17 Places You Can Buy a Home on a Modest Income

Couple outside home, holding cash.
Photo by Syda Productions / Shutterstock.com

Home prices continue to soar in most of the country — but there are places where they remain cheap.

In the second quarter of this year, single-family home prices rose in 161 out of 178 metropolitan areas, according to the latest quarterly data from the National Association of Realtors (NAR).

The national median price for existing single-family homes reached a new peak of $269,000 last quarter — 5.3 percent higher than it was one year prior. Rising mortgage rates also are putting more pressure on people hoping to buy a home.

Despite the challenges homebuyers in many cities face, homes remain downright affordable in some pockets of the nation.

Buying a home in the nation’s cheapest markets

In the metropolitan areas that currently have the most affordable housing markets, buyers can afford a home with an income of as little as $19,000, the NAR says. In many other areas, buyers can afford a home with a modest income of $30,000 or $40,000.

The following metropolitan areas were the most affordable in the second quarter of this year, based on qualifying income, according to NAR. To qualify to buy a home, a buyer who puts down 20 percent would need the following incomes.

All income figures assume a 4.7 percent mortgage interest rate and a monthly principal and interest payment that is limited to 25 percent of income:

  1. Youngstown-Warren-Boardman, Ohio-Pennsylvania: $18,984
  2. Cumberland, Maryland-West Virginia: $19,084
  3. Decatur, Illinois: $19,487
  4. Elmira, New York: $21,377
  5. Erie, Pennsylvania: $24,474
  6. Binghamton, New York: $24,715
  7. Wichita Falls, Texas: $25,500
  8. Toledo, Ohio: $25,862
  9. Rockford, Illinois: $25,902
  10. Peoria, Illinois: $26,022
  11. Waterloo-Cedar Falls, Iowa: $26,183
  12. Davenport-Moline-Rock Island, Iowa-Illinois: $26,203
  13. South Bend-Mishawaka, Indiana-Michigan: $26,726
  14. Fond du Lac, Wisconsin: $27,068
  15. Florence, South Carolina: $27,370
  16. Canton-Massillon, Ohio: $27,511
  17. Springfield, Illinois: $27,792

To put all of this in perspective, the national median income for families was $75,106 in the second quarter of this year, according to the NAR’s analysis of U.S. Census data.

Also, even if you could not make a 20 percent down payment, you wouldn’t need that much higher of an income to qualify to buy a home in these markets. For example, in the No. 1-ranked Youngstown area, you would need an income of $21,357 with a 10 percent down payment or $22,543 with a 5 percent down payment.

Meanwhile, in the most expensive metro area — San Jose, California, and surrounding areas — you would need an income of $282,546 with 20 percent down to $335,524 with 5 percent down to qualify to buy a home.

Tips for buying a home

Looking at the list above, one region is conspicuously absent: the West. That’s not a surprise, as prices are soaring in that region of the country. In fact, the 10 markets where prices are growing fastest are all located in the West.

To find out which cities are rapidly becoming least affordable, check out “Looking for a Bargain on a Home? Don’t Move Here.”

Buying a home is a cornerstone of the American Dream, no matter where you live. If you have your heart set on buying your own place, check out “10 Steps to Finding Your Dream Home.

What’s your take on this news? Sound off below or on Facebook.

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