How much income do I need to buy a house in Paterson?

To afford the median Paterson home ($605,000) using conventional lending guidelines (28% of gross income to housing, 20% down payment), you'd need approximately $49,000 annual household income. With a smaller down payment, you'd need higher income to offset PMI costs, or could qualify for FHA/VA loans with different requirements.

What is the price-to-rent ratio in Paterson?

Paterson's price-to-rent ratio is 20.6. This ratio divides the median home price by annual rent. Generally, ratios under 15 favor buying, over 20 favor renting, and 15-20 is a toss-up. This suggests renting may be more economical in Paterson.

How long should I plan to stay if I buy in Paterson?

Our analysis shows a break-even point of 9 years in Paterson. This means if you sell before that point, you'd likely have more wealth if you had rented and invested the difference. We generally recommend planning to stay at least 5 years before buying, though in Paterson specifically, you may want to plan for a longer stay.

Is Paterson a good place to invest in real estate?

Paterson has seen positive appreciation of 25.0% over the past 5 years. Growth has been modest, which could mean better entry points but also lower short-term returns. For investment analysis, use our Single Family or Multifamily calculator.

How do Paterson home prices compare to the national average?

Paterson home prices are above the national average by 44%. The median home in Paterson costs $605,000 compared to the national median of approximately $420,000. This modest premium is common for major metropolitan areas.

Rent vs Buy in Paterson, New Jersey

Should you rent or buy in Paterson? Get a personalized analysis based on current Paterson housing market data.

Median Home:$605,000

Median Rent:$2,450/mo

Price Change (1yr):+3.6%

Our Verdict: Toss-Up

⚖️

TOSS-UP

Our Recommendation for Paterson

In Paterson, New Jersey, buying and renting are similarly advantageous financially. The wealth difference over 10 years is approximately $20K, which suggests lifestyle factors and personal preferences should drive your decision.

Break-even

9 yrs

10-Year Advantage

+$20,000

buying wins

Confidence

67%

Price-to-Rent

20.6

Paterson Market Statistics

Median Home Price

$605,000

+44% vs national

Median Rent

$2,450/mo

+20% vs national

Property Tax Rate

2.49%

Price Change (1 Year)

+3.6%

Price Change (5 Year)

+25.0%

Price-to-Rent Ratio

20.6

+350% vs national avg

Income to Afford

$49,000

Days on Market

49 days

Data sources: Zillow, Tax Foundation. Last updated: 12/1/2024

Paterson Market Insights

Paterson's home prices have been relatively stable over the past year, changing just 3.6%. This stability can benefit both buyers seeking predictability and renters who aren't pressured to buy immediately.

Paterson's price-to-rent ratio of 20.6 is above the 20 threshold that typically indicates renting may be more financially advantageous. This doesn't mean you shouldn't buy, but the pure math favors renting in the short to medium term.

Home prices in Paterson are 44% above the national median of $420,000. This premium reflects strong demand, but means buyers need significantly more capital to enter the market.

Paterson has a relatively long break-even period of 9 years. Unless you're committed to staying long-term, renting may be the more financially prudent choice. Transaction costs and the opportunity cost of your down payment take time to overcome.

Paterson has a property tax rate of 2.49%, which is above the national average. This adds significantly to the cost of homeownership and should be factored into your monthly budget calculations.

About This Analysis

These insights are generated based on current Paterson market data including median home prices, rental rates, property taxes, and historical appreciation. The analysis uses standard assumptions (20% down payment, 7% interest rate, 10-year horizon) for comparability. Your specific situation may differ—use our calculator below to run personalized numbers.

Run Your Own Numbers

Our analysis uses standard assumptions. Your situation may be different. Use our full Buy vs Rent calculator to input your specific income, down payment, and financial goals.

Home: $605,000

Rent: $2,450/mo

Tax: 2.49%

Open Calculator with Paterson Data

Other Tools:

🏠 House Hack CalculatorLive in one unit, rent the others 📊 Investment Property AnalyzerAnalyze rental property returns 🏢 Multifamily CalculatorUnderwrite 2-20 unit properties

Compare Nearby Markets

See how Paterson compares to other cities in New Jersey and the surrounding area.

City	Median Home	Median Rent	Price/Rent	Break-even	Verdict
Paterson(current)	$605,000	$2,450	20.6	9 yrs	Toss-up
Newark	$510,000	$2,450	17.3	8 yrs	Toss-up
Jersey City	$575,000	$2,900	16.5	4 yrs	Buy
Elizabeth	$620,000	$2,700	19.1	9 yrs	Toss-up

Click on a city name to see its detailed rent vs buy analysis.

Frequently Asked Questions

Based on current Paterson market data (median home price: $605,000, median rent: $2,450/month), our analysis suggests either option could work. The break-even point is approximately 9 years. However, your personal situation (income, savings, job stability, plans to stay) significantly impacts this decision. Use our calculator to run your specific numbers.

Our Methodology

Our rent vs buy analysis uses a comprehensive financial model that compares the total cost of homeownership against renting and investing the difference. Here's how we calculate each verdict:

1Buying Costs We Include

Mortgage principal and interest (P&I)
Property taxes (using local rates)
Homeowner's insurance
PMI (if down payment is less than 20%)
Maintenance costs (1-2% of home value/year)
Transaction costs (closing costs, realtor fees)
Home appreciation over time

2Renting + Investing Assumptions

Monthly rent with annual increases (~3%/year)
Renter's insurance
Down payment invested in stock market
Monthly savings (buy cost - rent cost) invested
7% average annual stock market returns
Investment growth over holding period

Standard Assumptions for City Analysis

Down Payment

20%

Interest Rate

7.0%

Loan Term

30 years

Time Horizon

10 years

How We Determine the Verdict

Buy: When buying builds $20,000+ more wealth than renting over 10 years
Rent: When renting + investing builds $20,000+ more wealth than buying over 10 years
Toss-Up: When the difference is less than $20,000 either way—lifestyle factors should guide your decision

Note: This analysis provides general guidance based on market averages. Individual results will vary based on specific property characteristics, negotiated prices, timing, and personal financial factors. Always run your own numbers with our full calculator for personalized results.

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Ready to Run Your Numbers?

This analysis uses standard assumptions. Your situation is unique. Use our comprehensive Buy vs Rent calculator to input your specific income, savings, down payment, and financial goals.

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