The financial reality for a lot of parents seems grim. Studies have shown that most people can’t afford a home in their state, which holds true whether they’re buying a home or renting. Mortgage rates have increased, with the “typical” monthly payment rising by 39% in the last year, pushing people to look for rentals. The reality is that rent payments aren’t much better in terms of affordability. In some cities, rental prices have increased by 40% over the past year. And while the national average asking price for both one- and two-bedroom apartments have fallen slightly, experts have warned that we shouldn’t hold our breath for prices to drop back to affordability. Given this market, Homebuyer.com compiled data to narrow down which states were the cheapest to buy a house and which were the most expensive. Then, they looked at each state’s median home value and median household income data to determine affordability. “We assumed all home mortgages were bought with a 30-year loan and a four percent interest rate for the purpose of this study,” Homebuyer.com explained. Each state’s income-to-mortgage ratio was then calculated to determine the percentage of income used each month to cover the mortgage payments. And that calculated percentage was used to help rank the states, including the cheapest states to buy a house and the most expensive ones. Here’s what Homebuyer.com found.
Cheapest States to Buy a House:
- Iowa
Median home price: $147,800Median household income: $79,500Estimated monthly mortgage payment: $702.22Income-to-mortgage: 10.60%
- Indiana
Median home price: $141,700Median household income: $73,300Estimated monthly mortgage payment: $673.23Income-to-mortgage: 11.02%
- Ohio
Median home price: $145,700Median household income: $73,300Estimated monthly mortgage payment: $692.24Income-to-mortgage: 11.03%
- Nebraska
Median home price: $155,800Median household income: $79,400Estimated monthly mortgage payment: $740.22Income-to-mortgage: 11.19%
- Kansas
Median home price: $151,900Median household income: $77,400Estimated monthly mortgage payment: $721.70Income-to-mortgage: 11.19%
Rounding out the top ten cheapest states to buy a house includes Mississippi, West Virginia, Oklahoma, Michigan, and Arkansas. It’s also important to know which states have the highest income-to-mortgage ratio, especially for families looking to move to allow for more financial stability. Looking at the top five most expensive states to buy a house, the affordability measure is double — triple in some states — what the cheapest states’ income-to-ratio sits at.
Most Expensive States to Buy a House:
For more details, including the income-to-mortgage ratio in the other states, check out Homebuyer.com’s full report.
