U.S. Cities With the Cheapest First Year of Homeownership

Editor's Note: This story originally appeared on Point2.

For most Americans, the homebuying journey is daunting in and of itself — without even thinking about the expenses that follow once they check that milestone off their list.

And, with the national down payment averaging $85,100, homeownership-related costs risk breaking the bank even before considering recurring mortgage payments, homeowners’ insurance, and property taxes.

Point2 wanted to see where new buyers would have a financially smoother first year of homeownership. We looked at the 100 largest U.S. markets to determine the costs associated with the first year of homeownership. See the details of our methodology at the end.

Here are the cities with the cheapest first year of homeownership.

1. Detroit, MI

• Total Cost of 1st Year: $25,110
• 20% Down Payment: $15,000
• Closing Costs: $2,583
• Annual Mortgage: $4,684
• Annual Homeowners’ Insurance: $1,223
• Annual Property Taxes: $1,620

2. Toledo, OH

• Total Cost of 1st Year: $38,008
• 20% Down Payment: $24,000
• Closing Costs: $2,862
• Annual Mortgage: $7,495
• Annual Homeowners’ Insurance: $1,215
• Annual Property Taxes: $2,436

3. Cleveland, OH

• Total Cost of 1st Year: $38,569
• 20% Down Payment: $23,990
• Closing Costs: $2,862
• Annual Mortgage: $7,492
• Annual Homeowners’ Insurance: $1,215
• Annual Property Taxes: $3,011

4. Fort Wayne, IN

• Total Cost of 1st Year: $59,779
• 20% Down Payment: $40,590
• Closing Costs: $2,964
• Annual Mortgage: $12,676
• Annual Homeowners’ Insurance: $1,500
• Annual Property Taxes: $2,050

5. St. Louis, MO

• Total Cost of 1st Year: $61,635
• 20% Down Payment: $41,660
• Closing Costs: $2,890
• Annual Mortgage: $13,010
• Annual Homeowners’ Insurance: $1,492
• Annual Property Taxes: $2,583

6. Milwaukee, WI

• Total Cost of 1st Year: $63,001
• 20% Down Payment: $40,950
• Closing Costs: $3,237
• Annual Mortgage: $12,788
• Annual Homeowners’ Insurance: $846
• Annual Property Taxes: $5,180

7. Memphis, TN

• Total Cost of 1st Year: $63,198
• 20% Down Payment: $41,440
• Closing Costs: $3,890
• Annual Mortgage: $12,941
• Annual Homeowners’ Insurance: $2,088
• Annual Property Taxes: $2,839

8. Wichita, KS

• Total Cost of 1st Year: $71,050
• 20% Down Payment: $47,000
• Closing Costs: $3,724
• Annual Mortgage: $14,677
• Annual Homeowners’ Insurance: $2,265
• Annual Property Taxes: $3,384

9. Tulsa, OK

• Total Cost of 1st Year: $71,386
• 20% Down Payment: $48,000
• Closing Costs: $3,238
• Annual Mortgage: $14,990
• Annual Homeowners’ Insurance: $2,278
• Annual Property Taxes: $2,880

10. Buffalo, NY

• Total Cost of 1st Year: $71,489
• 20% Down Payment: $44,500
• Closing Costs: $5,823
• Annual Mortgage: $13,897
• Annual Homeowners’ Insurance: $1,418
• Annual Property Taxes: $5,852

11. Louisville, KY

• Total Cost of 1st Year: $73,014
• 20% Down Payment: $50,000
• Closing Costs: $3,204
• Annual Mortgage: $15,614
• Annual Homeowners’ Insurance: $1,571
• Annual Property Taxes: $2,625

12. Indianapolis, IN

• Total Cost of 1st Year: $73,148
• 20% Down Payment: $49,980
• Closing Costs: $3,086
• Annual Mortgage: $15,608
• Annual Homeowners’ Insurance: $1,500
• Annual Property Taxes: $2,974

13. Lubbock, TX

• Total Cost of 1st Year: $74,390
• 20% Down Payment: $48,000
• Closing Costs: $3,992
• Annual Mortgage: $14,990
• Annual Homeowners’ Insurance: $2,536
• Annual Property Taxes: $4,872

14. Baltimore, MD

• Total Cost of 1st Year: $74,702
• 20% Down Payment: $47,000
• Closing Costs: $7,557
• Annual Mortgage: $14,677
• Annual Homeowners’ Insurance: $1,426
• Annual Property Taxes: $4,042

15. Oklahoma City, OK

• Total Cost of 1st Year: $78,745
• 20% Down Payment: $53,299
• Closing Costs: $3,326
• Annual Mortgage: $16,644
• Annual Homeowners’ Insurance: $2,278
• Annual Property Taxes: $3,198

Methodology

Point2, a division of Yardi Systems Inc., covers real estate trends and news. Point2 studies are based on internal data, public records, governmental sources, online research and other reliable third-party agencies.

• For this study, we considered the 100 largest cities in the United States.
• The median home prices were sourced from Redfin, PropertyShark, and realtor.com as of June 2023.
• The study assumes a set 20% down payment, as well as closing costs from SmartAsset’s property taxes calculator (which include origination charges, title insurance, inspection fees, and other service fees). It excludes escrow and pre-paid expenses such as homeowners’ insurance.
• The closing costs at national level are sourced from ClosingCorp.
• We assumed a 30-year fixed-rate mortgage with an average interest rate of 6.78% as reported by FRED on June 1.
• Homeowners insurance data is from Value Penguin as of June 2023, measured at state level.
• The tax rate is at county level, sourced from SmartAsset. Property tax rate at national level is based on an average of the 50 U.S. states and D.C., sourced from PropertyShark.
• For the purpose of this study, we assumed a renter household saves 20% of the median household income sourced from the 2021 ACS 1-year estimates, adjusted for 2023 using the Employment Cost Index Wage and Salaries increase from December 2021-March 2023 (15 months).
• The number of years needed to save to cover the cost of upfront costs as well as the full first year of homeownership was calculated based on the 50/30/20 budgeting rule stating that 20% of income should go to savings.
• Excluded from the study were utilities and municipal services, which one must pay regardless of owning or renting, hence not influencing homeownership costs as much as other strictly owner-related expenses.