Prospective homebuyers received modest affordability relief in June, but a closer look at the numbers shows how difficult the monthly payment conversation remains for loan originators.
The national median principal-and-interest payment sought by purchase applicants fell to $2,191 in June from $2,198 in May, according to the Mortgage Bankers Association’s Purchase Applications Payment Index. The $7 decline came despite a slight increase in mortgage rates because applicants sought smaller loan amounts, MBA said.
For applicants seeking lower-payment mortgages, represented by the 25th percentile of MBA’s application data, the payment fell $10 to $1,522.
That was just $9 below the national median asking rent of $1,531 during the second quarter, according to newly released U.S. Census Bureau data.
The comparison does not mean buying and renting carry equivalent costs. MBA’s mortgage payment figure reflects principal and interest, while homeowners must also account for property taxes, homeowners insurance, mortgage insurance when applicable, maintenance, and other expenses. The figures also compare the 25th percentile of mortgage application payments with the median asking rent rather than equivalent properties or households.
Still, the shrinking gap illustrates the challenge facing originators working with payment-sensitive buyers.
Buying Lost Ground Against Renting During The Quarter
Dividing the $1,522 lower-payment mortgage application by the $1,531 median asking rent produces a mortgage-payment-to-rent ratio of approximately 0.99. In practical terms, the principal-and-interest payment alone equaled about 99% of the median asking rent.
That ratio was 0.94 in March, when the lower-payment mortgage application stood at $1,479, and the median asking rent was $1,579, according to MBA.
The broader comparison also moved against prospective buyers. The national median purchase-application payment equaled approximately 1.43 times the median asking rent in June, up from approximately 1.35 in March.
MBA calculates a national mortgage-payment-to-rent ratio using its purchase-application payment data and the Census Bureau’s quarterly median asking rent. The association’s index directly uses application information from its Weekly Applications Survey rather than estimating mortgage payments through assumptions about borrower underwriting.
The comparison is national and does not account for substantial differences in local home prices, rents, taxes, insurance costs, or property types.
Income Growth Improves Affordability Measure
MBA’s national Purchase Applications Payment Index, or PAPI, declined 0.3% to 157.9 in June from 158.4 in May, marking the second consecutive monthly improvement. A lower reading indicates that mortgage payments are consuming a smaller share of applicant income.
The index improved 3.5% from a year earlier because earnings grew 4.6%, outpacing the 0.9% annual increase in mortgage payments.
“Affordability conditions improved slightly in June, as prospective homebuyers benefited from lower loan application amounts despite a slight increase in mortgage rates,” said Edward Seiler, MBA’s associate vice president of housing economics and executive director of the Research Institute for Housing America.
Seiler said steady income growth has provided prospective buyers with modest relief over the past year.
The figures point to a distinction for LOs: Faster earnings growth may improve a borrower’s payment-to-income position, but the actual mortgage payment has barely declined. The median payment was only $7 lower than in May and remained $19 higher than in June 2025.
FHA Payments Edge Lower
The median payment sought by FHA applicants fell by $1 to $1,872 in June. That was also $9 below the $1,881 median recorded a year earlier.
For conventional loan applicants, the median payment declined by $2 to $2,209 but remained $4 above its June 2025 level.
Affordability improved slightly across the racial and ethnic household groups measured by MBA. The PAPI declined from 159.0 to 158.5 for Black households, from 146.6 to 146.1 for Hispanic households, and from 161.2 to 160.6 for White households.
State-level affordability varied considerably. Idaho recorded the highest PAPI reading at 251.2, followed by Nevada at 230.4, Arizona at 209.7, Rhode Island at 208.7, and Utah at 195.8.
Louisiana had the lowest reading at 119.6, followed by Washington, D.C., at 122.0, Vermont at 126.7, New York at 128.1, and West Virginia at 129.3.
New-Home Payments Move Higher
Applicants seeking newly built homes did not experience the same monthly payment relief.
MBA’s Builders’ Purchase Application Payment Index showed that the median payment for new-home purchase applicants increased by $26, rising to $2,199 in June from $2,173 in May.
That placed the new-home applicant payment slightly above the $2,191 median across the broader purchase market.
The data suggests that income growth may be helping borrowers qualify, but it has not fundamentally changed the payment pressure confronting prospective buyers. Lower loan amounts, loan-program selection, seller concessions, and other affordability strategies remain central to keeping purchase transactions viable.
