Saving for a first home can take only a few years in some US cities but several decades in others, according to a new analysis highlighting the country’s stark housing affordability divide.
The research found that a typical household in Warren, Michigan, could accumulate enough money for the median first-time buyer down payment in roughly three years. In Detroit, the estimated timeline is just under four years.
The situation looks dramatically different in some of America’s most expensive housing markets. A typical New York City household could require more than 65 years to save the median first-time buyer down payment of $265,000 under the study’s assumptions.
New York and San Francisco present the biggest savings hurdles
New York City recorded the longest estimated savings period among the major markets examined.
The $265,000 median down payment represents approximately 30% of an implied first-time buyer home price of $883,333.
San Francisco followed closely, with an estimated 57 years required to accumulate its $400,000 median first-time buyer down payment. That deposit represents roughly 27% of an implied $1.5 million home price.
Los Angeles also presents a substantial barrier, with the analysis estimating that a household would need about 41.5 years to save its median first-time buyer down payment of $170,500.
Other expensive markets recorded similarly lengthy timelines. Boston came in at 37.8 years, while Anaheim and San Jose each recorded an estimated 33.6 years.
Michigan markets offer a sharply different picture
The numbers are considerably lower in several Midwestern housing markets.
Warren recorded the shortest estimated savings period in the analysis. Its median first-time buyer down payment was $8,797, equivalent to 5% of an implied home price of $175,940.
Detroit followed with a median down payment of $7,600, also representing approximately 5% of an implied $152,000 purchase price.
However, Detroit’s lower housing costs come alongside substantially lower household incomes. The analysis puts the city’s median household income at $39,209.
Virginia Beach was estimated at approximately 4.3 years, based on a median first-time buyer down payment of $20,450. Fort Worth and Indianapolis followed at about 4.3 and 4.4 years respectively.
Several cities fall below the five-year mark
The analysis identified a number of markets where a typical household could theoretically save the required first-time buyer deposit within roughly five years.
Milwaukee was estimated at 4.4 years, while Jacksonville came in at 4.7 years. Cleveland, Columbus and West Palm Beach were also among the markets with relatively short estimated savings periods, ranging from approximately 4.4 to 5.3 years.
These differences reflect more than simply variations in home prices. The amount buyers typically put down also changes significantly from one market to another.
Down payments are much larger in expensive cities
According to the analysis, first-time buyers in lower-cost markets frequently put down around 5% of the purchase price.
In Detroit, Redfin agent Anne Loehr said most of the first-time buyers she works with put down about 5%.
By contrast, the typical first-time buyer in New York City puts down approximately 30% of the purchase price.
Chen Zhao, Redfin’s head of economic research, said the time required to accumulate a deposit differs considerably depending on the local market.
Zhao explained that local home prices are closely connected to local incomes, meaning buyers in more affordable markets can generally accumulate deposits faster because both property prices and the resulting down payment requirements are lower.
Buyers may not need to save 20%
Rocket chief business officer Bill Banfield said prospective homeowners should investigate the typical down payment in their particular market rather than automatically assuming that a 20% deposit is necessary.
The analysis found that down payments of 5% to 6% are common for conventional loans in some more affordable markets.
For buyers, that distinction can substantially alter the amount of cash they need to accumulate before applying for a mortgage.
New York Redfin agent Jason Warner said he has increasingly worked with first-time buyers in their late 30s and early 40s who have spent years renting before purchasing a property.
He also noted that larger deposits can strengthen a buyer’s position when competing for a home.
The upfront cost goes beyond the deposit
Saving the down payment is only one part of the financial challenge facing prospective homeowners.
Closing costs, prepaid expenses and other purchasing costs can add thousands of dollars to the amount of cash required to complete a transaction.
Mortgage rates can also affect how much money buyers need to put down. A larger deposit can reduce the size of the mortgage and, consequently, help keep monthly housing payments within a lender’s debt-to-income requirements.
Some buyers may need hundreds of thousands of dollars more
A separate Redfin analysis estimated that a median-income household would need approximately $159,000 in cash to purchase a typical US home while keeping estimated monthly housing costs below 28% of gross income.
That requirement could fall to around $144,000 if an eligible seller contribution covered certain closing expenses, although seller credits generally cannot be used to satisfy the required down payment itself.
The figures become substantially larger in the country’s most expensive markets.
In San Jose, for example, the analysis estimated that a median-income household would need approximately $1.15 million as a down payment to bring the monthly payment on a typical $1.53 million property below the 28% income threshold.
Higher mortgage rates can raise the hurdle
Interest rates add another layer of uncertainty for people trying to enter the housing market.
Under a 7.2% mortgage-rate scenario, the national analysis estimated that the total cash requirement would rise to approximately $170,800 without seller assistance, compared with about $159,000 under the assumptions used in August.
That means prospective buyers can face changing financial requirements even after determining the price range they can afford.
Location can determine how long saving takes
The analysis illustrates the enormous differences in the path to first-time homeownership across the United States.
In Warren and Detroit, the estimated savings period is measured in only a few years. In markets such as New York City, San Francisco and Los Angeles, the same exercise produces timelines measured in decades.
The figures are based on an assumption that households save 5% of annual income, using first-time buyer mortgage data alongside 2024 Census income figures.
They therefore represent an analytical scenario rather than a prediction of how long every individual household will take to purchase a home. Actual timelines can vary depending on income, existing savings, household expenses, assistance programs, home prices, loan terms and the amount a buyer ultimately chooses or needs to put down.
