Homebuyer affordability improved in July as the median monthly mortgage payment for purchase applicants fell to $2,175, down from $2,191 in June, according to the Mortgage Bankers Association (MBA)’s Purchase Applications Payment Index (PAPI) released Thursday.
The PAPI measures how new monthly mortgage payments vary across time relative to income and uses data from MBA’s Weekly Applications Survey.
The July payment was $48 higher than a year earlier, a 2.2% increase. But wage growth outpaced the increase in mortgage payments, helping improve overall affordability.
“Homebuyer affordability improved in July, as a decline in the median loan amount offset a modest increase in mortgage rates, bringing the typical mortgage payment down to $2,175,” Edward Seiler, MBA‘s associate vice president of housing economics and executive director of the Research Institute for Housing America, said in a statement.
“Affordability also improved on an annual basis, as earnings growth continued to outpace the increase in mortgage payments,” Seiler added.
The median payment for borrowers applying for lower-payment mortgages, at the 25th percentile, fell to $1,512 in July from $1,522 in June.
Affordability varied significantly by state. Idaho had the highest PAPI reading at 247.2, followed by Nevada at 228.7, Rhode Island at 209.9, Arizona at 205.9 and Florida at 192.0.
Louisiana had the lowest PAPI at 113.0, followed by Washington, D.C., at 113.5, North Dakota at 118.9, Alaska at 123.5 and Connecticut at 125.6.
The median mortgage payment for Federal Housing Administration(FHA) applicants increased to $1,901 in July from $1,872 in June and $1,865 a year earlier. For conventional loan applicants, the median payment fell to $2,184 from $2,209 in June but remained above the $2,160 figure in July 2025.
Affordability improved across racial and ethnic groups in July. The PAPI for Black households fell to 156.4 from 158.5 in June, while the index for Hispanic households declined to 144.2 from 146.1. The PAPI for white households fell to 158.5 from 160.6.
Meanwhile, the national mortgage payment-to-rent ratio rose to 1.43 at the end of the second quarter, up from 1.35 at the end of the first quarter, indicating that mortgage payments for home purchases increased relative to rents.
The U.S. Census Bureau’s national median asking rent fell to $1,531 in the second quarter, down from $1,579 in the first quarter. The 25th-percentile mortgage application payment-to-median asking rent ratio rose to 0.99 in June from 0.94 in March.
For newly built single-family homes, the MBA’s Builders’ PAPI showed the median mortgage payment increased to $2,210 in July from $2,199 in June.
Looking ahead, Seiler said affordability will remain closely tied to mortgage rates and home price growth.
“Mortgage rates have increased in recent weeks, but any sustained reversal, combined with moderating home-price growth and rising inventory, would provide additional relief for prospective buyers through the remainder of 2026.”
This article was generated using HousingWire Automation and reviewed by a HousingWire editor before publication.