How Long You’ll Need to Work to Save Up a Down Payment in 15 Major U.S. Cities

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So, you’re ready to become a homeowner. You have a good job and strong credit and are confident you can make those monthly mortgage payments. The only thing holding you back is the minor matter of saving up tens of thousands of dollars for a down payment.

Coming up with that big lump sum can be tough, what with student loan debt, high rents, and that trip you already booked to the Caribbean to escape from the winter doldrums. So how many years will you have to toil away, working for the man (or yourself), in order to afford to put 20% down?

That depends on where you live. In wallet-busting cities like San Francisco, it could take nearly 10 years of work to build up that nest egg, according to a recent study from personal finance website SmartAsset. It might be time to sign up for some overtime or find a second job.

But don’t despair (unless your heart is set on the San Francisco Bay Area). In more affordable big cities like San Antonio, it is only expected to take two and a half years of hard work to piece together a down payment, according to the study.

To figure out how long buyers would need to work to save up for a down payment, SmartAsset looked at median home values and household incomes in the nation’s 15 largest cities. The data came from the U.S. Census Bureau’s 2015 Five-Year American Community Survey. The study presumed buyers would save 20% of their pay annually toward that 20% down payment.

“Even if a household saves 20% of their income, in some of the larger, more expensive cities, the ensuing mortgage payments may still be out of their reach,” says SmartAsset spokeswoman Asees Singh. So “it’s important to think about whether buying makes sense for them.”

It’s no secret that homes are so expensive in San Francisco because there simply aren’t enough on the market. That’s because about two-thirds of abodes in the city are rentals—many of which are rent-controlled, says Patrick Carlisle, chief market analyst at the Paragon Real Estate Group in San Francisco.

The typical buyer in San Francisco has landed a high-paying job in the tech industry, meaning they can afford the sky-high prices, he says. (The median home value in San Francisco was $799,600, according to SmartAsset’s study. The median list price was even higher, at $1.2 million, according to realtor.com®.)

Meanwhile, the average home in San Antonio was worth about $117,000, according to the SmartAsset study, well within the budgets of many buyers. (However, the median listing price on realtor.com was twice as much, at $235,000.)

Lower home prices and costs of living are part of the Texas city’s appeal, says local Keller Williams Realtor® Scott Jauregui. He touted the wide selection available in San Antonio, from the urban lofts downtown to larger plots of land for those who seek more space to the newer subdivisions of single-family homes being constructed on the edges of the city.

“You can get a significantly better value here,” he says. “There’s something for everyone. There’s a variety of employers, there’s a variety of entertainment [with] everything from live music to museums. It’s family-friendly. We have theme parks.”

If coming up with a 20% down payment still seems impossible, you may not even need to in many markets. The median down payment for first-time buyers is just 6%, according to the National Association of Realtors®. It climbs to 14% for repeat buyers. (However those who don’t plunk down 20% typically must pay private mortgage insurance.)

Here’s how many years buyers will need to work for to come up with a 20% down payment in those 15 top metros:

1. San Francisco, CA: 9.84 years
2. Los Angeles, CA: 9.38 years
3. New York, NY: 9.27 years
4. San Jose, CA: 7.2 years
5. San Diego, CA: 7.01 years
6. Chicago, IL: 4.59 years
7. Austin, TX: 4.17 years
8. Philadelphia, PA: 3.8 years
9. Phoenix, AZ: 3.45 years
10. Dallas, TX: 3.09 years
11. Jacksonville, FL: 2.92 years
12. Houston, TX: 2.85 years
13. Columbus, OH: 2.83 years
14. Indianapolis, IN: 2.82 years
15. San Antonio, TX: 2.5 years

The post How Long You’ll Need to Work to Save Up a Down Payment in 15 Major U.S. Cities appeared first on Real Estate News & Advice | realtor.com®.

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