Mortgages rates that remained near yearly lows in September kept a window of affordability propped open for new-purchase mortgage borrowers.
The Purchase Applications Payment Index (PAPI), a monthly measure of new mortgage payments relative to income, derived from weekly surveys conducted by the Mortgage Bankers Association (MBA), fell 1.6% in September to 155 from 157.5 in August.
A decline in the PAPI indicates improving borrower affordability conditions due to shifts in loan application amounts, mortgage rates or earnings.
The median monthly payment applied for by homebuyers across the U.S. slid lower for the fourth consecutive month, to $2,067 from $2,100 in August. The MBA also reported that early estimates of median earnings in September, derived from August figures prior to the federal government shutdown, were 3.2% higher than a year ago, while payments increased just 1.3%.
This pushed the PAPI 1.9% lower and relative affordability higher on an annual basis, though September’s median mortgage payment was $26, or 1.3% higher than a year ago.
The median application payment for loans backed by the Federal Housing Administration was $1,792 in September, down $71 from August but up $39 from a year ago.
States with the lowest PAPI were Louisiana (114.3), Connecticut (120.8), West Virginia (121.6), Alaska (122.7) and New York (122.9). States with the highest PAPI were Idaho (242.4), Nevada (229.9), Arizona (206.6), Rhode Island (205.9) and Florida (196.8).
Cooling home price gains throughout 2025, and even outright declines in some markets, have amplified the affordability gains of easing borrowing costs in recent months.
Edward Seiler, associate vice president of housing economics for the MBA, noted in a press release that “with mortgage rates expected to stabilize and home prices remaining flat, we anticipate slightly stronger housing demand heading into 2026.”
The Builders’ Purchase Application Payment Index (BPAPI) indicated the median mortgage payment for purchase mortgages from the MBA’s Builder Application Survey decreased to $2,162 in September from $2,210 in August.
