Down Payments Posing a Roadblock for Renters to Become Owners
Renting is less affordable than paying a mortgage on a monthly basis, but down payments are a barrier to many first-time buyers.
- Paying for a mortgage continues to be more affordable than renting on a monthly basis across the U.S.
- At the end of the third quarter of 2015, buyers could expect to spend 15 percent of their monthly income on a mortgage, and renters could expect to spend 30 percent of their income on rent.
- All but one of the 35 largest metros have rental affordability worse than the historical average, making it difficult for renters to save money for a down payment.
Nov 11, 2015
SEATTLE, Nov. 11, 2015 /PRNewswire/ -- Paying for a mortgage is still more affordable than renting in the U.S., but saving enough money for a down payment has become increasingly difficult for first-time buyers, especially in markets where home values are rising rapidly.
With the majority of renters in the largest metros putting about 30 percent of their monthly incomei toward a rental payment, saving money for a 20 percent - or even 10 percent - down payment is extremely difficult. First-time homebuyers and millennials are left trying to find other ways to break into the housing market, turning to friends and family for financial help. In 2014 alone, 13 percent of home purchases were bought using a loan or gift from friends or family for the down payment.
Rental affordability worsened in 28 of the 35 largest metros over the past year, and mortgage affordability worsened in just 18 of the