Life and Money

20 Cities Where It’s Cheaper To Buy a Home Than Rent

If you can get past the down payment, it's smarter to buy.

Cameron Huddleston
Life and Money Columnist

Apr 26, 2022 Real Estate Investing 101

Buying a home is often touted as a smarter financial move than renting. In the past, Americans seemed to bear this sentiment, as homeownership rates climbed year after year to reach a high of 69.2% in 2004, according to Census Bureau data. But the tide turned as the housing market started to collapse in 2007 and the U.S. economy fell into a recession. Over time, more and more people turned to renting. By 2016, the homeownership rate had fallen to 62.9%, and the percentage of renting households hit a 50-year high.

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Things changed again, though, in 2017. The homeownership rate in the U.S. has been inching back up over the years and reached 65.5% in 2021, according to the Census Bureau. So, if you’re renting, should you join the renewed trend toward homeownership?

To help Americans determine whether they should continue renting or take the plunge into homeownership, GOBankingRates analyzed 80 Metro areas in the U.S. with the biggest housing markets, according to Zillow’s Housing Data, to see where you can save money in the long term by opting to buy rather than rent. The study estimated the typical monthly mortgage payment in each city by using the median list price, a 20% down payment and the current interest rate on a 30-year fixed-rate mortgage. The monthly mortgage payment was then compared to the median rent for a single-family residence, resulting in the expected savings from buying versus renting.

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Note that GOBankingRates’ study doesn’t factor in the initial cost of a down payment on a home, which can take many years to save up for. The study only considers the monthly mortgage payment and rent. So, if you can get past the hurdle of a down payment, buying a home in these cities makes financial sense.

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20. Little Rock, Arkansas

Rent, January 2022: $1,035
Home value, January 2022: $186,294
20% down payment: $37,259
Monthly mortgage payment after 20% down: $843
Difference between rent and mortgage payment: $192
Annual savings when you buy instead of rent: $2,304

19. Indianapolis, Indiana

Rent, January 2022: $1,383
Home value, January 2022: $253,300
20% down payment: $50,660
Monthly mortgage payment after 20% down: $1,188
Difference between rent and mortgage payment: $195
Annual savings when you buy instead of rent: $2,340

18. Atlanta, Georgia

Rent, January 2022: $1,861
Home value, January 2022: $350,758
20% down payment: $70,152
Monthly mortgage payment after 20% down: $1,663
Difference between rent and mortgage payment: $198
Annual savings when you buy instead of rent: $2,376

17. Dayton, Ohio

Rent, January 2022: $1,157
Home value, January 2022: $181,062
20% down payment: $36,212
Monthly mortgage payment after 20% down: $956
Difference between rent and mortgage payment: $201
Annual savings when you buy instead of rent: $2,412

16. Allentown, Pennsylvania

Rent, January 2022: $1,687
Home value, January 2022: $283,534
20% down payment: $56,707
Monthly mortgage payment after 20% down: $1,476
Difference between rent and mortgage payment: $211
Annual savings when you buy instead of rent: $2,532

15. Knoxville, Tennessee

Rent, January 2022: $1,497
Home value, January 2022: $282,038
20% down payment: $56,408
Monthly mortgage payment after 20% down: $1,281
Difference between rent and mortgage payment: $216
Annual savings when you buy instead of rent: $2,592

14. Pittsburgh, Pennsylvania

Rent, January 2022: $1,299
Home value, January 2022: $205,112
20% down payment: $41,022
Monthly mortgage payment after 20% down: $1,068
Difference between rent and mortgage payment: $231
Annual savings when you buy instead of rent: $2,772

13. Baton Rouge, Louisiana

Rent, January 2022: $1,253
Home value, January 2022: $226,177
20% down payment: $45,235
Monthly mortgage payment after 20% down: $1,004
Difference between rent and mortgage payment: $249
Annual savings when you buy instead of rent: $2,988

12. New Orleans, Louisiana

Rent, January 2022: $1,460
Home value, January 2022: $259,825
20% down payment: $51,965
Monthly mortgage payment after 20% down: $1,154
Difference between rent and mortgage payment: $306
Annual savings when you buy instead of rent: $3,672

11. Birmingham, Alabama

Rent, January 2022: $1,281
Home value, January 2022: $225,114
20% down payment: $45,023
Monthly mortgage payment after 20% down: $973
Difference between rent and mortgage payment: $308
Annual savings when you buy instead of rent: $3,696

10. Oklahoma City

Rent, January 2022: $1,265
Home value, January 2022: $202,471
20% down payment: $40,494
Monthly mortgage payment after 20% down: $953
Difference between rent and mortgage payment: $312
Annual savings when you buy instead of rent: $3,744

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9. El Paso, Texas

Rent, January 2022: $1,285
Home value, January 2022: $179,893
20% down payment: $35,979
Monthly mortgage payment after 20% down: $962
Difference between rent and mortgage payment: $323
Annual savings when you buy instead of rent: $3,876

8. Tampa

Rent, January 2022: $1,977
Home value, January 2022: $347,793
20% down payment: $69,559
Monthly mortgage payment after 20% down: $1,646
Difference between rent and mortgage payment: $331
Annual savings when you buy instead of rent: $3,972

7. Tulsa, Oklahoma

Rent, January 2022: $1,272
Home value, January 2022: $195,585
20% down payment: $39,117
Monthly mortgage payment after 20% down: $921
Difference between rent and mortgage payment: $351
Annual savings when you buy instead of rent: $4,212

6. Syracuse, New York

Rent, January 2022: $1,298
Home value, January 2022: $182,345
20% down payment: $36,469
Monthly mortgage payment after 20% down: $930
Difference between rent and mortgage payment: $368
Annual savings when you buy instead of rent: $4,416

5. North Port/Sarasota/Bradenton

Rent, January 2022: $2,433
Home value, January 2022: $434,234
20% down payment: $86,847
Monthly mortgage payment after 20% down: $2,055
Difference between rent and mortgage payment: $378
Annual savings when you buy instead of rent: $4,536

4. Greensboro, North Carolina

Rent, January 2022: $1,389
Home value, January 2022: $211,892
20% down payment: $42,378
Monthly mortgage payment after 20% down: $989
Difference between rent and mortgage payment: $400
Annual savings when you buy instead of rent: $4,800

3. Columbia, South Carolina

Rent, January 2022: $1,387
Home value, January 2022: $214,768
20% down payment: $42,954
Monthly mortgage payment after 20% down: $957
Difference between rent and mortgage payment: $430
Annual savings when you buy instead of rent: $5,160

2. Memphis, Tennessee

Rent, January 2022: $1,473
Home value, January 2022: $212,217
20% down payment: $42,443
Monthly mortgage payment after 20% down: $964
Difference between rent and mortgage payment: $509
Annual savings when you buy instead of rent: $6,108

1. Miami, Florida

Rent, January 2022: $2,817
Home value, January 2022: $467,826
20% down payment: $93,565
Monthly mortgage payment after 20% down: $2,214
Difference between rent and mortgage payment: $603
Annual savings when you buy instead of rent: $7,236

More From GOBankingRates

_{Methodology: GOBankingRates looked at the 80 Metro areas with the biggest housing markets in the US according to Zillow’s Housing Data to determine in which cities you can save long-term by opting to buy rather than rent. GOBankingRates first compiled (1) the median hme value for single family residence homes in each metro, sourced from Zillow. This allowed (2) a median monthly mortgage payment estimate to be calculated through Zillow’s Mortgage Calculator, using a 20% down payment, the Federal Reserve Economic Data website’s current 30-year fixed rate mortgage interest rate, and state annual property tax rates sourced from the Tax Foundation. This was then compared to (3) the median monthly rental price for single family residences in each city according to Zillow to find (4) the difference between a median mortgage payment and median rent in each city. Cities were then ranked according to how much the median rent exceeds the median mortgage, with #1 being the city where the most money can be saved by buying over renting.}_{All data was compiled on and up-to-date as of March 29, 2022.}

About the Author

Cameron Huddleston

Cameron Huddleston is an award-winning journalist with more than 18 years of experience writing about personal finance. Her work has appeared in Kiplinger’s Personal Finance, Business Insider, Chicago Tribune, Fortune, MSN, USA Today and many more print and online publications. She also is the author of Mom and Dad, We Need to Talk: How to Have Essential Conversations With Your Parents About Their Finances. U.S. News & World Report named her one of the top personal finance experts to follow on Twitter, and AOL Daily Finance named her one of the top 20 personal finance influencers to follow on Twitter. She has appeared on CNBC, CNN, MSNBC and “Fox & Friends” and has been a guest on ABC News Radio, Wall Street Journal Radio, NPR, WTOP in Washington, D.C., KGO in San Francisco and other personal finance radio shows nationwide. She also has been interviewed and quoted as an expert in The New York Times, Chicago Tribune, Forbes, MarketWatch and more. She has an MA in economic journalism from American University and BA in journalism and Russian studies from Washington & Lee University.