The biggest purchase you’re likely to make in your lifetime is a home, and in much of the United States it’s an expensive proposition. First you need to save up for a down payment to get a mortgage loan. The ideal down payment is 20% of the sale price, which means you might need to save more than your annual salary just to take the first step.
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The median U.S. home sale was $361,282 as of Aug. 31, according to Zillow. At that price, a 20% down payment is about $72,250. After deducting the down payment, Zillow calculated that the average mortgage payment on a 30-year loan is $1,715 a month, based on a mortgage rate of 5.9%, plus property tax and homeowners insurance.
You’ll pay much more than that in many places. In Los Angeles, for example, Zillow puts the typical home value at $941,784. This means you would need to put about $188,000 down and then face a monthly mortgage payment of $4,469 based on the above formula.
But you can also find markets where the average home price is considerably cheaper, and the money needed for a down payment is less than what you’d pay for the typical used car — which costs $25,571, according to CarEdge.
To find the cheapest home prices, GOBankingRates looked at the 50 largest U.S. housing markets with typical 2024 home values below $300,000, as sourced from July 2024 Zillow data. GBR deemed this “affordable” based on the national average. Researchers then calculated the savings needed for various down payments.
Here’s a look at the four cities where you need less than $25,000 for a 20% down payment. In the lowest-priced one, you can actually buy a home for less than $100,000.
Birmingham, Alabama
- 2024 average typical home value: $124,586
- Savings needed for 20% down payment: $24,918
- Annual mortgage with 20% down payment: $7,537
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Toledo, Ohio
- 2024 average typical home value: $119,690
- Savings needed for 20% down payment: $23,938
- Annual mortgage with 20% down payment: $7,240
Cleveland, Ohio
- 2024 average typical home value: $107,935
- Savings needed for 20% down payment: $21,587
- Annual mortgage with 20% down payment: $6,529
Detroit, Michigan
- 2024 average typical home value: $70,997
- Savings needed for 20% down payment: $14,200
- Annual mortgage with 20% down payment: $4,295
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This article originally appeared on GOBankingRates.com: You Need Less Than $25K Saved To Afford a Home in These 4 Housing Markets
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