Paying for a mortgage is still more affordable than renting in the United States but saving enough money for a down payment has become increasingly difficult for first time buyers. According to the latest analysis report from real estate firm Zillow this is particularly the case in markets where home values are rising rapidly. With the majority of renters in the largest metros putting about 30% of their monthly income toward a rental payment, saving money for a 20% or 10% down payment is extremely difficult. The report suggests that first time buyers 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% of home purchases were bought using a loan or gift from friends or family for the down payment. Rental affordability has worsened in 28 of the 35 largest metros over the past year, and mortgage affordability worsened in just 18 of them, according to the report covering the third quarter of 2015. Residents of the Denver metro can expect to spend about 21% of their income on a mortgage, compared to 34% on rent. In the US as a whole home owners can expect to spend 15% of their income on a mortgage and 30% on rent. But getting that mortgage payment requires a home buyer to have saved $ 62,760 for a 20% down payment, the industry standard, on a median valued Denver home, which is $ 313,800. In the Boston and Miami markets, the median monthly mortgage payment requires just 22% and 20% of monthly income, respectively. Renting is substantially more expensive, influencing many renters to start thinking about purchasing a home. Some 35% of the median income pays the median rent in Boston and 44% in Miami. However, to purchase a home in Boston a 20% down payment is $ 76,220 while in Miami, buyers need to have saved $ 44,680. The report also shows that breaking into the housing market is less of a challenge in more affordable markets, like Cleveland. A 20 % down payment on a median home there is $ 25,000, or $ 12,500 for a 10% deposit. Residents of Cleveland can expect to spend 11% of their monthly income on a mortgage while for renters it is 27% of their monthly income. ‘In general, paying a mortgage is more affordable than renting, and has been for some time. Unfortunately, many current renters aren't able to realize the savings that come with homeownership because as home values and rents keep rising, it's getting increasingly difficult to clear the down payment hurdle,’ said Zillow chief economist Svenja Gudell. ‘It's not uncommon for a 20% down payment on even a modest home to represent savings of $ 50,000 or more in some areas. And that number itself is a moving target, rising as home values escalate and harder to achieve as more money goes to landlords and less goes to savings,’… Continue reading
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