Mortgage Payments Require Largest Share of Income Since 2009

Mortgage Payments Require Largest Share of Income Since 2009

Rising mortgage payments chip away at relatively affordable monthly housing costs Americans have enjoyed for a decade.

  •  Monthly mortgage payments on the typical U.S. home required 17.1 percent of the median income in Q1 2018. From 1985 to 2000, mortgage payments took up an average of 21.1 percent of the median income.
  • Mortgage payments are a bigger financial burden than they were historically (1985-2000) in nine of the 35 biggest U.S. metros.
  • San Jose, Calif. has the least affordable mortgage payments, requiring more than half of the typical income.

The combination of rising rates and strong home value appreciation led to one of the largest recorded quarterly increases in the mortgage burden for homebuyers since the Great Recession.

In the first quarter of 2018, the share of median income needed for monthly mortgage payments on the median U.S. home increased to 17.1 percent, up from 15.9 percent in the fourth quarter of 2017, according to Zillow®’s latest affordability report. This was the second biggest quarterly increase in the mortgage burden since the housing market collapsed in 2007. In the fourth quarter of 2016, the share of income needed for mortgage payments increased from 14.1 percent to 15.6 percent.

Mortgage Payments Sustainability

Throughout the housing market recovery, low mortgage rates helped sustain housing affordability, even as home values climbed to new peaks. But mortgage rates increased sharply to start the year, rising nearly 50 basis points in the first three months, and affordability is waning as a result.

Mortgage payments haven’t taken up such a large share of the median income since the second quarter of 2009, when monthly housing costs for the typical U.S. home required 17.5 percent of the median income, and mortgage rates were well above 5 percent.

As home values recovered following the Great Recession, wages rose much more slowly. The price-to-income ratio has stayed the same or increased each quarter since Q1 2012, a sign of home price increases outpacing income growth. In Q1 2018, the median U.S. home was worth 3.54 times the typical household income. From 1985 to 2000, the average home was worth 2.78 times the median income.

“For the past few years, historically low mortgage rates provided the silver lining for buyers as prices rose higher and higher,” said Zillow Senior Economist Aaron Terrazas. “If you were able to come up with a down payment, the low rates kept monthly housing costs relatively affordable in most parts of the country. Now, though, as rates are on the rise and home values are climbing at their fastest pace in 12 years, that affordability edge is getting thinner. In markets that have seen some of the biggest increases in home values, housing costs already take up a larger share of income than they did historically, making it all the more difficult for buyers.”

In nine of the 35 largest housing markets, mortgage payments are already a bigger financial burden than they were historically. Seven are along the West Coast, led by San Jose, Calif., where mortgage payments for the median home increased from their historic average of 35.8 percent to 51.2 percent of the median income, the highest required in any of the top metros.

If mortgage rates reach 5 percent next year, as many economists expect, home shoppers in an additional seven markets would face greater mortgage burdens than buyers did historically, including Sacramento, Orlando and Tampa.

Metropolitan Area Share of
Spent On
Share of
Spent On
(Q1 2018)
Share of Income
Spent On
Mortgage (1-Year
Forecast at 5%
United States 21.1% 17.1% 19.0%
New York, NY 29.0% 27.7% 30.9%
Los Angeles-Long Beach-Anaheim, CA 34.5% 44.9% 49.8%
Chicago, IL 23.1% 15.2% 16.9%
Dallas-Fort Worth, TX 23.7% 16.5% 18.7%
Philadelphia, PA 20.3% 16.0% 17.7%
Houston, TX 21.1% 14.9% 16.6%
Washington, DC 22.2% 19.4% 21.5%
Miami-Fort Lauderdale, FL 20.3% 24.5% 27.1%
Atlanta, GA 18.5% 14.9% 16.8%
Boston, MA 26.6% 25.5% 28.3%
San Francisco, CA 38.5% 43.9% 49.4%
Detroit, MI 16.2% 12.2% 13.5%
Riverside, CA 27.6% 28.1% 31.9%
Phoenix, AZ 21.5% 19.9% 22.0%
Seattle, WA 25.9% 27.2% 31.3%
Minneapolis-St. Paul, MN 17.8% 16.2% 18.1%
San Diego, CA 33.4% 37.7% 42.2%
St. Louis, MO 17.0% 12.4% 13.7%
Tampa, FL 18.7% 18.2% 20.6%
Baltimore, MD 21.6% 15.8% 17.6%
Denver, CO 22.6% 25.1% 28.0%
Pittsburgh, PA 13.7% 11.3% 12.5%
Portland, OR 22.0% 25.8% 28.4%
Charlotte, NC 19.4% 14.9% 16.6%
Sacramento, CA 29.1% 28.7% 32.4%
San Antonio, TX 22.2% 15.1% 16.7%
Orlando, FL 20.7% 19.8% 22.6%
Cincinnati, OH 18.3% 12.0% 13.2%
Cleveland, OH 19.5% 12.4% 13.6%
Kansas City, MO 17.2% 13.4% 14.8%
Las Vegas, NV 26.7% 22.0% 25.0%
Columbus, OH 18.8% 13.8% 15.2%
Indianapolis, IN 22.2% 12.2% 13.6%
San Jose, CA 35.8% 51.2% 60.6%
Austin, TX 28.9% 18.8% 20.8%



Zillow is the leading real estate and rental marketplace dedicated to empowering consumers with data, inspiration and knowledge around the place they call home, and connecting them with great real estate professionals. In addition, Zillow operates an industry-leading economics and analytics bureau led by Zillow Group’s Chief Economist Dr. Svenja Gudell. Dr. Gudell and her team of economists and data analysts produce extensive housing data and research covering more than 450 markets at Zillow Real Estate Research. Zillow also sponsors the quarterly Zillow Home Price Expectations Survey, which asks more than 100 leading economists, real estate experts and investment and market strategists to predict the path of the Zillow Home Value Index over the next five years. Launched in 2006, Zillow is owned and operated by Zillow Group, Inc. (NASDAQ:Z and ZG), and headquartered in Seattle.