Why Mortgages Dominate U.S. Household Debt

When we talk about debt in America, it’s easy to point fingers at credit cards, student loans, or auto financing. But the true elephant in the room—the one carrying the most weight—is the mortgage.

As of 2025, nearly 70% of all U.S. household debt is tied to mortgages. That means out of every dollar Americans owe, 70 cents is likely wrapped up in a home loan. For many, this may not come as a surprise. After all, buying a home is still seen as a rite of passage and a symbol of financial stability. But in today's economy, that symbol comes at a steep cost.

A Legacy of Leverage

The modern American economy has been built on the premise that homeownership equals wealth. That belief has driven generations to stretch their finances to buy a house—even when interest rates or prices were unfavorable.

In 2025, mortgage rates are hovering between 6% and 7%, a far cry from the ultra-low rates of the 2010s. Combine this with record-high home prices in many regions, and the average buyer is not just purchasing a home—they’re committing to decades of debt. Add rising property taxes and insurance premiums (which are hitting crisis levels in disaster-prone areas), and that debt only grows.

Wealth Builder or Budget Buster?

Supporters of homeownership argue that a mortgage is “good debt” because it allows families to build equity over time. And in a stable market, that’s true. But the equation changes when:

• Housing values plateau or fall

• Maintenance costs surge

• Interest rates climb

• Job security becomes uncertain

Right now, an increasing number of homeowners are “house poor”—meaning they technically own property but have little left over for savings, emergencies, or retirement. And with lenders tightening credit standards, refinancing or tapping home equity is no longer the safety valve it used to be.

The Real Cost of the American Dream

There’s no question that owning a home still brings emotional and personal value. But with mortgage debt now dominating household balance sheets, we need to ask: Is homeownership empowering Americans—or financially trapping them?

For many, the home is no longer an asset; it’s a liability that eats up more than half their income. This isn’t just a personal finance issue—it’s a macroeconomic red flag. High household debt limits consumer spending, reduces economic flexibility, and increases vulnerability during downturns.

The American Dream isn’t dead, but it’s certainly more expensive than ever. If 70% of household debt is locked in homes, we must rethink what financial freedom looks like—and whether the pursuit of property is still the smartest investment for the average family.