July saw improved homebuyer affordability, with the national median payment applied for by people applying for home purchases decreasing from $2,172 in June to $2,127. Month over month, it was a 2.1% improvement.
The national median payment was down by $13, or 0.6%, from one year ago.
The numbers come from the Mortgage Bankers Association’s (MBA) Purchase Applications Payment Index (PAPI), which measures how new monthly mortgage payments vary across time, relative to income, using data from MBA’s weekly applications survey.
An increase in the PAPI means that mortgage payments to income ratios are higher due to increasing application loan amounts, rising mortgage rates or a decrease in earnings. A decrease in the PAPI happens when loan application amounts decrease, mortgage rates decrease or earnings increase.
“Affordability conditions have now improved for two consecutive months, the result of lower mortgage rates and continued, strong income growth,” stated Edward Seiler, MBA’s associate vice president of housing economics, in a press release. Seiler is also executive director at the Research Institute for Housing America.
“MBA is forecasting that mortgage rates will remain in the 6.5% to 7% range for the rest of 2025,“ he continued. “While still elevated, continued income growth and softening home-price gains should boost prospective buyers’ purchasing power in the months ahead.”
Nationally, PAPI decreased 3% to 158.7 in July from 163.7 in June. Median earnings were up 3.7% compared to one year ago. Though payments fell 0.6%, the earnings growth brought the PAPI down (affordability is higher) 4.1% annually. For borrowers applying for lower-payment mortgages (the 25th percentile), the national mortgage payment decreased to $1,468 in July from $1,500 in June.
MBA’s national mortgage payment to rent ratio (MPRR) decreased quarter over quarter from 1.48 in the first quarter of 2025 to 1.45 in the second quarter. The MBA says this shows mortgage payments for home purchases have decreased relative to rents.
The Census Bureau’s HVS (Housing Vacancies and Homeownership) national median asking rent in the second quarter 2025 was $1,494 (up from $1,468 in first-quarter 2025). The 25th percentile mortgage application payment to median asking rent ratio was 1.00 in June (a slight dip from 1.02 in March 2025).
Median mortgage payment for purchase mortgages from MBA’s Builder Application Survey decreased to $2,233 in July from $2,273 in June, according to data in the Builders’ Purchase Application Payment Index (BPAPI).
Other findings from the report showed the national median mortgage payment for FHA loan applicants was $1,865 in July, down from $1, 881 in June but up from $1,838 in July 2024. For conventional loan applicants, median payments were $2,160, down from $2,205 in June but up from $2,140 in July 2024.
The five states with the highest PAPI were: Nevada (248.9), Idaho (247.0), Arizona (219.7), Utah (204.7) and Florida (202.3). The five states with the lowest PAPI were: Louisiana (114.4), D.C. (118.1), New York (124.9), Alaska (125.0), and Connecticut (126.4).
Homebuyer affordability increased for Black households (PAPI decreasing from 163.1 in June to 158.2 in July), Hispanic households (PAPI decreasing from 152.4 in June to 147.8 in July) and white households (PAPI decreasing from 164.8 in June to 159.8 in July).
