18 Cities Where it’s Cheaper to Buy Than Rent
A very common barrier that people build up when they don’t want to purchase a home is that the cost of ownership is higher than the cost of renting. The truth is there is no answer to that question that fits every scenario.
Deciding whether to rent or buy is highly dependent on interest rates, home values in your area, HOA fees and taxes.
It also depends on what kind of a rental deal you can get. Some landlords include utilities and maintenance within their cost of rent, while others will only cover basic wear-and-tear within the home, leaving the rest up to you.
In this article, we’ll cover one of these factors – home values.
A recent study from Go Banking Rates, detailed the median cost of home ownership vs renting in 50 of the biggest cities in the United States.
We’re going to highlight the top 18 cities where home ownership is the cheapest option so that you can begin to consider your rent to own goals.
18. Omaha, Nebraska
It’s $118 cheaper per month to pay the median mortgage in Omaha than the median rental payment. Median mortgage payments here are $1,182, while median rent payments are $1,300.
17. Albuquerque, New Mexico
In Albuquerque, the median monthly rent is $1,250, while the median monthly mortgage is $1,124. It’s $126 cheaper each month to purchase the median home in Albuquerque for $218,000.
16. Tucson, Arizona
It’s $151 cheaper to own than it is to buy in Tucson. The median monthly rent here is $1,200 and the median monthly mortgage is $1,049.
15. Jacksonville, Florida
In Jacksonville, the median mortgage is $189 cheaper than the median monthly payment. Renters pay about $1,200 a month to live in Jax, while homeowner’s pay about $1,011 on monthly mortgage payments.
14. Baton Rouge, Louisiana
In Baton Rouge, it is $193 cheaper to pay off a mortgage than it is to pay rent to a landlord. The median monthly rent is $1,300, while the median monthly mortgage is $1,107.
13. Indianapolis, Indiana
Monthly home costs in Indianapolis are cheaper when you’re an owner. Homeowner’s pay about $793 for their monthly mortgage payments, while renters pay about $995.
Homeownership is $202 cheaper than renting in Indianapolis.
12. Miami, Florida
A mortgage in Miami will cost you about $224 per month less than your rental payment. The median monthly mortgage in Miami is $2,276 per month, while the median monthly rent payment is $2,500.
11. El Paso, Texas
A home in El Paso costs about $1,100 to rent and $866 to buy. The $234 difference indicates that it is cheaper to buy a home in El Paso than to rent a similar home.
10. Washington, D.C.
The cost to own in D.C. is $240 cheaper than the cost to rent. The median monthly rent here is $2,995 and median monthly mortgages are $2,755.
Interestingly, D.C. has one of the top ten highest average monthly mortgage costs in the country, according to a Lending Tree study.
9. Minneapolis, Minnesota
In Minneapolis, there’s a $248 difference between the monthly payments of renters and buyers. People who have purchased a home pay a median monthly payment of $1,695. Renters pay a median monthly payment of $1,447.
8. Fort Worth, Texas
The difference between renting and buying in Fort Worth is $260. The median monthly rent payment is $1,550 and the median monthly mortgage payment is $1,290.
7. Milwaukee, Wisconsin
Both the median rent and the median mortgage payments in Milwaukee are low, but you’ll save $327 per month if you buy. The median monthly mortgage payment in Milwaukee is a mere $670. On the higher side, the median monthly rent is $997.
6. Memphis, Tennessee
The median monthly mortgage payment in Tennessee is $342 less than the median monthly rent payment. Median mortgage payments are considerably low here at $508 per month; whereas, median monthly rent payments are $850 per month.
5. Arlington, Texas
It is $373 cheaper per month to pay a mortgage versus rent. The median rent in this city is $1,550 per month. The median amount homeowners pay toward their mortgage is $1,117 monthly.
4. Philadelphia, Pennsylvania
The median monthly rent in Philadelphia is much more expensive than the median monthly mortgage payment. Rent in Philly is about $1,400, while mortgage payments are about $979. Owners save about $421 each month, as a result.
3. Cleveland, Ohio
It’s a heck of a lot cheaper to purchase a property in Cleveland than it is to rent one. The median monthly mortgage is only $417, while the median monthly rent is more than double that amount. Rent in Cleveland is about $850 a month.
By purchasing a property in Cleveland, you’re saving $433 each month. Within three years of paying off the mortgage, you’ll have made up for the down payment cost in savings.
2. Columbus, Ohio
It is $460.50 cheaper per month to pay off a mortgage than it is to pay for rent in Columbus. The median monthly rent payment is $1,307.50, and the median monthly mortgage payment is $847.
As evidenced by the median rent vs mortgage costs in Columbus and Cleveland, Ohio is a relatively inexpensive place to live. In fact, according to a Lending Tree study, Ohio is one of the top ten states with the cheapest mortgages. The average mortgage in Ohio is $764 a month before HOA, taxes and utilities are factored in.
That amounts to about 12.24 percent of the average person’s income – one of the top 10 lowest income-to-mortgage ratios in the country, according to the same Lending Tree study.
1. Baltimore, Maryland
In Baltimore, it is a lot cheaper to buy than it is to rent. Median rent is $1,300 in Baltimore. The median mortgage cost is $792 each month. That’s a cost saving of $508 per month!
Despite the fact that buying is cheaper than renting in Baltimore, mortgages in Maryland are some of the highest in the country. The average monthly mortgage in Maryland is $1,326 – before factoring in taxes, insurance, utilities and homeowners association dues, according to the Lending Tree study.
That breaks down to about 15.26 percent of a persons salary. While this seems low when you compare it to the 30 percent rule that we’ve discussed for mortgages, it’s important to remember that the 30 percent rule does factor in HOA, insurance and taxes.