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Kiplinger
Kiplinger
Business
Erin Bendig

10 Best Affordable Cities for Homebuyers on a Budget

Image of a sign reading "price reduced/for sale" in front of a home. .

Homebuyers on a budget are more likely to make their home owning dreams a reality in several cities across the U.S., according to a new study from insurance broker Insurify. 

Over the last year, homes became increasingly more difficult to afford, especially for first-time buyers, due to high mortgage rates and real estate prices, along with low housing stock. In the first half of 2020, thanks to the pandemic, the difference in mortgage refinancing savings between high and low-income borrowers increased by 10. And as of January 2024, the median U.S. home selling price was $402,523, up 5.2% compared to the previous year, reports Redfin. The number of homes for sale fell 3.4%.

"Low mortgage rates in 2020 and 2021 allowed a lot of people to stretch their budgets and buy slightly more expensive homes," Cassie Sheets, Data Journalist at Insurify tells Kiplinger. “But people who didn’t get in when rates were low have more limited choices. This is causing further wealth disparity.” 

In order to help homebuyers bridge this gap, Insurify has determined the most affordable and desirable cities that a median household income of $75,000 (the average as of 2022) could afford.

Best affordable cities for homebuyers on a budget

In order to determine the 10 best cities for homebuyers with a household income of $75,000, Insurify compared several factors — housing costs, broader cost of living, increases in home values, population growth, crime rates, and unemployment rates. Housing costs were based on a 5.5% interest rate and a 20% down payment in order to eliminate the variable of private mortgage insurance (PMI). 

The study also followed the “30% rule” which instructs individuals to spend no more than 30% of their gross income on housing. Therefore, a household earning $75,000 annually should spend at most $1,865 a month on housing costs. As such, Insurify only considered metro areas with average monthly housing costs below this amount. 

These are the best cities to buy affordable homes with a $75,000 income in 2024.

1. Champaign, Illinois

Monthly housing costs: $1,422

Median home value: $196,732

Average annual home insurance rate: $1,753

2. Peoria, Illinois

Monthly housing costs: $1,090

Median home value: $141,649

Average annual home insurance rate: $1,753

3. Detroit, Michigan

Monthly housing costs: $1,697

Median home value: $240,338

Average annual home insurance rate: $3,060

4. Mansfield, Ohio

Monthly housing costs: $1,075

Median home value: $166,899

Average annual home insurance rate: $1,192

5. El Paso, Texas

Monthly housing costs: $1,527

Median home value: $210,010

Average annual home insurance rate: $1,976

6. Duluth, Minnesota

Monthly housing costs: $1,468

Median home value: $229,846

Average annual home insurance rate: $1,989

7. Bangor, Maine

Monthly housing costs: $1,495

Median home value: $250,233

Average annual home insurance rate: $1,208

8. Lansing, Michigan

Monthly housing costs: $1,457

Median home value: $216,402

Average annual home insurance rate: $1,671

9. Rochester, New York

Monthly housing costs: $1,728

Median home value: $235,391

Average annual home insurance rate: $1,942

10. Syracuse, New York

Monthly housing costs: $1,597

Median home value: $215,724

Average annual home insurance rate: $1,942

Overall, if you’re looking for affordable housing, look at small-to-midsize Midwestern cities, where individuals can get the most for their money. Many of these cities have undergone revitalization projects and have plans for future development.

“Small-to-midsize cities offer more opportunities for homeownership on a median household income. The houses are more affordable, home insurance is cheaper, and many have seen some downtown revitalization,” says Sheets. "First-time homebuyers can contribute to these community improvements and can benefit from their home values rising as a result." 

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