Homebuyer Affordability Edges Higher as Mortgage Payments Decline in August 

Homebuyer affordability demonstrated modest improvement in August, as the national median mortgage payment sought by purchase applicants declined to $2,162 from $2,175 in July. This finding derives from the Mortgage Bankers Association’s (MBA) Purchase Applications Payment Index (PAPI), which evaluates the evolution of new monthly mortgage payments over time in relation to income levels, utilizing data obtained from the MBA’s Weekly Applications Survey (WAS).

The national PAPI declined 0.6% to 154.3 in August compared to 155.2 in July. Although payments rose 2.9 percent, income growth of 4.1 percent resulted in the PAPI decreasing (indicating improved affordability) by 1.1% year-over-year. For borrowers seeking lower-payment mortgages (the 25th percentile), the national mortgage payment fell to $1,492 in August from $1,512 in July.

The Builders’ Purchase Application Payment Index (BPAPI) indicated that the median mortgage payment for purchase mortgages derived from the MBA’s Builder Application Survey increased to $2,214 in August from $2,210 in July.

“Homebuyer affordability improved slightly in August, as a decline in the median purchase loan amount helped offset the impact of higher mortgage rates,” said Edward Seiler, MBA’s Associate VP of Housing Economics and Executive Director of the Research Institute for Housing America (RIHA). “Affordability also improved compared to a year ago as earnings growth outpaced the increase in mortgage payments. However, conditions remain challenging, with 27 states seeing affordability decline in August.”

Key Highlights from the Report:

• The national median mortgage payment reached $2,162 in August 2026, representing a decrease of $13 compared to July, while demonstrating an increase of $62 relative to the previous year, corresponding to a 2.9% growth rate.
• For FHA loan applicants, the national median mortgage payment was $1,856 in August, declining from $1,901 in July and decreasing from $1,863 in August 2025.
• For conventional loan applicants, the national median mortgage payment was $2,188, rising from $2,184 in July and increasing from $2,112 in August 2025.
• The five states demonstrating the highest PAPI values were Idaho (258.6), Nevada (229.8), Rhode Island (213.7), Arizona (204.0), and Tennessee (193.5).
• The five states exhibiting the lowest PAPI values were D.C. (113.9), Louisiana (114.2), West Virginia (120.8), Connecticut (124.5), and New York (125.3).
• Homebuyer affordability for Black households improved, with the national PAPI declining from 155.8 in July to 154.9 in August.
• Homebuyer affordability for Hispanic households improved, with the national PAPI declining from 143.6 in July to 142.7 in August.
• Homebuyer affordability for White households improved, with the national PAPI declining from 157.9 in July to 157.0 in August.

“Looking ahead, meaningful and sustained improvements in affordability will depend on a combination of lower mortgage rates, continued income growth, and moderating home-price growth,” Seiler said.

Note: An increase in MBA’s PAPI—indicative of declining borrower affordability conditions—means that the mortgage payment to income ratio (PIR) is higher due to increasing application loan amounts, rising mortgage rates, or a decrease in earnings. A decrease in the PAPI—indicative of improving borrower affordability conditions—occurs when loan application amounts decrease, mortgage rates decrease, or earnings increase.

To read the full report, click here.

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