Across the nation, housing demand continues to outpace supply, making it tougher for would-be home buyers to find property for sale. The lack of inventory in the real estate market has given a boost to the rental housing market – which has, in turn, caused rental rates to spike in many places throughout the United States. But what about here in Fresno? What is the average rent in Fresno? And is it more or less expensive than a typical mortgage payment?
Fresno Rental Market
According to RentJungle.com, a website that tracks average rental rates, the average rent for an apartment within 10 miles of Fresno, CA was $854/month.* This is actually slightly lower than the $859/month average for the previous month. On a year-over-year basis, the average rent for an apartment in Fresno also dropped from $884/month. So while rental rates actually appear to be falling in Fresno, does that mean it’s a better deal? Not necessarily.
Depending on the neighborhood, some parts of Fresno are still quite expensive to live in as a renter. The Woodward Park neighborhood, for example, had an average rent of $1,242/month. According to Zillow, the median sale price for that neighborhood is $292,100.
If you were to buy a home in Woodward Park at the median sale price, your monthly mortgage payment would likely be somewhere around $1,049.** With taxes and insurance payments rolled in, the total payment would likely be around $1,277. So, as you can see, renting may not be a better deal in this particular area. Although the total payment with taxes and insurance would likely be more than the average rent, you would get the benefit of owning the home, building equity, and having your money go toward an investment – not bad for an additional $35/month!
Also keep in mind that you may be able to find a home priced even lower than the median sale price, like one of the following we found on Zillow…
9106 N Woodlawn Dr.
4 bed / 3 bath / 2,028 square feet
1756 E Revere Rd.
3 bed / 2 bath / 1,392 square feet
8147 N Cedar Ave. Apt. 213
2 bed / 2 bath / 1,111 square feet
336 E Alluvial Ave. SPC 300
3 bed / 2 bath / 1,701 square feet
The Cost of a Mortgage
Another point to consider when comparing renting vs buying, is what kind of mortgage you would be using to finance your possible home purchase. Depending on the type of home loan you’re eligible for, and what kind of interest rate you can get, it may make a lot of sense to buy. For example, some home loans do not require a down payment, making your out-of-pocket expenses a whole lot more manageable.
USDA loans and VA loans are two popular mortgage choices for people who don’t want to or cannot make the typical 20% down payment. These loans aren’t available to everyone, as certain eligibility restrictions apply. For instance, in order to be eligible for a USDA loan, the property must be located in an area that the USDA has designated as “rural.” USDA borrowers must also meet certain income and credit requirements. As for VA loans, they are available only to eligible service men and women (active duty military or veterans), and some surviving spouses of veterans.
Another affordable mortgage option is the FHA loan program. Although FHA loans do require a minimum down payment of 3.5%, the funds for the down payment can be gifted. Plus, FHA loans tend to have more lenient credit and income requirements than conventional mortgage programs, making them easier for some borrowers to qualify.
Talk to Resource Lenders for More Information
Want to learn more about home financing in Fresno? Ready to crunch the numbers and see what you may qualify for? Simply give us a call at (800) 564-4342 or fill out the form on this page and one of our loan consultants will review your information and discuss your options. Remember, you’re under no obligation when you contact us and we will happily provide you with a free Fresno mortgage rate quote.
*As of February 2016 (most recent data available).
**Based on 30 year fixed rate mortgage at 3.5% interest rate with 20% down payment.