How much does it cost to own a home in the U.S.? To find out, The Balance collected data on home prices, mortgage interest rates, property taxes, insurance, maintenance, and more for 21 of the largest U.S metro areas.
To determine how affordable homeownership is, The Balance collected regional income data for those same 21 metro areas to find out how much of homeowners' income is spent on housing costs (The Balance’s Home Affordability Index).
Learn how much it really costs to own a home in the U.S.’s largest cities, and all of the factors that impact total monthly cost.
- The average monthly cost of homeownership in the U.S. is $1,634.
- The national homeownership expense ratio is 30.2%.
- The three most affordable cities for monthly homeownership in The Balance’s index are St. Louis, Detroit, and Baltimore.
- The three least affordable cities for monthly homeownership in The Balance’s index are San Francisco, Los Angeles, and San Diego.
Monthly Cost of Homeownership
The average monthly cost of homeownership in the U.S. is $1,634.
After making it past the first month of homeownership’s significant expenses, homeowners need to plan for ongoing ownership-related monthly costs. In general, you will pay down the home loan while also paying interest, property taxes, insurance, and maintenance and improvement of the home.
We also calculated the average upfront cost of buying a home in the U.S.: $43,874. To learn more about the cost of buying a home, how we calculated it, and more, see The Average Cost of Buying a Home.
Principal and Interest
The principal and interest portions of a homeowner’s monthly payment are intertwined due to an amortization process. With a fixed-rate interest loan, you’ll pay the same amount every month for the number of years it takes to pay off your loan. At first, you pay more in interest than principal due to a high loan balance.
However, as you pay down your principal, the interest cost decreases, with more of your monthly payment going to the principal. In the second year, you’ll pay a little less in interest than the first year, and by year 29 of a 30-year mortgage, most of your payment will go to the principal, but the total amount of your payment won’t change.
If you have an adjustable-rate mortgage, the amount you pay in interest can (and likely will) change. Often, these mortgages begin with a low introductory rate for a specific period of time, then adjust based on market rates. Make sure the PITI payment is still within your budget if the interest rate reaches the loan’s maximum permitted interest rate.
Property taxes are based on your home’s assessed value (which might not be how much you paid for the house) and your county and/or city tax rate. The national homeowner median for real estate taxes is 1.1%, but as you can see from the above chart, the total amount can vary quite a bit. For example, Phoenix and Miami homeowners pay roughly the same amount per month overall, but Miami homeowners pay far more in monthly taxes. Some of the difference may be due to an Arizona law limiting how much a home’s assessed value may increase year to year.
Homeowners insurance helps cover property and land loss or damage from common causes such as fire or burglary. However, it typically won’t cover loss or damage from a flood or an earthquake—additional coverages that usually cost more to add. The national median for homeowners insurance is $750 per year ($63 per month), but costs can vary, as you can see from the chart above.
These insurance costs often depend on your home, location, discounts, and the types of coverage you’ve opted to purchase. Your insurance costs are usually paid into an escrow account as part of your monthly payment, although it may be possible to pay insurance on your own.
Maintenance and Improvement
You should spend around 1% of a home’s price on maintenance or repairs to prevent it from declining in value. Improvement costs are optional and individual. For example, maintenance may include fixing a leaking sink, while improvement might focus on a bathroom renovation. Maintenance and improvement aren’t part of your monthly mortgage payment but should be budgeted for and included in your savings goals.
Some homeowners can get help with home repairs and improvements (including weatherization) through federal or local grants and loans.
If you choose to purchase or renew your home warranty, you’ll likely pay out of pocket. If you own a home in a particular neighborhood or own a condominium or co-op home, you will need to pay condo, co-op, or homeowners association fees. Usually, these fees are not included in your monthly mortgage payment but are paid separately.
After you’ve paid down your mortgage balance or your house value increases and you own 20% in equity, you can request a cancellation of PMI, which you may be paying monthly.
The Balance Home Affordability Index
While generally understanding an area’s living costs is useful, true affordability is an essential piece of the overall puzzle. One way to measure this is with the homeownership expense ratio, which looks at how much of a homeowner’s income goes to housing costs. A housing expense ratio of less than 30% is considered affordable; a ratio greater than 30% is considered unaffordable.
The national homeownership expense ratio is 30.2%. This means 30.2% of the average American homeowner’s income is spent on housing costs.
The color scale in the map below indicates where each city sits on the affordability index, with dark-red Los Angeles being significantly less affordable than dark-green St. Louis, the most affordable place we examined.
Our index relies on regional data for both the cost of housing and income. So while few would consider Washington, D.C., real estate to be “affordable,” the relatively high regional income in our data suggests it is within reach of many living there (at least for the well-heeled). Conversely, Los Angeles’ relatively lower income in our data highlights the housing affordability crisis in that region.
When housing costs exceed 30% of income, households may respond by moving into more distant yet affordable areas, sharing housing with other households, or cutting spending on food, transportation, education, or health care.
In the 1940s, housing was considered affordable by government housing programs if it cost no more than 20% of income. However, now housing is defined as affordable when it costs less than 30% of household income, which allows the household to spend 70% on other costs and financial goals.
As you can see from the tables above, affordability varies based on the metro area. In many cases, the proportion of income dedicated to monthly housing costs is under 30%, but far more than 30% is going to housing in some cities, such as San Francisco and Los Angeles. This situation can occur in one of two situations: when wages don’t keep up with steady housing prices, or when housing prices vault ahead of income due to sudden changes in the market.
Still, despite the high costs, homeowners have significantly different experiences regarding housing compared to renters, even in high-cost cities such as Miami and San Francisco, according to an analysis from the Federal Reserve. The housing-cost burden, which is defined as housing costs greater than 30% of gross income, is substantially higher among renters than among homeowners, and has sharpened since the most recent housing crisis, which peaked in 2009. Analysts cite relatively low mortgage-interest rates as one factor driving the divergence.
The cost of homeownership increased from an average of $1,480 in October 2021 (when we last compiled this data) to $1,634 in May—an increase of 10.4%. The expenses of home insurance, maintenance and improvement didn’t change much, but costs associated with principal and interest, real estate taxes, and mortgage insurance increased. Most of the difference is due to rising principal and interest payments—up 13% from fall 2021 to spring 2022.
The regional average monthly cost of owning a home also increased in 2022, across all metro areas surveyed, from Detroit to San Francisco.
Data for this project was derived from a number of different sources.
- Home prices were sourced from Zillow’s weekly median list price by MSA & US, smooth and seasonally adjusted for all homes data.
- Mortgage interest rates for each state were sourced from the CFPB and nationally were sourced from Freddie Mac via FRED.
- Median real estate taxes and median household income for each MSA were sourced from the U.S. Census Bureau’s American Communities Survey five-year 2020 estimates.
- Home maintenance and improvement costs were sourced from the U.S. Census Bureau’s American Housing Survey from 2019.
- Insurance premiums for each state were sourced from the National Association of Insurance Commissioners' Dwelling, Fire, Homeowners Owner-Occupied, and Homeowners Tenant and Condominium/Cooperative Unit Owner’s Insurance Report: Data for 2019.
- Private mortgage insurance rate was sourced from the Urban Institute’s Housing Finance at a Glance monthly chartbook from August 2021.
- All figures have been normalized for inflation. Inflation adjustment data was sourced from the U.S. Bureau of Labor Statistics’ Consumer Price Index.
Due to the inclusion of estimates and statewide averages, pricing points for individual components and aggregate costs for each MSA should not be interpreted as exact figures, but rather used to compare pricing between regions and to national figures.
Want to read more content like this? Sign up for The Balance’s newsletter for daily insights, analysis, and financial tips, all delivered straight to your inbox every morning!