Renting Cheaper Than Paying Mortgage in All 50 Largest Metros
Min 1: Monthly Payments Increased 73% for Rate-Locked Sellers
Mortgage rate lock-in remains the major barrier keeping would-be sellers frozen in place. Current homeowners sitting on mortgages in the 3% range would pay about $1,000 more per month for similar home today—a 73% increase in monthly payment according to market analysis. This dynamic continues limiting inventory as sellers refuse giving up ultra-low rates locked in years ago. Federal Housing Finance Agency estimates 1.7 million home sales didn't occur between 2022 and 2024 because owners chose not surrendering historically low rates. With national median home price near $400,000, barriers to entry continue rising even as rental payments climb. Staying put carries costs—property taxes climbed about $700 annually since 2020 while insurance adds roughly $1,000 per year in several high-risk states, creating pressures that eventually force some moves.
Min 2: Average Homeowner Puts Third of Payment Toward Taxes and Insurance
Home insurance premiums now run 52% higher than 2020 levels, with average homeowner putting about one-third of monthly payment toward taxes and insurance according to Intercontinental Exchange data. Nationwide homeowners pay 52% more for home insurance than in 2020, with New Orleans and several Florida cities paying upwards of 80% more. Increasing frequency and magnitude of natural disasters drives costs—more than 10% of U.S. homes were directly in path of hurricane within last six months while Los Angeles experienced some of largest most destructive wildfires in state history. Rising costs to repair and rebuild in wake of storms compound insurance challenges. Growing number of homeowners now put upwards of 50% of monthly payment toward taxes and insurance in some markets, fundamentally changing affordability calculations.
Min 3: Buyers on Lower Income Ladder See Delinquency Rates Creep Up
Among folks on lower end of income ladder, mortgage delinquency rates started creeping up according to Intercontinental Exchange analysis, especially among those who bought over last couple years. For many others, homeownership eats up bigger chunk of monthly income. A homeowner near Tampa who bought in late 1990s now pays almost $11,000 annually for home insurance plus another nearly $700 for flood—double what insurance cost just in 2020. Even paying lot more, they have less coverage after increasing deductible to keep costs manageable. There are no caps when homes go up for sale—long-term homeowners effectively get really big discount on taxes but people who bought homes more recently wind up paying lot more relative to somebody whose house identical because recent purchase triggers reassessment at current market value.
Min 4: Rent Consumes 29.1% of Household Income
In 2025, rent consumed 29.1% of average household income, down slightly from 2022 peak of 30.3% but still far above pre-pandemic norms according to Reventure analysis. Pressure visible everywhere from suburban apartments to urban single-family rentals as landlords pass along higher maintenance and insurance costs. Median household income climbed to $83,200 in 2025, marking steady rise from $77,700 in 2023 and nearly doubling since 2005. But rising pay hasn't caught up with record housing costs—homebuyers who waited for relief still find higher paychecks can't bridge gap created by expensive debt. Just-under-30% threshold historically marked boundary between affordable and cost-burdened renters, leaving current levels with majority of renters financially stretched and limited ability saving for down payments to transition to homeownership.
Min 5: First-Time Buyers Don't Need 20% Down
The biggest misconception holding back buyers: most think it takes 20% down to buy home. FHA loans require just 3.5% down while many conventional loans now accept 3% down for qualified first-time buyers. On $300,000 home, that's $10,500 down for FHA versus the $60,000 that 20% requires—savings of $49,500 makes homeownership accessible to renters who thought they needed years more saving. Mortgage insurance adds cost for low down payments but builds equity from day one versus renting where zero equity accrues. A buyer who purchases $280,000 home with $10,000 down (3.5% FHA) at 6.5% pays $1,890 monthly including principal, interest, taxes, and insurance—comparable to $1,850 rent for similar property but buyer builds $450 monthly equity through principal paydown plus captures appreciation while renter builds nothing.
The Takeaway
Renting costs less than paying mortgage in all 50 largest U.S. metros in 2025 per Bankrate though affordability improved in 48 of top 50 markets month-over-month as most people mistakenly think 20% down required when FHA needs just 3.5% and conventional accepts 3%. Rate-locked homeowners would pay $1,000 more monthly for similar home today—73% increase—as FHFA estimates 1.7 million sales didn't occur 2022-2024 because owners refused surrendering low rates while property taxes climbed $700 annually and insurance added $1,000 yearly. Average homeowner now puts one-third of monthly payment toward taxes and insurance with premiums up 52% since 2020, growing to 50% of payment in some markets as natural disasters drive costs. Buyers on lower income ladder see delinquency rates creeping up especially among recent purchasers while rent consumes 29.1% of average household income down from 30.3% peak but above pre-pandemic norms. First-time buyers need just $10,500 down on $300,000 home via FHA versus $60,000 for 20%, paying $1,890 monthly comparable to $1,850 rent but building $450 monthly equity through principal paydown plus capturing appreciation while renters build nothing, making homeownership more accessible than narrative suggests.
