Renters Need 16 Years to Save for a Starter Home

Renters across the United States face a growing financial barrier to homeownership, with a median-income household now needing 16 years to save for a starter home's down payment and closing costs, according to an analysis released Thursday by the Center for Responsible Lending. The research, published through the nonprofit's Julian Bond Institute, finds that the savings period has doubled since 2019 as housing prices and household expenses have risen faster than renters' incomes.

The report estimates that a starter home costs $335,574, equivalent to 80% of the median sales price of existing homes. Median-income Black renter households face an even longer path to homeownership, requiring an estimated 21 years to accumulate the necessary funds.

For middle-income households earning approximately $50,000 to $120,000, the estimated savings period has doubled to 12 years. Police officers, firefighters, emergency medical technicians, nurses and teachers must save for 10 to 13 years, according to the analysis.

Mike Calhoun, president of the Center for Responsible Lending, said the findings reflect the growing difficulty of accumulating the upfront funds needed to purchase a home.

"Over the last seven years, the time to save up that down payment and closing costs has doubled," said Mike Calhoun, president of the Center for Responsible Lending.

The calculations assume buyers make a 3.5% down payment, the minimum required by the Federal Housing Administration for its loans. Calhoun noted that the typical first-time buyer puts down approximately 10%, meaning the actual savings period could be longer for many households.

He also said the analysis assumes families consistently direct money toward savings, even though some households cannot save, must draw down existing funds or take on debt. The report describes the 16-year requirement as a particularly difficult burden for families with children.

"staggering 16 years"

The report warns that the lengthy savings period can outlast major stages of family life, potentially delaying homeownership until children have left home for college or employment.

"young children at the time the family starts saving may have left the household — for higher education or the workforce — before the family will have saved enough to purchase their first home."

The analysis attributes the worsening affordability gap to rising home prices, persistent inflation, higher household expenses and increasing mortgage closing costs, partly driven by homeowners insurance. Meanwhile, renters' earnings have failed to keep pace with housing expenses, and personal savings rates have declined.

Calhoun said homeowners who purchased properties before prices surged have benefited from substantial increases in home equity. Some also refinanced their mortgages when interest rates fell to approximately 2% or 3%, reducing their monthly payments before rates climbed again.

"If you look at the last seven years, they have been extraordinarily good to homeowners," said Calhoun.

Many homeowners with low mortgage rates are reluctant to move because replacing their existing loans could substantially increase monthly payments. That reluctance has contributed to fewer homes entering the market, reinforcing the national housing shortage, according to the report.

Rental affordability has deteriorated as well. A separate report from Harvard's Joint Center for Housing Studies found that renter incomes increased 9% in real terms between 2001 and 2024, while rents rose 30%.

"From 2001 to 2024, renter incomes rose by 9 percent in real terms while rents rose by 30 percent," the Harvard Joint Center for Housing Studies reported.

The report found that one-quarter of renters spend more than half their income on rent and utilities. Although some rental markets have recently softened, a record number of renters remain cost-burdened.

Affordability also varies considerably by location. According to the Center for Responsible Lending, renters need approximately 11 years to save for a starter home in Houston, compared with 24 years in Los Angeles.

"the problem is even more acute in the fastest-growing rural areas than in urban areas."

A separate analysis from Third Way found that housing construction has struggled to keep pace with population growth in rural communities, adding pressure to already constrained housing markets.

Family assistance has become an important source of money for prospective buyers, particularly younger households. Calhoun said that purchases made entirely with cash have increased, while younger buyers frequently depend on financial support from relatives and friends.

"Cash purchases are way up," said Calhoun.

He described financial assistance from relatives and friends as the predominant way younger buyers obtain the money needed to purchase homes.

"the overwhelming way people come up with the money is from assistance from family, the 'bank of mom and dad' and friends."

Although thousands of down payment assistance programs exist, Calhoun said many have limited funding and cannot serve everyone who qualifies.

"The programs often run out of money," said Calhoun.

He said the programs frequently operate on a small scale, limiting their reach among prospective buyers.

"A lot of these are very small, idiosyncratic," said Calhoun.

Calhoun called for broader assistance that would help people without access to inherited wealth or substantial family resources.

"to reach a broader array of people who don't have intergenerational wealth."

The report also recommends zoning changes and other reforms to increase construction of smaller, less expensive homes, including duplexes, townhomes and manufactured housing. A sweeping federal law passed by Congress in 2026 aims to encourage additional housing construction, but implementation by states and cities will be necessary, and new supply will take time to materialize.

Despite the financial obstacles, a related survey from the Center for Responsible Lending found that millennials and Generation Z aspire to own homes at rates comparable to earlier generations.

"testament to the resilience of the American dream,"