Buying Is Cheaper Than Renting In 22 States, If You Have A 20% Down Payment

According to a new Zillow Home Loans analysis, recent rate declines pushed monthly payments down across the country, resulting in an affordability boost for homebuyers – but only under certain conditions.

Assuming a 20% down payment and factoring out taxes and insurance, New Orleans, Chicago, and Pittsburgh offer the greatest savings when comparing homeownership to the cost of rent.

In Chicago, the typical rent payment is $2,074 per month, but a monthly mortgage payment is $1,640, a $434 difference per month. In New Orleans, homeowners can save about $450 a month, and in Pittsburgh, about $320 a month. 

Nationwide, the typical rent payment is $2,063 a month, but the typical mortgage is $1,827, a $236 difference.

“This analysis shows homeownership may be more within reach than most renters think,” said Zillow Home Loans Senior Economist Orphe Divounguy.

Saving for a down payment is consistently ranked as one of the biggest issues hopeful buyers face today.

The typical homebuyer put down 18.6% of the purchase price in June, totaling more than $67,000.

“Coming up with the down payment is still a huge barrier, but for those who can make it work, homeownership may come with lower monthly costs and the ability to build long-term wealth in the form of home equity — something you lose out on as a renter. With mortgage rates dropping, it’s a great time to see how your affordability has changed and if it makes more sense to buy than rent,” Divounguy said.