Article Summary: The MBA Purchase Applications Payment Index fell to 154.3 in August as the median mortgage payment declined to $2,162. Year over year, earnings growth of 4.1% outpaced a 2.9% rise in payments, lowering the index by 1.1%.
Homebuyer affordability improved modestly in August as the median monthly mortgage payment for purchase applicants fell to $2,162, down from $2,175 in July, according to the Mortgage Bankers Association (MBA)’s latest Purchase Applications Payment Index (PAPI).
The index measures changes in mortgage payments relative to borrower income. The index fell 0.6% to a reading of 154.3 in August, down from 155.2 in July.
Affordability also improved from a year earlier. Mortgage payments rose 2.9% during the past 12 months, but household earnings increased 4.1%, pushing the PAPI down 1.1%.
“Homebuyer affordability improved slightly in August, as a decline in the median purchase loan amount helped offset the impact of higher mortgage rates,” Edward Seiler, MBA’s associate vice president of housing economics and executive director of the Research Institute for Housing America, said in a statement.
Seiler said affordability remains challenging, with 27 states recording declines in August. He said sustained improvement will depend on lower mortgage rates, continued income growth and slower home-price growth.
The median mortgage payment for borrowers applying for lower-payment loans, those at the 25th percentile, fell to $1,492 in August, down from $1,512 in July.
Federal Housing Administration (FHA) loan applicants had a median mortgage payment of $1,856 in August, down from $1,901 in July and $1,863 a year earlier. For conventional loan applicants, the median payment increased to $2,188, up from $2,184 in July and $2,112 in August 2025.
Idaho once again had the highest PAPI in August at 258.6, followed by Nevada at 229.8, Rhode Island at 213.7, Arizona at 204.0 and Tennessee at 193.5. The lowest PAPI readings were recorded in the District of Columbia at 113.9, Louisiana at 114.2, West Virginia at 120.8, Connecticut at 124.5 and New York at 125.3.
The PAPI for Black households fell to 154.9 in August from 155.8 in July. The index for Hispanic households declined to 142.7 from 143.6, while the index for white households fell to 157 from 157.9.
Meanwhile, the MBA’s Builders’ Purchase Application Payment Index, which tracks mortgage payments for newly built single-family homes, increased slightly. The median payment rose to $2,214 in August, up from $2,210 in July.
The PAPI uses mortgage application data from the MBA’s weekly applications survey and earnings data from the U.S. Bureau of Labor Statistics’ Current Population Survey. A lower index reading indicates improved affordability, while a higher reading indicates that mortgage payments account for a larger share of borrower income.
This article was generated using HousingWire Automation and reviewed by a HousingWire editor before publication.
Mortgage loans are a common way to finance property purchases. Before applying, understand key terms and your financial situation.
Step 1: Check your credit score and report. A higher score can lead to better interest rates.
Step 2: Determine your down payment. Typical down payments range from 5% to 20% of the property price.
Step 3: Compare loan types: fixed-rate mortgages keep the same interest rate for the entire term, while adjustable-rate mortgages have rates that change over time.
Step 4: Get pre-approved by a lender. This shows sellers you are a serious buyer.
Step 5: Submit your application with documents such as income proof, tax returns, and bank statements.
Step 6: Review the loan estimate and closing costs. These include appraisal fees, title insurance, and origination fees.
Step 7: Close the loan. Sign the final documents and receive the funds.
Remember: Monthly payments include principal, interest, taxes, and insurance. Late payments can damage your credit score and lead to foreclosure.
