Is It Cheaper to Buy a Home With an FHA Loan or to Rent?
November 4, 2023
Is it Cheaper to Buy or Rent?
The short answer? “It depends.” The nature of your selected housing market is key. According to figures compiled by USA Today, those living in California, for example, might find it cheaper to rent than to buy.
But ask a house hunter in Chicago that same question, and you get a different answer. For example, the Chicago housing market is affected by forces including gentrification, high demand of high-cost homes, and other variables that make that housing market about (according to USA Today) cheaper per month to own than to rent.
Chicago, New Orleans, Memphis, and Cleveland were all listed by USA Today as being markets where it is cheaper to own your home than to rent it. Compare that to New York, where USA Today reports the following numbers:
“New York City has the highest home prices at $559,117. But given that rent is typically $3,068 a month, residents are better off springing for a mortgage than paying rent to a landlord...”
Where Is it Cheaper to Buy Than to Rent?
In May 2023, these housing markets were all listed in published reports, including the one by USA Today as being areas where it makes more sense to buy than to rent. If you want to buy a home in one of these locations, a FHA loan’s low 3.5% minimum down payment can be a big advantage:
- Pittsburgh
- New Orleans
- Chicago
- Cleveland
- Memphis
- Miami
- Detroit
- Oklahoma City
- St. Louis
- Tampa
- Cincinnati
- Philadelphia
- Houston
- Atlanta
Contact a participating FHA lender to learn more about low-downpayment home loans and your options for becoming a homeowner.
------------------------------
RELATED VIDEOS:
You're Almost There When You Get Your Loan Approval
Learn About the Mortgage Insurance Premium (MIP)
Pre-approval Starts the Mortgage Process

FHA Loan Articles
April 30, 2025 In a previous post, we discussed why FHA borrowers should carefully consider whether paying for discount points truly serves their best interests, focusing on factors like short-term homeownership, opportunity cost, FHA mortgage insurance, and the prevailing interest rate environment. Discount points are an option for borrowers willing to pay a fee to lower the interest rate by a set amount. This is not right for all borrowers, and you don't want to pay for points you won't benefit from during the loan term.
April 29, 2025Are you considering buying a home with an FHA loan? You'll likely talk to your participating lender about FHA loan "discount points" – fees you pay upfront for a lower interest rate on your mortgage. The idea behind discount points is a straightforward exchange: you spend money today to reduce your interest rate. Typically, one point equals one percent of your total FHA loan. In return, your interest rate might decrease by an amount you and the lender agree upon.
April 28, 2025Home loans have various expenses that aren't apparent to a new borrower until much later in the process. What do you need to consider when making your home loan budget? It might not be complete without addressing some of the issues we cover here.
April 23, 2025 While the prospect of lower interest rates or more favorable loan terms can be enticing, there are situations where waiting is the better option. Refinancing without carefully considering your current financial circumstances is never a good idea, but careful planning in the current financial environment is even more important.
April 22, 2025First-time home buyers worry about loan approval, but there are important steps to take to increase the likelihood that the lender will approve their application for the loan or pre-approval. What do you need to know before you choose a lender?