Homeownership is one of the best ways to build wealth. According to the U.S. Census Bureau, Americans who own property have a median net wealth nearly 75 times greater than those who rent. However, owning a home remains expensive, and prospective buyers must hurdle the financial barrier to homeownership.
After several years of climbing home prices and interest rates, some markets are now reaching an equilibrium, making homeownership slightly more affordable. However, households who have already spent years saving for a down payment must also balance the high cost of living. Additionally, mortgage rates have only decreased marginally in the past year, and buyers in coastal areas face larger insurance premiums due to climate change.
More and more households, especially low- and middle-income, still struggle to come up with funds to meet the 20% down requirement, even if their city now has a lower cost of homeownership.
To better understand the financial barriers homebuyers across the country face, we at Numba Realty looked at the years required to save up for a down payment in the Boston.
Key Findings:
| Boston | MA | $94,755 | $859,000 | $171,800 | $18,951 | 9.07 |
Boston rank number 10 of all major cities in USA. Median household income is $94,755; median list price is $859,000; Required down payment is $171,800 (20%); Annual savings $18,951; years required is 9.07.
Methodology
We calculated the median list price by city using over 1.5 million residential for-sale listings on between October 2024 and December 2024. To limit the scope of this study and better reflect the prices U.S. households expect to see when buying, the following property types were included when calculating the median: condos, co-ops, single-family homes, and townhouses. Any listings classified as “land” are excluded from this study.
To calculate the years required to save up for the down payment on a home, we first collected the median household income data in Boston from the most recent ACS data from the U.S. Census Bureau and assumed that a household saves 20% of its annual gross income each year. We then calculated the required years using 20% of the median asking price (down payment) and the amount saved annually.
Tips for Getting a Mortgage
Our research has shown that owning is not easy in Boston. Especially in a high-interest rate environment, buyers looking to enter homeownership soon should plan for financing requirements. Below are a few tips that might help you along the way.
1. Start Saving Now
While 20% is generally the requirement to qualify for a loan, the more you put down, the better, as your outstanding principal balance would be lower. This, in turn, brings down your monthly obligation, and less of your money will go toward interest throughout the lifetime of the loan. Any additional cash you’ve saved could also be used to cover some of the closing costs you, as the buyer, have to bear, including the mortgage origination fee.
2. Know Your Credit Score
While you can still get approved even with a credit score of 580, the higher your credit score is, the more likely that you will be approved for a mortgage and enjoy a lower interest rate. Compare rates and find out if you qualify for a loan.
Keep track of your income, expenses, as well as tax filing documents.
If you are self-employed, you are required to submit your tax returns for the previous two years when applying for a loan, and the mortgage lender will take your average income for that period into account to see if you are qualified for a mortgage. It is, therefore, crucial that you keep track of your income and expenses.
3. Choose a Mortgage Broker
While it might seem straightforward to go with the bank offering you the lowest rate, sometimes lower rates and fees mean poor service and a lack of transparency. Make sure to shop around and fully understand the application process and the mortgage products they offer.
4. Find a First-Time Homebuyer Program
Many counties, and cities fund first-time homebuyer programs to help Americans afford the high cost of homeownership. Those looking to purchase property in cities and towns with high barriers to homeownership may consider downpayment assistance program here.