Costs of homeownership

As homeownership costs rise, how are you planning for housing? Housing is typically a large, fixed expense for most people. Recently, homebuyers in 2024 faced higher mortgage payments than in previous years, with a median mortgage payment of $2,225 per month ($26,700 per year), according to the American Community Survey (ACS). Some families are resorting to multigenerational housing situations to combat the increasing costs of living. Young adults may live with their parents longer than in previous generations as well. Deciding to purchase a home or even sign a rental lease can be a major financial commitment. 

While a mortgage pre-approval from a banking institution may give you an amount that you can spend toward a home, it may not be wise to use the full amount available to you. Make a financial plan that accounts for all your income and expenses to see if the cost is within your budget. A mortgage affordability calculator can be a tool to help you determine how much you can afford to spend, such as the one from Fannie Mae that takes into consideration car loans, credit cards, other debt, property taxes, and homeowners' insurance. According to Fannie Mae, housing generally costs around 25-30% of your gross income. The Consumer Financial Protection Bureau provides a detailed guide called Your home loan toolkit to assist you in understanding the financial aspects of the home-buying process. 

In addition to the mortgage payment amount, be sure you have money set aside to pay for home maintenance costs. Some minor repairs may be needed or even major repairs that you submit to your insurance may still have a hefty deductible. Depending on the age and condition of the home, you want to make sure you have enough money set aside for maintenance expenses. 

Renting is an option that avoids some of the costs and stress of homeownership. Renting can avoid the expense of local property tax and the homeowner's insurance expense as well as large maintenance costs. Median renter costs in 2024, according to the ACS, was $1,487 per month ($17,844 per year). Renting can also face financial challenges, such as the possibility of rent increases at the end of your rental agreement term. The options available for renting may be limited in the location, size, or price range that meets your needs. 

Whether you rent or own a home, housing costs can be a financial challenge. Make thoughtful decisions because changing your housing situation is not always an easy task, and it also comes with the additional costs of moving. Find a housing option that fits your needs and your budget to avoid long-term financial strain. 

References

Brassell, E. (2025, September 15). From mortgage crisis to recession, 20-year-old American community survey tracks housing booms and busts. Census.gov. 

Consumer Financial Protection Bureau. (2015). Your home loan toolkit: A step by step guide. Cfpb.gov

Fabina, J. (2025, September 10). Monthly mortgage payments for homeowners who moved in 2024 were $2,225, above the U.S. median of $1,521. Census.gov. 

Fannie Mae. (n.d.). Mortgage affordability calculator. Fanniemae.com

Washington, C. (2023, June 13). In 2020, 7.2% of U.S. family households were multigenerational. Census.gov.