Housing affordability challenges are weighing not only on prospective buyers, but also on a growing proportion of existing homeowners, new data shows.
Late-stage mortgage delinquencies (delinquencies that are more than 90 days past due) rose 18.6% in December from a year earlier, according to a new study from credit scoring firm VantageScore. Ricardo Vandebo, chief strategy officer and chief economist at VantageScore, said the percentage of mortgages in default is still small at about 0.2%, up from just under 0.17% in December 2024, but the increase is occurring faster than delinquencies for other types of consumer credit, such as auto loans, credit cards and personal loans.
“This is a fairly low delinquency rate” compared to the level of nonpayments seen during the 2008-2010 financial crisis, Vandebo said. “However, the increase (in delinquency) remains a worrying sign.”
According to the St. Louis Fed, as of the third quarter of last year, the delinquency rate for all levels of mortgages was 1.78% of outstanding mortgages, up slightly from 1.74% in the same period last year. In the first quarter of 2010, its share was 11.49%.
Also as of the third quarter of 2025, Americans owed $13.7 trillion on 86.67 million home loans, according to a LendingTree analysis of New York Fed data. Based on these numbers and St. Louis Fed delinquency data, the number of delinquent mortgages could be around 1.5 million.
This recent increase in delinquencies pushed the average VantageScore credit score down to 700 in December, down 1 point from November and 2 points down from the same month last year.
Housing prices are easing, but remain high
Affordability issues have taken center stage as households continue to struggle to absorb rising prices. The cost of everyday shopping has increased by more than 25% since January 2020, according to the Consumer Price Index.
Inventory constraints, soaring prices over the past five years, and rising mortgage rates have pushed many prospective home buyers out of the market. Although the market is showing some signs of easing, the median sales price for a single-family home in December was $409,500, according to the National Association of Realtors.
Although this amount is down from the June 2025 high of $435,300, it is still well above the price of homes heading into the pandemic. According to the S&P Kotality Case-Shiller U.S. National Home Price Index, home prices rose 54.5% from January 2020 to November 2025.
Separately, a new analysis by Realtor.com’s economic research team examines what it would take to bring home affordability back to pre-pandemic levels, when a typical mortgage payment consumed about 21% of median household income, compared to more than 30% now.
Our analysis shows that one of three things needs to happen: Mortgage rates should fall from the current 6.16% to around 2.65%. Median household income would need to increase by 56% to $132,171 from the current estimate of $84,763. If not, home prices would have to fall 35% from about $418,000 last year to a median price of $273,000.
Other expenses related to homeownership are also increasing. For example, homeowners insurance rose about 6.5% in 2025 and 31.3% from January 2020 to December 2025, according to the Producer Price Index. Property taxes also generally increase over time as the value of your home increases.
“Leave room for the unknown”
For potential homebuyers, rising delinquency rates could serve as a warning to avoid buying a home they can’t afford.
“Just because a lender approves a certain amount of money doesn’t mean you can spend it,” says certified financial planner Thomas Blackburn, partner, vice president and senior financial planner at Mason & Associates in Newport News, Virginia.
“Their maximum is not what they’re comfortable with, but what they think they can tolerate,” Blackburn says. “Leave room for the unknown, for saving, and for actually enjoying life.”
A general rule of thumb is to keep your mortgage payments, including property taxes and homeowners insurance, at 28% or less of your income, but some advisors recommend even lower limits to protect against unforeseen circumstances.
“One of the costs that people often underestimate is ongoing maintenance,” says CFP Kate Feeney, vice president and wealth advisor at Summit Place Financial Advisors in Summit, New Jersey.
“A simple rule of thumb is to set aside about 1% to 2% of your home’s value each year for repairs and maintenance,” Feeney said.
Additionally, don’t forget the importance of emergency savings.
“Having three to six months worth of living expenses aside can give you flexibility and peace of mind, especially in the first year when unexpected expenses are most likely to surface,” Feeney says.
