A Third of Americans Say Mortgage and Debt Are Unmanageable—They Need These 5 Tips

Sticky inflation and high interest rates continue to take a toll on Americans’ wallets. A new Achieve survey found that 1 in 3 consumers say their debt, including mortgages, is “unmanageable” in 2025.

Mortgages still represent the bulk of Americans’ debt, standing at $12.61 trillion as of the fourth quarter of 2024, according to the Federal Reserve Bank of New York.

“That comes to an average of $148,120 per person with a mortgage on their credit report,” according to Lending Tree, which adds that mortgages represent 69.9% of total U.S. consumer debt.

Further underscoring debt challenges, Colton Pace, CEO of the real estate resources website Ownwell, noted that a majority (58%) of Americans said rising homeownership costs are preventing them from making other financial moves, such as saving for retirement or building generational wealth.

How to manage your mortgage payments

Fear of mounting more debt is keeping many new homeowners from making the leap.

While the Freddie Mac rate on a 30-year mortgage slightly decreased last week, it remains high, standing at 6.81% as of April 24.

“Affordability remains a challenge as mortgage rates hover near 7%, and home prices have not budged significantly,” says Realtor.com® Senior Economic Research Analyst Hannah Jones.

Mortgages are generally the most significant debt a person owes, and missing a payment can have terrible consequences, including losing your house. Experts recommend several tips to manage your mortgage payments.

1. Make your mortgage payment a top priority

When examining overall finances, it is essential to prioritize necessities, which include shelter, food, and utilities. That includes paying the minimum on any secured debts, like your home (mortgage payment) or car (vehicle loan), advises Kyle Enright, president of lending at Achieve.

If you must choose, Enright encourages paying your housing expense first, keeping in mind the equity return.

2. Stick to a budget

While many people talk about how inflation is impacting their budget, talking about a budget isn’t the same as having one.

“Know exactly what you have coming in and going out. The budget can be simple, with a spreadsheet, an app, or old-fashioned pencil and paper,” Enright adds.

3. Up the emergency fund

Generally, experts agree that saving the equivalent of six to nine months of living expenses is your best bet. However, more couldn’t hurt.

“You can’t control inflation or whether a recession will happen, so the best thing you can do is provide yourself a buffer to be better prepared,” Enright adds.

4. Automate payments

“Automation is always a good starting point for managing any ongoing payments you don’t want to be late on or miss entirely,” says Bobbi Rebell, a CFP and personal finance expert at CardRates.com.

“It is also a good idea to try to pay more on the principal of the loan, and to make sure that the mortgage company applies it correctly,” she adds. “By being more aggressive in reducing the principal amount, you can create significant savings over the lifetime of the mortgage.”

5. Contact your lender

Finally, if you are struggling to make your monthly mortgage payment, contact your lender.

“Most large lenders offer mortgage assistance and payment help you can apply for if you are experiencing a temporary hardship from an unexpected life event such as job loss, illness, or natural disaster,” said John Hummel, east region mortgage manager for U.S. Bank.

Bottom line: Saying something is better than nothing. Hummel notes that the earlier you act, the more options you are likely to have.

Why mortgage debt is a good thing

Not all debt is bad—in fact, mortgages can be a form of good debt.

“The truth is that if you have a low-interest mortgage, it can sometimes make sense to carry the debt, because not only is the interest often tax-deductible, but the freed-up money can be invested for a potentially higher return,” says Rebell.

She adds that a history of on-time mortgage payments is also beneficial to one’s credit score, which can, in turn, save money in other areas.

Finally, there’s the priceless value of owning your home and the security and peace of mind that come with homeownership, she says.

“While homeownership can involve considerable costs, you’re not subject to the whims of a landlord who might raise your rent or decide they no longer want a tenant—leaving you to find a new place to live,” she adds. “With homeownership, you have much more control.”

What is a good debt-to-income ratio for mortgage loans

Michael Santiago, CRPC (chartered retirement planning counselor) and senior financial editor at Annuity.org, says lenders usually prefer a debt-to-income (DTI) ratio on mortgage loans below 36%.

“Typically, a lender will ensure you can handle mortgage payments by looking at your total debt. By keeping your overall debt low, you can secure loans more easily and cheaper,” he adds.

Put simply: The lower the DTI, the better.

A special warning to those using adjustable-rate mortgages

If you have an adjustable-rate mortgage (ARM), your debt could increase with a rise in interest rates, potentially straining your finances further.

Unlike fixed-rate mortgages, an ARM features a variable interest rate that changes over the life of the loan. The fixed-rate period for an ARM typically lasts five, seven, or 10 years, after which the rate begins to adjust.

For example, with a 30-year 5/1 ARM, the borrower has an introductory rate for the first five years. After that, the rate adjusts annually for the remaining 25 years, according to Hummel. With a 30-year 10/6 ARM, the introductory rate lasts for the first 10 years and then adjusts every six months for the following 20 years, he adds.

“With an ARM, the interest rate and monthly payment may start low. However, both can rise quickly. Consider an ARM only if you can afford increases in your monthly payment—even up to the maximum amount,” according to the Consumer Financial Protection Bureau (CFPB).

Lenders use two key factors to calculate an ARM’s new rate: the index and the margin. The index fluctuates based on market conditions.

“If interest rates go up, your payments will go up, so these loans carry future risks that others do not. The lender determines which index your loan will use when you apply, and this generally won’t change after closing,” according to the CFPB.

For instance, the average 5/1 ARM in 2020 had an introductory rate of about 3.29%, according to the Federal Reserve Bank of St. Louis.

“The first adjustment is generally 2% after the initial five years, and then 1% annually thereafter,” says Michelle White, national mortgage expert at The CE Shop, a real estate and mortgage education platform. “That means you’re looking at a rate of around 5.29% this year.”

White explains that homeowners can refer to their closing disclosure, which includes a chart outlining potential payments based on allowable rate adjustments.

“This should give you an idea of what your new payment might be,” she says. “There are times when an ARM can be a beneficial option. For example, if you plan to stay in your home only a short time and will sell before the first adjustment, an ARM loan could be advantageous.”

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