Owning a home in San Francisco costs nearly $500,000 for just the first year. But in many other U.S. cities, the first year of homeownership is more affordable.
Recent data from SmartAsset shows the average cost of the first year of owning a home in several major cities. The study anaylized data for the 20 largest cities in the U.S., specifically considering two categories: upfront costs and annual recurring costs.
For upfront costs, SmartAsset assumed a 20% down payment on a median-priced home, using data from Zillow, as well as average closing costs, excluding escrow and any pre-paid expenses. Annual recurring costs include mortgage payments, average property tax and homeowners' insurance. The data also assumes a 30-year fixed-rate mortgage with a 6% interest rate.
Keep in mind that living in any of these areas will be more expensive than smaller places, due to competition and high home values. But within the list of major cities, here are the 10 places where the first year of homeownership is the least expensive.
1. Indianapolis
Down payment: $44,102
Annual mortgage cost: $12,692
First year total cost: $63,244
2. Columbus, Ohio
Down payment: $47,261
Annual mortgage cost: $13,601
First year total cost: $70,192
3. Philadelphia
Down payment: $46,612
Annual mortgage cost: $13,414
First year total cost: $71,590
4. Houston
Down payment: $52,307
Annual mortgage cost: $15,053
First year total cost: $79,107
5. Jacksonville
Down payment: $58,876
Annual mortgage cost: $16,943
First year total cost: $85,631
6. San Antonio
Down payment: $58,059
Annual mortgage cost: $16,708
First year total cost: $87,388
7. Fort Worth, Texas
Down payment: $63,465
Annual mortgage cost: $18,264
First year total cost: $94,949
8. Dallas
Down payment: $64,101
Annual mortgage cost: $18,447
First year total cost: $95,528
9. Chicago
Down payment: $63,098
Annual mortgage cost: $18,159
First year total cost: $96,611
10. Charlotte, North Carolina
Down payment: $76,771
Annual mortgage cost: $22,093
First year total cost: $107,524
While Indianapolis is the least expensive city on the list, first-year expenses still grew from $50,014 in 2021 to $63,244 in 2022 — a 26% increase. The current median home price in Indianapolis is $220,511.
Despite these being the 10 cities where the first year of homeownership costs the least, mortgage costs are still higher than they have been in the past.
For many homeowners, "housing expenses are just becoming a larger part of your income," says Douglas Boneparth, certified financial planner and president and founder of Bone Fide Wealth.
If you're thinking about buying a home, be sure to understand your own income first to see how housing expenses would impact your budget.
"You should know exactly what you're making. You should have a good idea of what you're spending," says Boneparth. "You should know what you can consistently afford to save and invest."
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