The 10 States Where Mortgages Cost You More

Do you want to find the best mortgage rate in the US? Home buyers have always had a tough time finding the best mortgage deals, especially with today’s volatile market. However, if you know where to look, certain states provide more affordable mortgages than others.

Interest rates across the United States have been increasing since 2020. The media often reports the entire national landscape, but real estate is hyperlocal. For home buyers who want to find the most value for their mortgage dollar, the loan terms and mortgage size will vary significantly throughout the country.

A recent post from National Mortgage News highlights this variance, calling out the states with the highest mortgages on average. What are those states, what kinds of mortgages do they typically see, and how might that impact your ability to secure an affordable mortgage in your area?

The States with the Highest Average Mortgages

As you might expect, major markets along the coast lead the way when it comes to the size of the mortgage. According to National Mortgage News, home loans in the District of Columbia exceeded all 50 states at an average of $561,114. Contrast that to the national average mortgage size of about $440,000, and you’ll understand how large that is.

After Washington, DC, the state with the highest mortgage average was Washington state, reporting an average mortgage size of $537,741.

Besides the majority being near the coast, many of the states on the list were also some of the most populous in the country. California, the biggest needle-mover of all, with a population of nearly 40 million, came in third with an average mortgage size of $520,110. New York ($407,308) was 11th on the list.

Here’s a summary of the top ten so you can get an idea of how the averages broke down:

• DC: $561,114
• Washington: $537,741
• California: $520,110
• Hawaii: $477,777
• Massachusetts: $467,436
• Colorado: $458,499
• Vermont: $452,412
• Utah: $416,423
• Maryland: $409,742
• Rhode Island: $409,170

Notice some states on the list of top 10 states fell below the national average. It shows how much the size of the state could affect the overall average, as less dense areas balance out the state’s larger populated areas, or the smaller size translates to fewer transactions and higher averages.

So remember that the national average doesn’t necessarily reflect your state. It includes states with higher home values, which lead to higher mortgage averages.

Knowing where mortgages are often can matter when deciding which lender to use. As reported recently, some of the nation’s top lenders are pulling back to exclusively focus on high-value mortgages.

Average Housing Prices Impact Mortgages

It’s not a leap to imagine that the states with the highest mortgage values will also tend to be those states with the highest average housing prices. But how closely do the two numbers stack up?

We consulted the median 2023 home prices by state as determined by Rocket Mortgage. Some of the names above also appear at the top of this list. For example, California’s median price value of $684,800. Hawaii’s median home value was even higher than California’s, despite appearing one step below California on the highest mortgage values list. Hawaii’s median home price of $732,000 was the only state on the list with a median home value of $700,000 or higher.

Another state high on the first list, Washington, had a relatively high median home price of $504,200.

Massachusetts and Colorado also appeared in the top ten median home prices. The median home price in Massachusetts was $510,500, while in Colorado, it was $488,600.

This is also reflected in the median household income. In California, the median income is $78,672, while in Arkansas, it’s $49,475.

However, Vermont, Maryland, and Rhode Island’s median home prices were well below some of the other top homes that didn’t report higher average mortgages. For instance, Oregon’s home value of $438,100 was well above Vermont’s $294,000.

These lists demonstrate that the housing market is not just a single entity. As the old adage in real estate goes: location, location, location. The median home price can shift hundreds of thousands of dollars across state lines.

Are Current Median Home List Prices Declining?

The Federal Reserve tracks residential existing home sales on the regional level each quarter. In the first quarter of 2023, the national median list price for residential homes nationwide was $436,800, down from Q4 2022. Hawaii’s $700,000+ median home price in 2022 is far above that national number, while states like Arkansas are well below it. To gauge home values in your area, knowing the national and state averages provides more context on if your market is a value.

Mortgage Rates Still In Flux

Home buyers must be aware because even a small percentage increase in mortgage rates or value means spending thousands more in the long term. So what’s the latest in the world of mortgage rates?

Bankrate.com reported a national average of about 6.87% on a conventional 30-year fixed-rate mortgage on May 16, 2023. According to TradingEconomics, the number has decreased slightly since a bump in late April. Overall, mortgage rates are high compared to years past, but if you focus on where rates went in 2022, conditions are generally favorable.

We know that buying a house can be a thrilling but daunting experience. From taking out a mortgage to finding the right neighborhood, there’s much to consider when purchasing a property. Looking at what’s happening nationwide can give a big-picture look at where homeownership is heading.