Buying a home is an exciting process when you focus on the end result. However, the process can be quite stressful. You have to find a real estate agent that you trust, prepare your finances, browse through housing prices, determine what your needs are for the family, and go through the loan approval process.
Another factor that affects your decision is the location of your home. If home prices are the greatest concern you have, then finding an affordable state worth moving to is crucial. This is especially true for those who are beneath the median household income across the nation. For this reason, it makes sense to look for the cheapest states to buy a house. Let’s discuss what you should know about finding affordable home prices in the cheapest states in the country.
Factors Affecting Housing Affordability
Anyone who has bought a house in the past understands that house prices are not the only factor that determines affordability. Just because you can afford a certain down payment and monthly mortgage premium does not mean any house fitting that range could work for your financial situation. When searching for the best states to buy a home, the following metrics should be considered.
Property Taxes
Property taxes are collected to fund community services like local governments, road utilities, school systems, and more. States and towns with higher property taxes will cost homeowners more each year, depending on home values. For example, a $300,000 house in a city with a 1% property tax rate will owe an additional $3,000 each year for property taxes. Many of the states on this list have lower property tax rates than the national average. And with the already low home prices, this will reduce the financial burden significantly.
Home Insurance Rates
Homeowners are required to pay for insurance on their properties, and lenders will not give out loans unless buyers have insurance to protect their assets. Insurance rates can change from state to state, lender to lender, and town to town, so it is important to get quotes for homeowner’s insurance so you understand how these extra costs will affect your payments. Many different elements will influence insurance rates in a given area, such as the danger of droughts, fires, floods, tornados, and other weather events.
Cost of Living
Once you buy the home and start making your mortgage payments, the cost of living will impact your income situation. More expensive states like California and New York will drain your bank account faster, perhaps forcing you to purchase a much cheaper home to manage those costs. On the other hand, finding one of the cheapest states in terms of cost of living might mean you can pay a higher home price.
Job Market and Average Income
States with healthy economies tend to be better for homeowners. If the job market is growing and career opportunities are plentiful, then people are much more likely to afford homes. If you want to figure out what your professional opportunities are, research the local job market to see if you can grow professionally in that state. Median household income is one of the primary metrics to focus on during this phase of your research.
Economic Growth and Stability
The best time to buy a house in any market is during a period of economic growth and stability. These phases typically indicate that home values will continue to increase, so investing in a house now would benefit you in the future. Additionally, a stable economy means the median home value in the area will be rather predictable, so you won’t have to worry as much about fluctuating payments.
Median Household Income
As you search for states to move to, consider how the median household income compares to the national average. Median household income is generally a pretty strong indicator of a state’s economic health; locations with higher salaries tend to be safer places to move and afford the median home price. It is always wise to evaluate the leading industries in any given state that you are considering a move to so you can envision a potential career path.
10 Cheapest States to Buy a House Based on Median Home Price
Median home price represents the middle of the pack for home prices. It means half the homes sell for less than that number and half sell for more than that number. This isn’t the same as average prices. However, median price is a measurement most commonly used in real estate to assess the affordability of homes in a given area. Here are the 10 cheapest states to buy a house based on median home price.
10. Missouri
Missouri, also known as the Show Me State, has a very affordable price of $261,000 for a home. Numerous job opportunities, a laid-back lifestyle, and a lower cost of living make it a prime option for affordability for more than median home sale prices. The Mississippi River runs right through the major city of St. Louis, so you can keep that in mind in terms of natural wonders in this state.
Missouri ranks 36th in the United States for diversity, and the largest BIPOC community is Black and African American people, who make up about 12% of the population. However, the state has become significantly more diverse in the past decade, and it’s likely that this trend will continue.
In terms of LGBTQ+ people, approximately 3.8% of the population identifies as part of the community, and 26% of the community has children together. While Missouri ranks low on the list of states with strong LGBTQ+ protections, local activists, especially in St. Louis, are working hard to turn the tide in favor of equality.
9. Kentucky
If you head to the Bluegrass State, you will find that a median-priced home is about $257,000. Kentucky has a respectable score on the cost of living index as well, so you can get a home for pretty cheap and have plenty of money left over for a comfortable lifestyle. Beautiful scenery and a central geographical location also make this state ideal for travelers, as well as the historic Kentucky Derby.
Kentucky rates 45 out of 51 territories in terms of diversity, but there is a strong push toward making a more diverse and equitable state for everyone. This includes the Kentucky Department of Education’s recent development of a Division of Diversity, Equity, Inclusion and Belonging (DEIB), meant to ensure that everyone feels welcome in the Bluegrass State.
This is especially important for the 3.6% of Kentucky’s population who identify as LGBTQ+, as 26% of the community has children. Lexington is well-known for having a very friendly and welcoming atmosphere; it may prove to be the best place for you and your family.
8. Arkansas
Many household expenses are cheaper in Arkansas, such as groceries, utilities, healthcare, and transportation. But all of that is topped off with a low home price of $256,600 as the middle value. There are plenty of metro areas, but you can also move to thriving rural communities to take advantage of the area's cost of living. This would be an excellent place to use a USDA loan, which requires no down payment and has very low interest rates.
Though Arkansas has a pretty small LGBTQ+ population, which makes up only 3.3% of the population, over 36% of the community has kids; this is even higher than the population of LGBTQ+ parents in California! Such a large number demonstrates a brighter and more welcoming future, which is echoed in one small sign of hope: a discriminatory law banning gender-affirming care for transgender minors was defeated in the courts last year.
Arkansas is relatively homogenous, with about 70% of the population identifying as white, but there is also a significant Black population. Northwest Arkansas, specifically, has become more diverse in recent years, and researchers expect the minority population to continue growing.
7. Indiana
Is the Midwest the right option for your next move? Indiana’s median home value is $256,100 as of 2024. With those median prices, the amazing educational system, and the vibrant culture of entertainment, the Hoosier State is a very affordable location when you are looking for the perfect home, especially in populated areas like Indianapolis or Fort Wayne.
Like several other Midwest states, Indiana has suffered a number of setbacks recently in terms of LGBTQ+ inclusion, despite 4.5% of the population identifying as LGBTQ and 34% of the queer community being parents. This includes legislation targeting transgender teens by banning gender-affirming care and a low rating by the Movement Advancement Project. However, the LGBTQ+ community in Indiana is very active in fighting these bills and advocating for justice, bringing hope to anyone who would like to call this state home.
Indiana ranks 40th in terms of diversity, with most of the population identifying as white. Regardless, some areas have vibrant and multicultural populations, particularly around Indianapolis. Near Westside in Indianapolis has an A+ rating for diversity, making it an excellent option for BIPOC individuals who want to feel included in their communities.
6. Michigan
Michigan has two geographical areas separated by the Great Lakes. The median home sales price is roughly $255,700, which is much lower than the national median sale price of $412,000 at the end of 2023. Some of the main benefits of moving to Michigan are the natural beauty of the Great Lakes, the amalgamation of diverse cultures, and a vibrant sports scene.
Of all the Midwestern states, Michigan is one of the most welcoming to LGBTQ+ individuals. About 4% of the population identifies as LGBTQ+, and 27% are parents. The Movement Advancement Project rates it as medium in gender and sexuality protections, which is the second-highest rating. Last year, Governor Whitner signed a bill that provides greater protection to LGBTQ+ Michiganders, which added gender identity and sexual orientation to the 1976 Elliott-Larsen Civil Rights Act.
Michigan also has a significant BIPOC population, particularly in Detroit. In fact, Detroit is 77.4% Black or African American, one of the few major metropolitan areas that is minority majority. As a whole, the state has been growing increasingly more multiracial for decades now, and the population who identifies as multiracial is up by 176%.
5. Louisiana
Native American, French, Spanish, Creole, and African cultures collide in the melting pot that is Louisiana. Plus, the median home sale in this state goes for $254,200. Known as the Pelican State, Louisiana’s location on the Gulf of Mexico makes it a unique contender for your next home.
In terms of diversity, Louisiana sits around the middle of the pack at 18; about 31% of the population is Black or African American, but the Asian population is quite small. There have been significant advances in racial equity in recent years, including redistricting in Baton Rouge that enabled Black voters greater power to elect judges.
While Louisiana’s LGBTQ+ population sits at only 3.9%, there have unfortunately been a number of laws passed meant to prevent greater acceptance in schools. This includes a bill that restricts discussions of gender and sexuality, which could impact the state’s LGBTQ+ population for years into the future.
However, Louisiana elected Davante Louis, its first openly out state politician, in 2022. This represents a slow but steady change toward acceptance that will hopefully continue long into the future.
4. Oklahoma
Sitting in second place on the cost of living index, Oklahoma is more affordable to buy a home and live in than almost every other state. The median home sells for $240,300, which is perfect if you are dealing with a tight budget. The Sooner State is also appealing for other reasons, such as low traffic (even in cities), great family-friendly neighborhoods, and famous Southern hospitality.
Oklahoma’s population is about 3.8% LGBTQ, 38% of which have children of their own. The state made history earlier this year by electing its first nonbinary official. Mauree Turner represents the growing trend, with LGBTQ+ elected officials of color increasing by 17% across the union in the last year.
2020 Census Bureau data shows that there’s a significant BIPOC population in the state, with 12.4% of Oklahomans identifying as Black and 18.7% identifying as Hispanic. The state’s diversity index rose significantly from 2010 to 2020, and it now sits at 61.1%.
3. Ohio
Let’s head over to the Buckeye State for third place in the most affordable locations based on a median home sale price of $238,800. Ohio has everything from bustling cities like Columbus and Cleveland to lower taxes and higher median income. Your money will go pretty far even after you buy your home in this Midwest state. Plus, there’s tons to do here, like the Rock and Roll Hall of Fame or Cedar Point!
As with other Midwestern states, Ohio is not very diverse; about 79% of the population identifies as white. However, there are vibrant immigrant communities in many of the largest cities; 4.9% of the population was born outside of the United States. Many communities in the Buckeye State have been at the forefront of confronting racism, including the city of Athens declaring racism a public health crisis that must be addressed immediately.
Ohio has a significant LGBTQ+ population that makes up about 4.3% of Ohioans, 30% of which have kids. The state is also known for having enshrined reproductive rights in its constitution, showing that progressive values are Ohio values, too. This is especially important for LGBTQ+ people because opponents used anti-trans rhetoric to oppose the amendment, but their messaging failed.
2. Mississippi
Mississippi is the state with the lowest cost of living index score in the country. The Magnolia State is an incredibly affordable area with great healthcare, low utility bills, and other cheap necessities. When you buy a house here, the median home price is $238,600, so that makes it the best option if you want both an affordable home and a low cost of living.
In terms of diversity, Mississippi sits around the middle of the pack with a ranking of 21; about 37% of the population is Black or African American, and there is a very strong and vibrant history of anti-racism activism throughout the state.
Mississippi’s LGBTQ+ population is relatively small, at only 3.5% of the population, 34% of which are parents. Though the South has historically been known as unfriendly to LGBTQ+ people, the state recently elected its very first openly gay state legislator, representing hope for the community.
1. Iowa
Iowa also has a great position on the cost of living index, though it cannot match states like Mississippi and Oklahoma. What it does have is the lowest median home value in the country at $232,100. This makes it the cheapest state in the nation if you need to buy a house based on the median home price. Wide-open spaces, unique foods, and friendly communities like Cedar Rapids top off the benefits of purchasing a typical home in the Hawkeye State.
Iowa is not very diverse; over 86% of the population is white, and only 3.78% are Black or African American. However, the tide is turning to better respect the BIPOC community in the state: Iowa City held its first Black History Ball in 2022, suggesting there are plenty of opportunities to engage with more diverse perspectives.
In terms of LGBTQ+ individuals, they represent only 3.6% of the population, but the Movement Advancement Project gives the state a Fair rating, meaning that there are few discriminatory laws in place. Additionally, this Midwestern area was the third in the country to legalize same-sex marriage, showing a history of progressive views.
10 Cheapest States to Buy a House Based on Median Home Prices to Average Household Income Ratio
Another way to evaluate the cheapest states to buy a house is by comparing the median home value to the average household income. To get this ratio, you simply divide the amount of the median home sale in the state by the average household income, so the lower the resulting number, the cheaper that state is to buy a house.
1. West Virginia - 2.9
The Mountain State is well known for its economic opportunities and affordable housing. The jobless rate has continuously fallen for several years and the top industries by revenue are hospitals and coal mining. Gas stations with convenience stores are the next largest industries, and the reason is that West Virginia extracts a lot of natural gas from the earth.
West Virginia actually has a larger LGBTQ+ population than many of the other states on this list, sitting at about 4%. While its ratings for anti-discrimination laws currently sits at Low, there is hope: most of the anti-transgender legislation that was pushed in the state legislature died without passing, and a bill attempting to ban transgender athletes was overturned.
However, WV ranks dead last in terms of diversity: 91% of the population is white. This doesn’t mean you can’t find happiness and community here, though; 65% of the population in tiny Keystone, WV, is Black.
2. Iowa - 3.0
Iowa has a job market trending in the right direction, with many new positions being created each year. When you combine healthy career opportunities with affordable housing options, you have one of the cheapest states for home-buying. Major cities like Des Moines and Iowa City have the highest concentration of job openings.
3. Kansas - 3.2
Kansas has a solid ranking on the cost of living, but it also has a high position compared to other states in terms of the average family income, which sits just under $100,000. These two elements combine to make the Sunflower State an ideal location to buy a house in, especially with the growth that has occurred in the job market since 2021. Whether you seek a home in Kansas City or a rural community situated in the rolling hills, you can see why this state is ranked so highly on this list.
In terms of diversity, 3.8% of Kansas’ population is LGBTQ+, and there’s a significant portion of queer parents living here. Kansas City got a perfect score on the Human Rights Campaign’s Municipal Equality Index, and KC also has its own community of queer and lesbian women called Womontown!
Kansas is relatively low on diversity, getting a diversity ranking of just 43%, despite being number 15 in most populated states in the country. Final scores of diversity show that over 80% of the population is white, but even 70 years after desegregation, the state continues to push for better equity in education and public life.
4. Mississippi - 3.3
We already know Mississippi has a low median home price, making it one of the more affordable states to move to, but it also has a strong market for educators, construction workers, and food and beverage businesses. Forestry is another important industry in the Magnolia State.
5. Kentucky - 3.3
Some of the most in-demand jobs in Kentucky include truck drivers, nurses, and pharmacists, all of which have high earning potential. When you compare the median household income to home prices throughout the state, you will find many affordable places to live in Kentucky.
6. Oklahoma - 3.3
Oklahoma is right at the top of the list for cheapest home prices in the United States. Some of the fastest-growing industries in the state are construction, education, health services, and hospitality. With low home prices and many strong career opportunities, it is very doable to buy a house in Oklahoma City or anywhere else in the state for a great price.
7. Ohio - 3.3
There is a particularly strong demand for workers in both the Columbus and Cincinnati areas. With high-paying jobs available and low home prices, you can find plenty of options in the housing market that are very affordable. Education and health services are seeing the greatest amount of growth in Ohio, so workers in those industries are most likely to find solid careers to afford their mortgage rates.
8. Illinois - 3.3
76% of the land in Illinois is covered by farms, so workers in the agricultural industry will find the greatest career opportunities in this state. Agriculture is followed closely by manufacturing and transportation. Though it is not the cheapest state for home prices, the combination of a solid median household income and affordable homes makes it a desirable location for many buyers.
Illinois has a relatively large LGBTQ+ population, making up about 4.3% of all residents, and it has the highest rating for anti-discrimination protections. Several of its colleges, including the University of Illinois-Chicago and Northern Illinois University, also rank very high in LGBTQ+ protections.
Additionally, Illinois has one of the most diverse populations of anywhere on this list, with 40% of the population identifying as non-white. It is important to note, though, that Illinois has struggled with racial equity despite its large BIPOC population.
9. North Dakota - 3.4
North Dakota has one of the highest average household incomes on this list. However, slightly elevated home prices move it down in terms of the ratio between income and home sales. When compared to the rest of the country, it is still one of the ten most affordable states, especially for agricultural and mining workers who will find plenty of job opportunities here.
10. Louisiana - 3.5
Heading back down to the Bayou State for the final entry on this list, Louisiana is a good mix of income potential and one of the most affordable regions for home prices in the country. The highest number of workers are employed by health care and social assistance entities. The average household income is a respectable $88,000.
Which One is The Most Affordable State?
There is no perfect answer that works for every buyer; it depends on what is of individual importance to you. The most affordable, best state will depend on your individual needs. For some who make less money than the median household income, they will need to choose a state with a low cost of living and lower home prices, such as Mississippi or Oklahoma.
Others may want to focus on earning potential with growing industries in each state compared to the national average. In either case, finding the most affordable locations when you buy a house should come down to both your financial situation and the home prices you can find.
Wherever you choose, be sure to consider the upfront expenses associated with buying a home, including the down payment. While you can often purchase a home with as little as 3% down if you’re a first-time homeowner, putting down 20% will reduce your costs over time as you won’t have mortgage insurance.
Pride Lending is a team filled with knowledgeable experts in the world of home buying. Our staff is composed of allies and members of minority communities, including LGBTQ+ and BIPOC individuals; we help people from all walks of life achieve their dream of homeownership.
You can rely on our guidance throughout the whole mortgage process, starting with finding the best states to move to based on median household income, the cost of living index, and home prices. We can also help you find local, state, and national down payment assistance programs to ease the upfront costs of homeownership, as well as connect you with loan options that require a smaller down payment.
Call our team today at 725-231-0192 to find out more, send us an email, or check out our website. Let’s start a conversation today about your home-buying needs.
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