Cheapest State To Buy a House In

After West Virginia, all eyes are on the Midwest

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You’ve saved up for a down payment and are in a position to buy a home, but you want the best deal and you’re willing to move to another state to find it. Knowing which states offer the cheapest housing can help narrow your search and help you get the most value out of your money. Keep in mind that other factors, such as job opportunities, weather, culture, proximity to family, and many others are also important to consider.

But to narrow down your search to the most affordable states, learn about the cheapest states and regions for homebuying, typical prices, property taxes, and more to help you decide where to put down roots.

Key Takeaways

  • The Midwest is home to four of the five cheapest states to buy a home in.
  • Four of the five states have low population density, although most have more populous metro areas for city-lovers to consider.
  • Steep property taxes can make specific locations more expensive in the long run.
  • Consider other factors such as state income tax, dividend and interest taxes, and property taxes while shopping for your new home.
  • No matter where you buy your home, be prepared to make a down payment and pay for a variety of closing costs. But also look for down-payment assistance programs that can help lower the cost of your upfront expenses.

Cheapest States for Buying a House

The following list of the five cheapest states to buy a home in is based on data from a variety of industry sources:

  • All home prices are typical prices based on Zillow’s data as of April 2022.
  • Property-tax rates reflect property taxes paid as a percentage of housing values, as calculated by the Tax Foundation for 2020.
  • Affordability rankings are based on the National Association of Realtors’ (NAR) 2021 data, which looks at what percentage of home listings are affordable at different income levels.

West Virginia

All factors considered, West Virginia is the cheapest place to buy a house in the U.S. According to Zillow, the typical home value in West Virginia was $132,638—the lowest of any state and well below the typical national home price of $344,141.

The Mountain State also ranks as the fifth most affordable according to the NAR’s December 2021 ratings. Its property-tax rate as a percentage of home values was 0.55%, the fifth lowest in the nation.

West Virginia is in the Appalachian Mountains, not in the Midwest, unlike the other four states on this list. But like three of the others, it has a low population—1.79 million—and a population density of 74.6 people per square mile. So it may appeal most to people who like that kind of setting.

Iowa

Moving more toward the middle of the continental United States, Iowa occupies second place on the list of the cheapest places to buy a house. The Hawkeye State’s $187,720 typical home value is almost $30,000 lower than Indiana’s, and the NAR ranked it the second most affordable state. However, it has the 10th highest property tax rate nationally, at 1.43%.

Iowa has a total population of 3.19 million but as a geographically large state, its population density is only 54.5 people per square mile, which is lower than 37 other states.

Indiana

The Hoosier State, often known for basketball and cornfields, is one of the top spots for affordable home purchases. While it has the 11th lowest typical home value—$216,149—the NAR scores it as the fourth most affordable state for homebuying. Add those facts to its effective property tax rate of 0.84% (which ranks it number 30 out of all 50 states), and Indiana may be a good location for your home purchase.

With a population of 6.79 million people and a population density of 189.4 people per square mile, Indiana offers a mix of rural and metro areas, and your costs will vary depending on which type you choose.

For a larger city experience, consider Indianapolis, home of the NFL’s Indianapolis Colts and site of one of the country’s biggest privately-funded zoos. Indy’s typical home value is around $50,000 higher than in the state as a whole, though, at $263,495.

To see how buying a home in a metropolitan area changes affordability, use the NAR tool to compare a particular metro area with affordability in the state as a whole.

Kansas

The NAR ranked Kansas as the third most affordable state to buy a home in, and Zillow’s calculation for the typical home value comes in at $202,102. Like Iowa, the typical home value doesn’t reflect the fact that Kansas has the 15th highest property-tax rate (relative to home values), at 1.32%. Nevertheless, it’s a solid option as a place to find your next affordable home.

Like the other cheapest states, the Sunflower State state has consistently been one of the cheapest states to buy a home in, ranking in the NAR’s top five most affordable states from 2017 to 2021.

With a population of 2.94 million, Kansas is the least densely populated state in the top five, coming in at number 43 in the U.S. for population density. However, if you’re looking for a large or mid-sized city, try Wichita, Overland Park, or Kansas City.

If you’d like to research more specific areas in a particular state, you can look up median home prices by county on the NAR’s website.

Ohio

The NAR ranks Ohio as the top state for home affordability. The Buckeye State has the ninth-lowest typical home value, at $202,341, but it has the ninth highest property-tax rate in the nation, at 1.52%.

Ohio’s population of 11.8 million is higher than the other four states on this list, and it has a population density of 282.3 people per square mile, making it the most densely populated. It boasts a few larger cities, including Columbus—which has nearly 1 million people—as well as Cleveland and Cincinnati.

Ohio is home to the four most affordable metropolitan areas among the country’s 100 largest metro areas: Akron, Toledo, Dayton, and Youngstown-Warren.

Cheapest Region To Buy a House in the U.S.

Four out of the top five most affordable states are in the Midwest, which is why it’s no surprise the NAR found the Midwest is the most affordable area of the country to buy a home, as of 2022. On the other hand, the West is the most expensive region and is significantly more expensive than the South, Northeast, and Midwest.

Is Cheaper Always Better for Homebuyers?

While it’s enticing to shop in some of the cheapest states, cheaper may not necessarily create an easier buying process or a better living situation.

Increased Competition

Keep in mind that even though a particular area may be cheaper than others, it may also have rising demand and short supply, making it an especially tough market for buyers.

According to an NAR 2022 Q1 report, “markets where median listing prices have grown more slowly have seen shares of inbound listing views from out-of-state and out-of-metro growing more rapidly.”

To get an idea of how competitive an area is, you can use the NAR’s Market Hotness Index to see how “hot” the market is where you’re looking. Hot markets mean that homes are on the market for fewer days than average, the properties move off the market faster, and home listings get more views than average.

More Talk of Taxes

You may also want to consider whether the state you’re considering has a state income tax, how high the sales tax is, and other special tax circumstances that could increase your cost of living compared with a different state. Keep in mind that states without income taxes often make up for it with higher property taxes, sales taxes, and fuel taxes. These seven states do not charge any income tax:

  • Alaska
  • Florida
  • Nevada
  • South Dakota
  • Texas
  • Washington
  • Wyoming

New Hampshire and Tennessee don’t tax your earned income, but they do tax what you earn from dividends and interest.

How To Buy a House in Another State

Once you’re ready to make the move, it’s important to find a trustworthy real estate agent in the new state—someone to advocate for you and guide you in the new locale. Fortunately, it’s fairly easy to view homes and place offers remotely. When you do visit, complete online research in advance to shorten your list and get familiar with your top choices.

Closing on a home purchase in another state can be complicated, especially if you’re selling an existing home. Clear, intentional communication with agents and your lender could make the process more efficient.

Frequently Asked Questions (FAQs)

What credit score do you need to buy a house?

Your credit score affects the interest rate you’ll receive from a lender, and different loan types require different scores. Generally, a lower credit score will result in a higher interest rate on your mortgage, while a higher credit score helps lower your rate. FHA loans require a minimum score of 500 (although a 580 or higher can lower your down payment at 3.5%), while USDA loan lenders generally require a score of at least 640, and conventional loans typically require a minimum score of 620.

How much money do you need to buy a house?

You’ll need to save up enough money for a down payment, but with some loans, you can pay much less or even no money down if you find a down-payment assistance program in the state where you buy. You’ll need to plan for closing costs that include appraisal fees, title insurance, and fees you pay to your lender.

Methodology

To narrow our list from 50 states to five, we reviewed the National Association of Realtors Affordability Distribution Curve and Score dating back to 2016, then examined Zillow data from the current market and five years ago. From there, we ordered the five states based on the NAR’s affordability rankings, then adjusted our rankings based on typical home values (according to Zillow), property tax rates as a percentage of home values, and estimated monthly mortgage payment including property taxes.

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Article Sources

  1. Zillow. “Housing Data.” Select first option in “Data Type” dropdown, select “State” in “Geography” dropdown, click “Download,” then go to column JM.

  2. Tax Foundation. “Facts & Figures: How Does Your State Compare? (2022),” Page 49.

  3. National Association of Realtors. “REALTORS Affordability Distribution Curve and Score.”

  4. Census Bureau. "Historical Population Density Data (1910-2020)."

  5. Indianapolis Zoo. “About the Zoo.”

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  7. National Association of Realtors. “Housing Affordability Conditions Wane in January 2022.”

  8. Realtor.com. "Q1 2022 Cross-Market Demand Report: American Home Shoppers Increasingly Willing To Search From Sea to Shining Sea for Affordable Homes."

  9. H&R Block. “States With No Income Tax.”

  10. Department of Housing and Urban Development. “Handbook 4000.1, FHA Single Family Housing Policy Handbook, Title I Content,” Page 494.

  11. Fannie Mae. “Fannie Mae Introduces New Underwriting Innovations to Responsibly Expand Access to Mortgage Credit.”

  12. Neighbors Bank. “USDA Loan Credit Score Requirements.”

  13. Department of Housing and Urban Development. “Handbook 4000.1, FHA Single Family Housing Policy Handbook, Title I Content,” Page 176.