Top 10 Most Affordable States for First-Time Homebuyers
Between high amounts of student loan debt, pandemic-related job loss and an ultra-competitive housing market, it may be harder than ever for some Americans to make the dream of buying their first home a reality.
September 10, 2021
Certain life goals are pretty universal. And while owning a home might not be on everybody’s bucket list, the desire to set down roots seems pretty widespread.
Unfortunately, millions of millennials are struggling to become homeowners. Between high amounts of student loan debt, pandemic-related job loss, and an ultra-competitive housing market, it may be harder than ever for some Americans to make the dream of buying their first home a reality.
For those who are willing to make a move, we’ve identified the cheapest states to live in. Don’t let housing prices alone sway you, this list strikes the right balance between low housing prices and strong household incomes.
The 10 most affordable states to live in
The best place to buy a house is of course subjective, but let’s take a look at the most affordable states to buy a home in:
Median household income: $57,603
Median home value: $156,000
Although Indiana doesn’t have the lowest median home value or highest median household income on this list, The Hoosier State strikes a happy medium between housing prices and household income. This combination landed Indiana the top spot on our list of best states to buy a home. It also doesn’t hurt that Indiana offers the First Place program to potential homeowners by providing down payment assistance.
Median household income: $61,691
Median home value: $158,900
If you’re buying your first home, you’re about to take on a big financial responsibility. Luckily, for homeowners in Iowa, there are plenty of amazing career growth opportunities close by. U.S. News ranked Iowa the 7th best state in the U.S. to find a job thanks to a low unemployment rate and high labor force participation.
Median household income: $58,642
Median home value: $157,200
If part of your motivation for buying a home is to make room for a growing family, then Ohio might just be the right state for you. A 2021 study by MoneyRates found that Ohio was the ninth best state to raise a family in.
4. West Virginia
Median household income: $48,850
Median home value: $124,600
House hunters who want to steal a deal need look no further than West Virginia, where the median home value is just $124,600. If your job plans to stay remote post-pandemic, you might find moving to this affordable state makes homeownership even more possible.
Median household income: $59,584
Median home value: $169,600
First-time homebuyers in Michigan with a credit score of at least 640 (or 660 for multiple-section manufactured homes) may qualify for the MI Home Loan program which provides down payment assistance to eligible applicants.
Median household income: $65,003
Median home value: $235,200
It looks like a lot of people are starting to see the Wyoming appeal! In 2018, nearly 5.6% of Wyoming residents came from a different state. Where are all these new residents coming from? In some cases, more expensive states. For example, more than 3,000 of these residents moved from California, which is an infamously difficult state to afford a home in.
We see the appeal as well, as Wyoming tops this list with the highest median household income. Even if Wyomming isn’t the cheapest state to live in, it’s still a really affordable place to buy a home.
Median household income: $64,168
Median home value: $197,200
Parents or soon-to-be parents will appreciate how family-friendly Wisconsin is. The same MoneyRates survey referenced above found that Wisconsin was the eighth best state to raise a family in, when taking into account factors like affordability, safety and academics.
Median household income: $57,409
Median home value: $168,000
First-time homebuyers in Missouri may qualify for the First Place Loan program, which offers them access to affordable mortgage financing with interest rates that tend to be lower than market rate loans.
9. North Dakota
Median household income: $64,577
Median home value: $205,400
With median home values coming in at just $205,400, it’s easy to see why North Dakota is one of the top states people are moving to. Between 2018 and 2019, North Dakota had a boom of new residents, with 36,668 people moving there.
10. South Carolina
Median household income: $56,227
Median home value: $179,800
Last but not least on our list of the most affordable states for first-time homebuyers is sunny South Carolina. With median home values well under $200,000 and an average of 216 sunny days per year, what’s not to love about the Palmetto State?
How to save for a downpayment
If trying to round up enough funds for a solid down payment is slowing down your dreams of becoming a homeowner, there are a few steps you can take to speed up your saving efforts:
1. Tighten your budget
Even the most affordable states to live in can cost a pretty penny. If homeownership feels out of reach, consider tightening the reins on your budget for the next year. You can put any savings you do have into a CD or high-yield savings account, that way your down payment is growing on its own while you trim down your budget and free up funds for your new home.
2. Take on a side hustle
To make buying a home more achievable, try setting a savings goal and (literally) working towards it. Once you know how much you need to save for a home, you can start a side hustle with that financial goal in mind. You can put all the extra income you earn as a freelance graphic designer, tutor or dog walker towards your down payment.
3. Pay down credit card debt
Every month you hold a balance on a credit card, you’re spending more and more money on interest. Not only will paying down your credit card debt help you eliminate pricey interest payments, but you’ll be able to use the money you were spending on monthly payments to boost your home savings fund.
Need help getting a plan in place to pay down your credit card debt? Check out this credit card debt repayment guide.
If you want to pay down credit card debt fast while saving money on interest, consider Tally†. Less debt could help you reach your financial goal of becoming a first-time homebuyer.
†To get the benefits of a Tally line of credit, you must qualify for and accept a Tally line of credit. Based on your credit history, the APR (which is the same as your interest rate) will be between 7.90% - 29.99% per year. The APR will vary with the market based on the Prime Rate. Tally Technologies, Inc. NMLS # 1492782 (nmlsconsumeraccess.org). Loans made or arranged pursuant to a California Finance Lenders Law License or other laws in your state.