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 RealtyHop looked at the years required to save up for a down payment in the top 100 most populated cities in the U.S.
Key Findings
- Los Angeles is the city with the worst barrier to homeownership. It takes 14.10 years for an average family in L.A. to save enough funds and qualify for a conventional loan.
- On the other hand, it takes only 2.53 years for a family in Detroit to afford the 20% down payment on a home.
- California outranks all other states, with six cities in the top 10, including Los Angeles, Irvine, Anaheim, Long Beach, San Jose, and San Diego.
- The barrier to homeownership is generally higher along the West and East coasts. In Chicago, the third most populous city in the U.S., it takes 4.66 years for a household to qualify for a mortgage, with 20% down. This number is 6.19 years lower than the largest city, New York, and 9.44 years lower than Los Angeles.
The 5 Cities with the Biggest Barrier to Homeownership
1. Los Angeles, CA
With a median list price of $1,133,000, Los Angeles ranks as the city with the most significant barrier to homeownership. If an average L.A. family sets aside 20% of their annual income – $16,073 or $1,339 a month – for the down payment on a home, it will take a whopping 14.10 years of savings to meet the loan requirement. While the barrier to homeownership decreased by 1.64 years since the start of 2024, the high cost of property still makes this market unapproachable for new buyers.
2. Irvine, CA
Another California city made the top five this year, moving up from fourth place to second. While households in Irvine have a high median household income of $129,647, it still takes over 13 years for a typical family to accumulate enough cash to cover a 20% down payment of $344,000.
3. Miami, FL
Miami continues to grow less affordable for prospective buyers. The median list price rose to $699,000 in the past year, meaning local Miami families with a median income must save for 11.77 years to accumulate a down payment.
4. New York, NY
Despite increasing housing costs, the barrier to homeownership slightly improved in New York City this year due to a growing household income. Households now earn a median income of $79,713 and will spend 10.85 years saving for a down payment of $173,000.
5. Anaheim, CA
Anaheim moved up three spots this year to become the city with the fifth largest barrier to homeownership. Households in this city will need to save $18,117 for 9.93 years if they plan to afford a home with a median list price of $899,900.
The 5 Cities with the Lowest Barrier to Homeownership
1. Detroit, MI
Detroit remains the city with the lowest barrier to homeownership in 2025. However, the barrier did increase this year. While the median household income grew to $39,575, prospective buyers will now need to save for 2.53 years to afford a home with a median list price of $100,000.
2. Cleveland, OH
Due to relatively low asking prices, homeownership in Cleveland is still attainable for most. An average family can spend 3.55 years saving $7,837 yearly, or $653 monthly, to afford a home. The median list price slightly increased to $139,000 this year, so families now need to save $27,800 for a down payment.
3. Baltimore, MD
Baltimore moved in the rankings and now boasts the third lowest barrier to homeownership. Households with a median income of $59,623 will need to save $45,000 for 3.77 years for a down payment in the city.
4. Buffalo, NY
Buffalo has become more affordable for prospective buyers since last year. The median list price for a home decreased to $182,200, and the household income increased to $48,050. Buyers now only need to spend 3.79 years saving for their 20% down payment.
5. Pittsburgh, PA
The barrier to homeownership decreased in Pittsburgh this year due to a rising household median. An average family making $64,137 can now spend 3.82 years saving $1,068 monthly to afford a down payment for a home in their area.
A Closer Look at Homeownership Barriers in California
California remains the most expensive state in America. RealtyHop’s 2024 Most Expensive U.S. Zip Codes study shows that the most expensive zip codes in the country reside in California. Higher demand continues to push up housing costs, making property unaffordable in areas like Irvine. While the barrier to homeownership has decreased in Los Angeles since last year, high housing costs still make it the city with the highest barrier nationwide. Add these housing costs to the increasing cost of goods and services and the still high interest rates, and many households across California still must save for almost a decade to purchase a home.
California cities remain expensive across the board. Prospective buyers will need to spend at least 5 years saving for a down payment across all 18 surveyed cities in the state. Even areas like Fremont, which has the highest median household income nationwide, require buyers to save for 7.99 years to afford a $281,689 down payment. Households in Long Beach, San Jose, and San Diego all need to spend at least nine years saving for a down payment in their respective cities.
Full Dataset
Methodology
This report examines the barrier to homeownership across the top 100 U.S. cities by population. We calculated the median list price by city using over 1.5 million residential for-sale listings on RealtyHop 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 by city 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 major cities in the U.S., especially the most populous ones with job opportunities. 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 here 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 states, counties, and cities fund first-time homebuyer programs to help Americans afford the high cost of homeownership. Those looking to purchase property in cities with high barriers to homeownership may consider the following programs:
CalHFA’s MyHome Assistance Program
The MyHome Assistance program provides a deferred payment junior loan of up to 3.5% of the lower appraisal value or purchase price to assist with a down payment and closing costs. This subordinate loan is a deferred payment amount.
There is a cap of $10,000 for all qualified borrowers, and buyers can this program with any other grants or down payment assistance programs.
Los Angeles Housing Department Low Income Purchase Assistance
First-time homebuyers in Los Angeles can receive up to $90,000 to cover the down payment, home purchase, and closing costs. Buyers will not have to pay monthly payments but must repay the loan upon the sale, title transfer, first mortgage repayment, or 30 years after receiving the loan.
Miami-Dade Affordable Homeownership Program
Miami-Dade first-time homebuyers can utilize the program to acquire a mortgage loan subsidy as a second or third mortgage with a low interest rate. The program lowers a buyer’s out-of-pocket costs. Participants can only use the program once and must fulfill a 3% down payment, 1% of which must be from their funds.
Miami-Dade Infill Housing Program
The Infill Housing Program caters to Miami-Dade residents who qualify for the Affordable Homeownership Program and aims to increase the amount of available, affordable housing. Infill Developers are currently working to build homes for the program, which applicants must select from when purchasing a home. Homes through the program cannot exceed a sales price of $205,000 or $215,000 if built on a private lot.
New York City HomeFirst Down Payment Assistance Program
Through HomeFirst, qualified homebuyers can receive up to $100,000 for their down payment and closing costs in New York City. The loan will cover all closing costs and half of the down payment. Recipients must purchase a home within the five boroughs to utilize the program.
