A starter home is supposed to be the cheap one. The fixer-upper. The first rung on the ladder. The place you buy with a 20-something income and trade up from a few years later.
Not anymore.
A Zillow analysis found 233 U.S. cities where the typical starter home now costs at least $1 million. Five years ago, only 85 cities crossed that line. The number has nearly tripled.
California still has the most cities on the list — 113 of them. But this stopped being a California-only story years ago. New York has 32. New Jersey has 20. Florida and Massachusetts have 11 each. Minnesota and Rhode Island just joined.
The good news? Nationwide, a typical starter home still costs around $192,514, which a median-income household can actually swing. The bad news? In the metros where most jobs and most people are, the math has gone insane.
So what do you do if you live in one of these cities and want to buy a first home? Plenty, actually. Here are eight moves that still work.
1. Hunt the ZIP codes just outside the hot ones
The line between a $1 million starter home and a $400,000 starter home is often a 15-minute drive. Pricey cities are surrounded by cheaper ones that share the same schools, jobs, and freeways but not the brand-name ZIP code.
Take the San Francisco metro. According to Zillow, 43 cities in that metro alone have million-dollar starter homes. Dozens of nearby cities don’t. Same commute to most Bay Area jobs. Same weather. Half the price.
Pull up a map and draw a circle around where you actually want or need to be. Then look hard at the towns most buyers ignore.
2. Use an FHA loan and stop saving for 20% down
The 20%-down rule is a holdover from a different era. It’s not a law. It’s not a requirement. And in today’s market, it can lock you out of homeownership for an extra decade while prices keep rising.
The Federal Housing Administration lets qualified buyers put down as little as 3.5% with a FICO score of 580 or higher, according to Bankrate. On a $400,000 home, that’s $14,000 instead of $80,000.
Yes, you’ll pay mortgage insurance until you build enough equity. Yes, it costs more over time. But if you’re a renter watching home prices climb 5% a year, waiting another five years for a bigger down payment is the more expensive choice.
3. Buy less house than the bank says you can afford
This is the rule that’s made more people rich than any other piece of homebuying advice. A lender’s job is to tell you the maximum they’ll loan you. Your job is to ignore that number.
I’ve been writing about money since 1991, and I’ve watched the same mistake destroy the same people every decade. Maxing out your housing budget leaves no margin for the property tax hikes, insurance spikes, and surprise repairs that come with every home.
In Florida and California especially, insurance premiums have doubled or tripled in the last few years. Property taxes get reassessed when you buy. A house that fits your budget on paper can crush you in practice once those bills arrive — one of the dumb mistakes nearly everyone makes when buying a house.
Aim for a mortgage payment that takes 25% of your take-home pay, max. Not what the bank says you can afford.
4. Live where you actually want to, not where everyone else does
The Zillow data tells you something useful if you read it sideways. Million-dollar starter homes cluster in a handful of regions — coastal California, the NYC tri-state area, parts of Florida and Massachusetts. The rest of the country is still affordable.
If your job is remote or portable, the move you actually need is geographic. Buying a real house in Pittsburgh, Indianapolis, Birmingham, or Kansas City for $250,000 isn’t a downgrade. It’s how regular people still build wealth.
I’m not saying leave your family or your career behind. I’m saying “I have to live in San Francisco” is sometimes a story you’ve told yourself, not a fact.
Quick gut-check — if your money advice is coming from random online influencers, you’re playing a dangerous game. I’ve been a CPA since 1981 and writing about money since before the internet existed. Sign up for the free Money Talks Newsletter and get expert advice that’s been tested by time.
5. Buy where employment is actually growing
When people ask me whether to buy a home in a certain area, the first criterion I single out isn’t interest rates, construction trends, or even tax policy. It’s jobs. Specifically, whether the local job market is expanding or contracting.
Buy a $250,000 house in a city where employment is rising 3% a year, and in 10 years you’ll likely have a $400,000 house.
Buy that same $250,000 house in a city where employment is flat or falling, and in 10 years you might still have a $250,000 house, or worse.
This is why I tell every first-time buyer to start their search at the Bureau of Labor Statistics. Look at metro-area employment data. Look at the five-year trend. Look at which industries are growing locally.
Cities with rising jobs have rising rents, rising demand, and rising home values. Cities with shrinking employment are the opposite — and no great deal on a house is worth catching a falling knife.
(This makes me wonder about tech hubs like San Francisco and Seattle. If AI is really going to replace a lot of tech jobs, could that lead to shrinking job opportunities? It hasn’t happened yet, but it’s something interesting to keep an eye on.)
6. Explore down-payment assistance most people don’t know exists
Every state has these programs. Most cities do too. The federal government does. And most first-time buyers walk past the money because they assume they won’t qualify.
The programs come in three flavors: grants you don’t repay, second mortgages with deferred payments, and forgivable loans that vanish if you stay in the home long enough. Income limits are usually higher than people expect.
Start at the U.S. Department of Housing and Urban Development’s homeownership page for your state. Then check your state housing finance agency. Then check your city. One evening of digging can be worth $10,000 to $20,000 toward a down payment — and here are 10 ways to pull together the down payment for a home if you need more options.
7. Do the rent-versus-buy math honestly
Owning a home isn’t always smarter than renting.
The math depends on how long you’ll stay, what rents do in your area, what your real all-in monthly cost is (taxes, insurance, maintenance, HOA fees), and what you could earn investing the down payment somewhere else.
If you’re going to move in three years, renting almost always wins. If you’re settling in for 10-plus years, buying usually wins. The middle is messy. Walk through the real tradeoffs before you commit.
Run the actual numbers before you hand a third of your income to a house just because your parents said you should.
8. Stop waiting for rates to crash
The 30-year fixed mortgage averaged around 6.5% in May 2026, per Freddie Mac. That’s down from a year ago but nowhere near the 3% rates of 2021. Plenty of buyers are still on the sidelines hoping those numbers come back.
Don’t hold your breath. Federal Reserve policy, sticky inflation, and the federal deficit all point to higher-for-longer being more likely than a return to pandemic-era lows. And even if rates do fall, you’ll be competing with everyone else who was also waiting.
The smarter play: Buy when you can afford the payment at today’s rates. Refinance later if rates drop. Nobody ever refinances a low-rate loan they got a decade ago into a higher one.
The bottom line
A million-dollar starter home shouldn’t exist. The whole concept is an oxymoron. But the data says they exist in 233 cities and counting, which means the rules you grew up with — save 20%, buy young, leverage up — need updating.
The buyers who’ll thrive in this market are the ones who pick the right ZIP code, the right loan, and a payment they can comfortably afford on a regular Tuesday in February when the property tax bill arrives.
Not the ones who get into a bidding war for a fixer-upper at a price their grandparents would’ve called “rich.”
You’re not stuck. You just have to be smarter than the average buyer. And the average buyer in 2026 is making some pretty dumb decisions.
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