There are a lot of reasons why we choose to live in the places we do – convenience, proximity to family and friends, personal preferences, jobs and the like.
One of the biggest factors, naturally, is affordability. After all, housing is the largest item in most Americans’ budgets. Where you live can have a huge impact on your finances, for better or worse.
To help you determine where to live and save, we found the top 15 states that are most affordable for home buyers.
Median Homeowner Costs In The US
- U.S. population: 331,893,745
- Median household income: $64,994
- Median home value: $229,800
Many experts recommend using the 30% rule to determine how much you should spend on housing. Basically, the rule states that you should spend no more than 30% of your monthly gross income on monthly housing costs when buying a home. Those who spend more than 30% on these costs can be considered “cost-burdened.” While how much a person should spend each month on housing varies from household to household, the 30% rule gives a general idea of how affordable a given area is because it compares median income to median housing costs.
According to the U.S. Census, U.S. homeowners with a mortgage spend around $1,621 each month on housing costs, with the national median household income coming in right below $65,000. If you divide the nation’s average monthly mortgage costs by the average gross monthly income, this means the nation’s average is spending just under 30% of their income on housing.
15 States With The Cheapest Real Estate In The US
Like we see with the 30% rule, true affordability isn’t just about which houses cost the least amount of money to buy. Home prices, average incomes and local cost of living expenses all factor into calculating a state’s true affordability.
Let’s say, for example, you move to an area where home prices are well below the national average, but average incomes are also relatively low. Even though the home prices are cheap, if your income is too low, you still might not be able to afford to purchase one of those cheap homes. Alternatively, you could move to an area where home prices are higher, but average incomes are also higher to better match the area’s cost of living.
All states have pockets of affordable homes, but if the cost of living is too high, it may prove difficult for buyers to realistically afford.
Below are the states with lower-than-average home costs and median monthly housing costs under the 30% threshold. These are the cheapest states to buy a house, based on housing cost ratios, which are calculated from the state’s average monthly gross income and home costs.
- Indiana
- Iowa
- Utah
- Minnesota
- West Virginia
- Ohio
- Michigan
- Idaho
- Arkansas
- North Dakota
- Nebraska
- Missouri
- Wyoming
- Wisconsin
- Kentucky
1. Indiana
Population | 6,805,985 |
Median household income | $58,235 |
Median home price | $148,900 |
From the cool city vibes of Indianapolis to the hip college town of Bloomington, to an area known affectionately as “the Region,” which is home to the wonderfully wacky annual Pierogi Fest and is just a short train ride from Chicago, the Hoosier State has a lot to offer.
It’s also the most affordable place to live on our list, with a housing cost ratio of 24%. The state’s median housing costs are $1,155.
Example of how each state is calculated: Take each state’s median household income and translate it to a monthly income by dividing by 12. Then, you take the state’s average monthly mortgage costs and divide it by the monthly income. For example, Indiana’s median income of $58,235 is $4,853 a month. The state’s median monthly mortgage payment is $1,155. That translates to a housing ratio of 24%.
2. Iowa
Population | 3,193,079 |
Median household income | $61,836 |
Median home price | $153,900 |
Though the state is the country’s top producer of corn, Iowa isn’t all rural farmland. It’s a particularly great place to live for those who are looking for that “city living” experience with a more affordable cost of living and friendlier neighbors.
There’s the arts and culture of Cedar Rapids, the shopping and eats of nearby Iowa City or the ample economic opportunity of Des Moines (the state of Iowa has the third lowest unemployment rate in the country), to name a few of Iowa’s many great urban areas.
3. Utah
Population | 3,337,975 |
Median household income | $74,197 |
Median home price | $305,400 |
Few states can compare to Utah’s geographical diversity. From its rugged red rock formations to its lakes, Utah is home to five national parks and bustling urban areas. Whether you want to spend the weekend mountain biking or enjoying the views of Salt Lake City, the Beehive State offers the best of both urban and rural worlds.
Other than its natural appeal, Utah also has a cheaper cost of living compared to the rest of the country, especially with its median household income of $74,197.
4. Minnesota
Population | 5,707,390 |
Median household income | $73,382 |
Median home price | $235,700 |
Known as the land of 10,000 lakes, Minnesota is the epitome of Midwestern excellence. With opportune urban life in the Twin Cities, aquatic adventure spread out across the state and the infamous Midwest charm, Minnesota has a lot to offer future homeowners.
Even with all its amenities, Minnesota is significantly cheaper to live in compared to other states in the country across all categories.
5. West Virginia
Population | 1,782,959 |
Median household income | $48,037 |
Median home price | $123,200 |
Mountainous, beautiful West Virginia is a great choice for those who love nature and every activity that takes place in it, including hiking, fishing or even whitewater rafting. In this state, you’ll get beautiful natural views no matter where you are.
West Virginia also has a few smaller cities, such as the charming state capital of Charleston, for those who don’t want to feel quite so remote.
6. Ohio
Population | 11,780,017 |
Median household income | $58,116 |
Median home price | $151,400 |
Did you know that an unusual number of astronauts hail from Ohio?
If the thought of potentially raising the next Neil Armstrong doesn’t convince you to move your family to Ohio, the affordable living, vibrant cities and ample cultural offerings just might.
The state also has a lot of natural beauty and offers plenty of opportunities for adventure from the splendor of Hocking Hills State Park to the sunny islands off the coast of Lake Erie, making Ohio a great place to live.
7. Michigan
Population | 10,050,811 |
Median household income | $59,234 |
Median home price | $162,600 |
Michigan is an extremely diverse state, both in terms of its people and its locales. There’s the bustle and economic opportunity of Detroit and its many surrounding suburbs, the eternal coolness of Ann Arbor, the liveliness of Grand Rapids, the charm of Traverse City, the tranquility of the Upper Peninsula and much more.
Avid hikers will find refuge in the state’s abundant natural offerings, while suburbanites will love the convenience of being close to a plethora of shopping and dining options.
8. Idaho
Population | 1,900,923 |
Median household income | $58,915 |
Median home price | $235,600 |
Home to some of the fastest growing cities in the country, Idaho’s beautiful landscapes and welcoming communities are drawing thousands of homeowners every year. Cities like Boise, Meridian and Caldwell all offer a bustling nightlife while maintaining a family-friendly atmosphere.
Leaving Idaho’s cities, the state has 31 scenic byways that boast its natural beauty. If you are looking for a state with growing opportunities, beautiful housing options and warm communities, Idaho may be the state for you.
9. Arkansas
Population | 3,025,891 |
Median household income | $49,475 |
Median home price | $133,600 |
Known for its lakes, rivers and hot springs, Arkansas has a wide range of indoor and outdoor attractions, from 218-mile-long hiking trails through the Ozark Mountains to the only active diamond mine in the U.S.
For a picturesque vibe, the mountain town of Eureka Springs is lined with Victorian-style homes, offering boutiques and antique shops, and is known as one of the nation’s top art destinations. For more of an urban experience, the capital city of Little Rock is a historic hub, offering plenty of museums, restaurants and nightlife to experience.
10. North Dakota
Population | 774,948 |
Median household income | $65,315 |
Median home price | $199,900 |
Expansive landscapes, historical attractions and quaint cities make North Dakota an opportune destination for homebuyers. With a strong agricultural community, the Peace Garden State leads the nation in the production of multiple crops including honey and flaxseed.
Beyond its agricultural attractions, North Dakota’s natural formations and its rural spreads make it easy to find something to do.
11. Nebraska
Population | 1,963,692 |
Median household income | $63,015 |
Median home price | $164,000 |
Situated where the Midwest meets the Great Plains, the state of Nebraska has a lot to offer home buyers with a relatively low cost of living and impressive average incomes.
And though the Cornhusker State may be best known for its agriculture, there’s plenty to experience beyond the obvious plains, sand dunes and rock formations of the outdoors – from the bustling Gateway to the West in Omaha to the historic city of Lincoln.
12. Missouri
Population | 6,168,187 |
Median household income | $57,290 |
Median home price | $163,600 |
Food lovers, this state is for you. Missouri boasts not one but two iconic, signature dishes: St. Louis-style pizza and Kansas City barbecue.
Missouri is very affordable, great for families and its cities have offerings for every type of interest, whether that be the arts, shopping or dining. And for lovers of the outdoors, this state also offers 85 state parks and historic sites, with over 840 miles of hiking and biking trails.
13. Wyoming
Population | 578,803 |
Median household income | $65,034 |
Median home price | $228,000 |
It’s hard to come across another state that can compare to Wyoming’s natural beauty. From Yellowstone National Park to its scenic byways, Wyoming is an outdoor lover’s paradise. The state has larger cities, like Cheyenne and Jackson, but the Equality State is perfect for those who seek peace and quiet in their everyday life.
Wyoming is also conveniently located near Montana, Colorado, Utah, Idaho, Nebraska and South Dakota, allowing easy access for adventurous road trips to the heart of the United States.
14. Wisconsin
Population | 5,895,908 |
Median household income | $63,293 |
Median home price | $189,200 |
Located in the heart of the Midwest, the Badger State is known for its tasty cheeses and views of Lake Michigan. Madison and Milwaukee offer a bustling nightlife, diverse community events and decadent breweries.
From warm cabins in rural areas to condos in its cities, Wisconsin has a lot to offer to those who reside in the state.
15. Kentucky
Population | 4,509,394 |
Median household income | $52,238 |
Median home price | $147,100 |
When you think of Kentucky, you may think first of the Kentucky Derby, an annual horse race that has been happening in Louisville for nearly 150 years. But the state has a lot to offer beyond horse farms.
Great food – hello? Kentucky Fried Chicken – and world-class bourbon are just a few of the things the Bluegrass State is known for. Whether you’re looking for a comfy cottage in the country or an expansive estate in the suburbs, there’s something for everyone in Kentucky.
How To Choose The Right State With (Or Without) The Cheapest Homes
Uprooting your life to move to a new state isn’t a decision to make lightly. Just because the price is right doesn’t mean you’ll actually enjoy living there, so take the time to think through the benefits and drawbacks of an area before moving out of state.
Consider the types of activities you enjoy, the transportation options you need, and the style of homes available when choosing a location. It’s important to decide if you prefer to live in the city or the suburbs, as some states have better options for each lifestyle. What’s right for one family may not be right for the next. As long as you choose a location that fits your needs, you’ll be able to find the perfect place to live without breaking the bank.
The Bottom Line
Searching for the cheapest real estate in the U.S. is a great way to save money on your new home – but buyers shouldn’t choose a location solely based on price. Still, if you’re moving to a new state, understanding its average real estate costs and cost of living can help you plan out your future budget.
Considering a change of pace? Once you have a location in mind, work with a Verified Partner Agent so you can buy with confidence.
Methodology
To determine which states are the most affordable for home buyers, we turned to the most updated Census data, as of July 1, 2021. This provided the country’s and each state’s population, median household income, median home price and monthly housing costs. We looked at each state’s median home values and median household incomes. Then, we calculated the state’s average monthly income and the state’s average monthly mortgage bill to get the state’s housing ratio.