Where mortgages are easiest to pay off
Becoming a homeowner can be the beginning of a long, complicated process. After you qualify and buy the home, you could spend 30 years paying off your mortgage loan. And during that time, your finances may change through job transitions, family growth, and larger economic events. So it’s important to have a strong emergency fund to cover unexpected expenses. You may also decide to pay off your mortgage early, even when having the opportunity to invest those extra funds elsewhere.
With this in mind, SmartAsset ranked 40 of the largest U.S. metro areas based on where it’s easiest to pay off a home. Mortgage data for 2023 determined the median principal and interest payments on a 30-year fixed-rate mortgage, which was then compared to the median income of these new homeowners.
Key Findings
- Mortgages are easiest to pay off in Pittsburgh, PA. The median new homeowner in Pittsburgh has an income of $101,000, making it easiest to pay off the $1,377 monthly principal and interest. The mortgage works out to be 16.4% of the household’s gross income. This is based on a median property value of $265,000, with a 78.2 loan-to-value ratio and a 6.99% median interest rate.
- Mortgages are hardest to pay off in California metro areas. The five places where it’s hardest to pay off a mortgage are all in the Golden State: The San Jose metro ranks last with the $6,588 principal and interest payment taking up 29.2% of the homeowner’s gross $271,000 income. San Diego (28.6%), Los Angeles (28.4%), San Francisco (27.2%), and Riverside (26.9%) metros are the next most expensive for new homeowners.
- Interest rates on new mortgages are highest in this metro area. The Virginia Beach metro area saw a median interest rate of 7.38% on new conventional mortgages. This yields a mortgage payment of $1,950, compared to a $109,000 income. This metro ranked 23rd overall, with 21.5% of gross income going to housing payments.
- This Texas metro had the lowest interest rates for new homeowners in 2023. The Austin metro saw a median interest rate of 6.5% on conventional mortgages. While incomes for new homeowners were high at a median of $160,000, so were property values at $505,000. Austin ranked 10th overall with the mortgage costing 19.1% of gross income.
Top 10 Metro Areas Where It’s Easiest to Pay Off a Mortgage
- Pittsburgh, PA
- Housing payments as a percent of gross pay: 16.4%
- Monthly principal and interest payment: $1,377
- Median annual income of new homeowners: $101,000
- Median property value of homes purchased with conventional loans: $265,000
- Median loan-to-value: 78.20%
- Median interest rate: 6.99%
- Mortgage amount: $207,230
- Number of conventional mortgages issued in 2023: 38,556
- Houston-The Woodlands-Sugar Land, TX
- Housing payments as a percent of gross pay: 17.1%
- Monthly principal and interest payment: $1,894
- Median annual income of new homeowners: $133,000
- Median property value of homes purchased with conventional loans: $365,000
- Median loan-to-value: 80%
- Median interest rate: 6.75%
- Mortgage amount: $292,000
- Number of conventional mortgages issued in 2023: 77,248
- Detroit-Warren-Dearborn, MI
- Housing payments as a percent of gross pay: 17.5%
- Monthly principal and interest payment: $1,228
- Median annual income of new homeowners: $84,000
- Median property value of homes purchased with conventional loans: $225,000
- Median loan-to-value: 80%
- Median interest rate: 7.25%
- Mortgage amount: $180,000
- Number of conventional mortgages issued in 2023: 21,380
- Cleveland-Elyria, OH
- Housing payments as a percent of gross pay: 17.6%
- Monthly principal and interest payment: $1,408
- Median annual income of new homeowners: $96,000
- Median property value of homes purchased with conventional loans: $265,000
- Median loan-to-value: 77.95%
- Median interest rate: 7.24%
- Mortgage amount: $206,568
- Number of conventional mortgages issued in 2023: 34,202
- San Antonio-New Braunfels, TX
- Housing payments as a percent of gross pay: 17.7%
- Monthly principal and interest payment: $1,723
- Median annual income of new homeowners: $117,000
- Median property value of homes purchased with conventional loans: $345,000
- Median loan-to-value: 77%
- Median interest rate: 6.75%
- Mortgage amount: $265,650
- Number of conventional mortgages issued in 2023: 29,354
- St. Louis, MO-IL
- Housing payments as a percent of gross pay: 17.9%
- Monthly principal and interest payment: $1,570
- Median annual income of new homeowners: $105,000
- Median property value of homes purchased with conventional loans: $295,000
- Median loan-to-value: 80%
- Median interest rate: 7%
- Mortgage amount: $236,000
- Number of conventional mortgages issued in 2023: 44,987
- Milwaukee-Waukesha, WI
- Housing payments as a percent of gross pay: 18%
- Monthly principal and interest payment: $1,678
- Median annual income of new homeowners: $112,000
- Median property value of homes purchased with conventional loans: $345,000
- Median loan-to-value: 75%
- Median interest rate: 6.75%
- Mortgage amount: $258,750
- Number of conventional mortgages issued in 2023: 29,855
- Philadelphia-Camden-Wilmington, PA-NJ-DE-MD
- Housing payments as a percent of gross pay: 18.5%
- Monthly principal and interest payment: $1,570
- Median annual income of new homeowners: $102,000
- Median property value of homes purchased with conventional loans: $315,000
- Median loan-to-value: 75.01%
- Median interest rate: 6.99%
- Mortgage amount: $236,283
- Number of conventional mortgages issued in 2023: 27,364
- Cincinnati, OH-KY-IN
- Housing payments as a percent of gross pay: 18.7%
- Monthly principal and interest payment: $1,623
- Median annual income of new homeowners: $104,000
- Median property value of homes purchased with conventional loans: $305,000
- Median loan-to-value: 78%
- Median interest rate: 7%
- Mortgage amount: $237,908
- Number of conventional mortgages issued in 2023: 39,875
- Austin-Round Rock-Georgetown, TX
- Housing payments as a percent of gross pay: 19.1%
- Monthly principal and interest payment: $2,549
- Median annual income of new homeowners: $160,000
- Median property value of homes purchased with conventional loans: $505,000
- Median loan-to-value: 79.87%
- Median interest rate: 6.50%
- Mortgage amount: $403,351
- Number of conventional mortgages issued in 2023: 37,476
Data and Methodology
SmartAsset used data from the Home Mortgage Disclosure Act for 2023. The median loan-to-value and property value of conventional mortgages issued in 40 of the largest metro areas were used to determine the median loan size. This loan amount, coupled with the median interest rate issued with corresponding mortgages, was used to determine the monthly principal and interest calculator with SmartAsset’s mortgage calculator. This monthly mortgage payment (excluding PMI, property taxes, and home insurance) was then compared with the median incomes of the new homeowners. Metro areas with the lowest income-to-housing-payment ratios were deemed the easiest places to pay off a mortgage.
This story was produced by SmartAsset and reviewed and distributed by Stacker.
By Jaclyn DeJohn, CFP
