Mortgage payment amount has fallen lower than rent in 22 of the 50 largest US metro areas.

The monthly cost of owning a home may be more manageable than some people realize, but it varies depending on location. A recent analysis by Zillow Home Loans found that in 22 of the 50 largest U.S. metros, the monthly mortgage payment is actually cheaper than rent. This is partly due to the recent decrease in mortgage rates, which have dropped to the lowest level since early 2023, resulting in significantly lower monthly payments.

Comparing the cost of rent to a mortgage payment before taxes and insurance, New Orleans, Chicago, and Pittsburgh offer the greatest savings for buyers who can make a 20% down payment. Purchasing a home in these cities may be a wise choice for those who are able to make a down payment.

In Chicago, the average monthly rent is $2,074. On the other hand, the monthly mortgage payment is $1,640, which means that owning a home rather than renting can save you $434 per month. Similarly, in New Orleans, homeowners can save almost $450 per month by paying a mortgage instead of renting, and in Pittsburgh, the savings are about $320 per month. It’s surprising to see these savings, especially considering that homes for sale are often larger than typical rental properties.

The average rent payment in the U.S. is $2,063 per month, while the typical mortgage payment is $1,827, resulting in a monthly savings of $236 by owning rather than renting.

Beyond monthly rent or mortgage payments, there are additional costs for both renting and homeownership that must be considered. Homeowners pay taxes, insurance, and utilities on a monthly basis, and should be prepared for ongoing maintenance costs. Renters also typically need insurance, and will often pay extra for parking, pets, and utilities. 

There are pros and cons to both buying and renting, but generally, the longer you plan to stay in your house, the more financial sense it makes to buy. Mortgage payments can decrease over time by paying off private mortgage insurance or refinancing your loan at a lower rate, whereas rent payments have the potential to increase at each lease renewal. Beyond that, mortgage payments build homeowners’ equity in their house — increasing their financial stake in their home as time passes. 

Rent growth has come down from pandemic-era highs and returned to long-run norms, but prices are still climbing. The typical rent is 3.4% more expensive than a year ago and nearly 34% more expensive than before the pandemic. The for-sale market, on the other hand, is offering opportunities for buyers heading into the fall, with more than 1 in 4 sellers cutting prices. With inventory up 22% compared to a year ago, buyers are gaining bargaining power. 

One easy way for buyers to see if their potential mortgage payment is cheaper than their rent is to use BuyAbility, a new tool from Zillow Home Loans. BuyAbility quickly gives prospective home buyers an idea of how much they can afford and their likelihood of getting pre-approved for a mortgage. Buyers can check in with BuyAbility regularly on the Home Loans tab on Zillow’s app to see how their estimate changes with current mortgage rates or a change to their credit score. 

U.S. Metros Where Mortgage Payments are Lower Than Rent