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How long it takes you to save for a 20% down payment on a home depends in part on where you live.
In an expensive area like New York City, it could take the typical buyer about 10.85 years to save $173,000, which is 20% of the average listing price of $865,000 for a home, according to a report from RealtyHop, one Real estate investment agency.
RealtyHop measured the “barrier to homeownership” for the 100 largest U.S. cities by population. The analysis is based on the average listing price using more than 1.5 million residential listings and median household income data from the U.S. Census Bureau. This assumes that a household saves 20% of its gross annual income and intends to make a down payment of 20%.
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In each of the five cities with the lowest barrier to homeownership, the timeline for savings is less than four years.
According to the report, Detroit has the lowest barrier to homeownership.
In Detroit, prospective homebuyers earning about $39,575 – the area's median household income – need just 2.53 years to come up with a 20% down payment on a home purchase, the report said. For a house price of $100,000, that's $20,000.
Cleveland, Ohio, is in second place: It takes a potential buyer in the area 3.55 years to save $27,800, or 20%, on a home that costs $139,000, the average listing price in the area.
Rounding out the top five are Baltimore; Buffalo, New York; and Pittsburgh.
Even in low-cost cities there can be obstacles to savings
Large expenses can impact your down payment saving timeline, even in a city where homes are more affordable.
A separate report from Zoocasa, a Canada-based real estate website and brokerage firm, found that home buyers with children, on average, take longer to make a 20% down payment compared to buyers without children due to expenses such as child care costs.
Potential home buyers with children in Detroit, for example, need about 20.3 years to save for a 20 percent down payment, according to Zoocasa. Meanwhile, homebuyers without children in the area will need about 4.2 years to come up with a 20% down payment if they start with no prior savings, according to the report.
Rising home prices could pose another challenge, said Jacob Channel, an economist at LendingTree.
“The more expensive the property is where you want to live, the more you'll probably want to save for a down payment,” Channel said.
The average listing price for homes in Los Angeles, for example, is about $1.13 million, RealtyHop found. LA tops the list of five cities with the greatest barriers to homeownership, followed by Irvine, California; Miami; New York City; and Anaheim, California.
Even the cheapest home price on the “high barrier” list – No. 3, Miami – is $699,000, nearly three times more expensive than the most expensive city on the “low barrier” list, Pittsburgh.
If a typical L.A. household were aiming for a 20% down payment, they would need to save $1,339 a month for about 14.10 years, the report says.
Why you may not need to pay a 20% deposit
In many cases, a 20% down payment is not required to purchase a home.
In the third quarter of 2024, the average down payment was 14.5% and the median amount was $30,300, according to Realtor.com. That's down from 14.9% and $32,700 in the second quarter of 2024, the site noted.
Some mortgages require significantly smaller down payments. For example, the Department of Veterans Affairs offers VA loan programs; Those who qualify can only deposit 0%. U.S. Department of Agriculture mortgages, called USDA loans, aim to help buyers purchase homes in rural areas and also offer a 0% down payment.
Federal Housing Administration loans (FHA loans) may require a down payment as low as 3.5% for qualified borrowers, which include first-time homebuyers, low- and moderate-income buyers, and minority buyers.
The benefit of a lower down payment, experts say, is that you can become a homeowner faster and with less savings.
However, if you choose to purchase a home with less cash up front, you'll likely end up making higher monthly mortgage payments.
“If you put less money into a down payment, you’ll end up with a larger loan,” Channel said.
Additionally, private mortgage insurance is typically added to the monthly cost if the buyer puts less than 20% down on the home, he said.
According to The Mortgage Reports, PMI can cost between 0.5% and 1.5% of the loan amount per year, depending on factors like your credit score and your total down payment. For example, on a $300,000 loan, mortgage insurance premiums could cost between $1,500 and $4,500 per year or between $125 and $375 per month, the website says.
“This is a different type of payment that may be bundled with your mortgage and further increase your housing costs,” Channel said.
How to create your own savings schedule
According to Melissa Cohn, regional vice president at William Raveis Mortgage, where you want to live long-term and your financial circumstances can help you determine your own down payment savings timeline.
First, you need to have a good household budget — understand how much money you make, how much you typically spend and what you can save in a given month, Cohn said.
“Can you reduce your expenses? Can you increase your savings? … Can you save on your premiums every year?” she said.
You will then find out what a house in your desired location usually costs. “It would be important for a buyer to get an idea of what price is suitable for him,” said Cohn.
You'll also need to save for closing costs, which can vary significantly from place to place, Cohn said.
According to NerdWallet, average closing costs can range from about 2% to 6% of the loan amount. For example, a $300,000 mortgage could incur closing costs of $6,000 to $18,000 in addition to the down payment, it said.
To find out what closing costs typically are in your desired area, ask a mortgage broker or a real estate agent, she said.
Overall, you want to set realistic goals and give yourself the time you need to get there.
“Go as slow or as fast as you need to,” the LendingTree channel said. “Make sure you make good decisions.”