The average monthly payment on a new U.S. mortgage fell 2.4% to $1,942 in 2025, but 1 in 4 new borrowers are still devoting at least 30% of their income to housing costs.

A recent analysis by LendingTree highlights an ongoing housing affordability challenge despite a modest overall payment reduction. While the typical new mortgage payment dropped slightly from 2024’s $1,990 average, younger buyers are still feeling financial strain at disproportionate levels, with Generation Z facing the highest payment burdens.

Regionally, California metros continue to demand the highest payments, while historically affordable markets in the Midwest and South experienced payment increases, though their aggregate costs lag behind other markets.

Nationwide, the typical borrower spent 20.3% of their monthly income on principal and interest in 2025. Despite the slight decline in average payments, 24.3% of new borrowers allocated 30% or more of their income to their mortgage, eclipsing a threshold commonly used to measure housing cost stress.

A more severe cost burden affects a sizable segment of homeowners, with 10.2% of borrowers across the country dedicating 40% or more of their income to new mortgage payments.

The financial burden falls heaviest on the youngest market participants. Gen Z borrowers (ages 18 to 28) allocate an average of 24.5% of their monthly income to mortgage payments, compared to 20.3% for millennials (ages 29 to 44) and 18.2% for Gen X (ages 45 to 60).

About one-third of Gen Z borrowers spend at least 30% of their income on principal and interest payments. This substantially outpaces the 21.7% of millennials who do the same.

LendingTree’s chief consumer analyst, Matt Schulz, noted in the report that younger borrowers “typically earn less and have lower credit scores than older Americans, and that’s a difficult mix when you’re trying to buy a home.”  He explained that these dynamics result in smaller downpayments and higher interest rates for younger buyers.

Geographically, California remains the most expensive market for new borrowers. The state is home to the five U.S. metros with the highest average monthly mortgage payments: San Jose ($4,016), San Francisco ($3,850), Oxnard ($3,401), Los Angeles ($3,366) and San Diego ($3,225).

In Oxnard, 26.9% of borrowers funnel at least 40% of their income toward mortgage payments, the highest share in the nation. While incomes in these major California cities are generally higher, Schulz warned that the exorbitant housing costs can easily leave buyers “house-poor” or force them to settle for smaller homes or longer commutes — which can lead to regret and a desire to relocate soon after purchase.

Although national averages declined, 26 of the 100 largest U.S. metros saw new mortgage payments increase last year.

Several traditionally affordable Midwestern and Southern markets experienced the steepest jumps. Akron, Ohio, saw a 10.7% increase in average payments, followed by Toledo, Ohio (9.7%); Augusta, Ga. (8.9%); and Charleston, S.C. (6.7%).

A persistent shortage of available homes combined with strong buyer demand has pushed home prices and monthly payments higher, even in historically lower-cost markets like Toledo. However, despite these increases, Toledo still boasts the lowest average monthly payment in the study at $1,297.