Three months of declining mortgage payments came to an end in September, as higher rates pushed the median monthly payment on purchase applications up $53 despite a slight decline in loan amounts.
The median principal-and-interest payment rose to $2,215 from $2,162 in August, according to the Mortgage Bankers Association's latest Purchase Applications Payment Index (PAPI), released Thursday.
“Homebuyer affordability worsened in September as mortgage rates increased 30 basis points, pushing the median monthly mortgage payment $53 higher to $2,215,” said Edward Seiler, MBA's associate vice president of housing economics and executive director of the Research Institute for Housing America.
“Despite a slight decline in the median loan amount, higher mortgage rates drove monthly payments upward, with affordability deteriorating in 39 states. Compared to a year ago, mortgage payments are up more than seven percent, outpacing earnings growth and adding to the affordability challenges facing prospective homebuyers.”
Payments Outpace Earnings
Mortgage payments increased 7.1% year over year, compared with 4% earnings growth, pushing MBA's national affordability index up 3.1% from September 2025.
On a monthly basis, the PAPI rose 2.4% to 158.2 from 154.5 in August. Higher readings indicate worsening affordability.
The September increase reversed a three-month stretch of declining payments, underscoring how quickly higher borrowing costs can erase affordability gains.
FHA and Conventional Payments Rise
FHA applicants saw their median monthly payment climb $50 to $1,906, up from $1,856 in August and $1,792 a year earlier.
Conventional applicants faced a $56 increase, with the median payment reaching $2,244, compared with $2,188 in August and $2,105 in September 2025.
Even borrowers seeking lower-payment mortgages saw an increase. At the 25th percentile of purchase applications, payments rose to $1,525 from $1,492.
The increases add pressure to debt-to-income ratios, particularly for first-time buyers and borrowers already near qualifying limits.
New-Home Buyers See Larger Increase
Payments on new-home purchase applications rose even faster.
MBA's Builders' Purchase Application Payment Index showed the median payment climbing $93 to $2,307 in September from $2,214 in August, a 4.2% increase.
That compares with a roughly 2.5% increase in the broader purchase market, adding another affordability challenge for builders and their lending partners competing for payment-sensitive buyers.
Affordability Declines Across 39 States
Idaho recorded the highest PAPI reading at 254.9, followed by Nevada (238.6), Rhode Island (220.4), Arizona (210.3), and Tennessee (199.8).
Louisiana had the lowest reading at 116.6, followed by Connecticut (123.3), West Virginia (127.7), Alaska (128.6), and Iowa (130.2).
Affordability also deteriorated across the racial and ethnic household groups tracked by MBA, with the index rising to 158.8 for Black households, 146.4 for Hispanic households, and 161.0 for White households.
For originators, September's reversal reinforces the pressure on purchase pipelines as higher rates offset smaller loan amounts. With payments rising faster than earnings, borrowers have less room to absorb financing costs, even when they scale back their purchase budgets.
