Buying a $400K Home Today Costs $960 More Each Month Than in 2021
In a viral post on X, Andrew Lokenauth of TheFinanceNewsletter.com said: “A $400K home now costs $960 more per month today than it did in 2021.”
Is he right? And if so, how can would-be homebuyers offset these much-higher ownership costs?
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Higher Interest Rates
Mortgage rates matter. For a $400,000 home with a 20% down payment, a 30-year loan at 6.5% would cost $2,023 a month in just principal and interest. The same $320,000 loan at 3% interest (which many borrowers paid in 2021) would cost $1,349.
That’s a difference of $674 just for higher interest alone. It says nothing of the fact that homes themselves cost much, much more today.
Higher Property Taxes
Home values have risen an average of 30% over the last five years, according to Zillow. For homeowners, that typically means paying 30% more in property taxes.
The latest report from Attom shows the average homeowner pays 0.9% of their home value per year in property taxes. That comes to $3,294 a year at today’s average home price of $366,030, or $275 per month. Five years ago, the same percentage came to $193, for a monthly difference of $82.
Higher Insurance
An analysis by Insurify estimates that homeowners in 2026 will pay $3,057 this year in insurance. That’s up 46% since 2021 — a difference of $1,406 a year or $117 a month.
By these calculations, a homebuyer today pays $873 more per month for the same $320,000 loan. But if they put down a smaller down payment and pay mortgage insurance, they may well pay $960 more for the same $400,000 house.
Strategies To Offset Higher Costs
To begin with, buyers can of course look to buy in cheaper cities and pay less than $400,000. Some major cities cost far less; the average home price in Cleveland costs just $115,537, per Zillow.
Alternatively, they can consider house hacking. That involves renting out part of the home, such as a second unit or bedroom, to offset ownership costs.
They could also rent out storage space or parking through platforms like Sparefoot and Neighbor.
By putting down more cash, buyers can avoid private mortgage insurance. A lower loan amount also reduces the effect of higher interest rates.
Homeowners can also explore higher-deductible insurance, with lower premiums.
While not covered above, energy costs have also risen. Homeowners can conduct an energy audit and find the most effective ways to slash their monthly utility bills.
This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal or tax advice.
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