A new study from RentCafe identified the US metro areas where renters can save to buy their first home the fastest.

Researchers Used Popular “50-30-20” Budget Formula to Compile List

Not long ago, Senator Elizabeth Warren from Massachusetts popularized a budget formula known as “50-30-20” which guides consumers on how much and where to spend while saving money to buy a home.  Here are the specifics:

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  • 50% of income is allocated for unavoidable “needs” or costs such as rent, groceries and utilities
  • 30% of income is allocated for “wants” such as eating out, alcohol, entertainment and gym memberships
  • 20% of income is allocated for not-to-be-touched/spent “savings” such as saving for a down payment on a house to buy

Obviously, in some metro areas, allocating just 50% of a renter’s income to unavoidable needs like rent and groceries isn’t realistic.  In other metros, the combination of salaries, costs and home prices may result in a relatively quick path to homeownership.

Also obvious is that the less households spend on “wants,” the faster households can increase their savings dedicated towards their savings.

Metro Areas Where It’s Faster to Save for 20% Down Payment

RentCafe based its analysis on a median-earning two-person household saving for a 20% down payment on a median-price starter home.

Metro             Median Price      20% Down Payment   Months to Save

Bloomington IL   $105,249            $21.050                     12

Springfield IL      $81,901              $16,380                     15

Cedar Rapids IA  $117,181             $23,436                     21

Trenton NJ          $164,490             $32,898                     22

Ann Arbor MI       $228,996             $45,799                     28

Bismarck ND        $212,918              $42,584                    28

Bridgeport CT       $303,031              $60,606                    29

Fargo ND               $187,766             $37,553                    29

Madison WI            $242,538             $48,808                   30

Des Moines IA         $154,720             $30,944                   31

Hartford CT             $198,000             $39,600                   32

Fond du Lac WI        $122,982             $24,596                   32

Champaign IL           $102,166             $20,433                   32

Baltimore MD            $211,039            $42,208                   33

Waterloo IA                $91,403             $18,806                   34

Washington DC          $341,444            $68,289                    34

Cincinnati  OH            $151,092            $30,218                    35

Akron OH                   $104,637            $20,927                    37

Decatur IL                   $46,696              $9,339                     38

Naples FL                    $262,944             $52,589                   39

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Thanks to RentCafe.

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