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The Cheapest, Most Affordable States To Buy A House In 2021

Molly Grace7-Minute Read
February 27, 2021

There are a lot of reasons why we choose to live in the places we do – convenience, proximity to family and friends, personal preferences, jobs and the like.

One of the biggest factors, naturally, is affordability. After all, housing is the largest item in most Americans’ budgets. Where you live can have a huge impact on your finances, for better or worse.

To determine which states are the most affordable for home buyers, we turned to Census data.

We looked at median home values, median household incomes, and what percentage of their monthly incomes homeowners with mortgages are spending on housing costs. Here’s what we found.

Median Homeowner Costs In The U.S.

  • U.S. population: 328,239,523
  • Median household income: $65,712
  • Median home value: $240,500

Many experts recommend using the 30% rule to determine how much you should spend on housing.

Basically, the rule states that you should spend no more than 30% of your gross income on monthly housing costs. Those who spend more than 30% are considered to be “cost-burdened.”

In practice, how much a person should spend each month on housing varies from household to household. For our purposes, however, the 30% rule gives us a general idea of how affordable a given area is because it compares median income to median housing costs.

According to the Census, U.S. homeowners with a mortgage spend around $1,609 each month on housing costs, which means they’re spending just under 30% of their income on housing, which is in line with the 30% rule.

So, with the national median as your benchmark, which states in the U.S. are the best for budget-minded buyers?

The most affordable states to buy a house in 2021 are:

#1 Cheapest State: Indiana

#2 Cheapest State: Iowa

#3 Cheapest State: Ohio

#4 Cheapest State: West Virginia

#5 Cheapest State: Michigan

#6 Cheapest State: Wyoming

#7 Cheapest State: Wisconsin

#8 Cheapest State: Missouri

#9 Cheapest State: North Dakota

#10 Cheapest State: South Carolina

The Cheapest Real Estate In America

Like we see with the 30% rule, true affordability isn’t just about which houses cost the least amount of money to buy.

Let’s say, for example, you move to an area where home prices are well below the national average, but average incomes are also relatively low. Even though the home prices are cheap, if your income is too low, you still might not be able to afford to purchase one of those cheap homes.

Alternatively, you could move to an area where home prices are higher, but average incomes are also higher to better match the area’s cost of living.

Here are the states that are not only cheap, but affordable, with lower-than-average home costs and median monthly housing costs below the 30% threshold.

#1 Cheapest State: Indiana

  • Indiana population: 6,732,219
  • Median household income: $57,603
  • Median home value: $156,000

From the cool, city vibes of Indianapolis, to the hip college town of Bloomington, to an area known affectionately as “the Region” which is home to the wonderfully wacky annual Pierogi Fest and is just a short train ride from Chicago, the Hoosier state has lots to offer.

It’s also the most affordable place to live on our list, with a housing cost ratio just under 24%.

#2 Cheapest State: Iowa

  • Iowa population: 3,155,070
  • Median household income: $61,691
  • Median home value: $158,900

Though the state is the country’s top producer of corn, Iowa isn’t all rural farmland. Whether they’re looking for a charming small town, a bustling suburb and or a big city, Iowans-to-be won’t have trouble finding a place that suits their needs.

Iowa is a particularly great place for those who are looking for that “city living” experience with a more affordable cost of living and friendlier neighbors. There’s the arts and culture of Cedar Rapids, the shopping and eats of nearby Iowa City, or the ample economic opportunity of Des Moines (the state of Iowa has the third lowest unemployment rate in the county), to name a few of Iowa’s many great urban areas.

Homes Currently For Sale

Cedar Rapids Iowa Home For Sale

3628 Knight Ct SW, Cedar Rapids

$275,000 – 3 beds, 3 baths – 2,062 square feet

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#3 Cheapest State: Ohio

  • Ohio population: 11,689,100
  • Median household income: $58,642
  • Median home value: $157,200

Did you know that an unusual number of astronauts hail from Ohio?

If the thought of potentially raising the next Neil Armstrong doesn’t convince you to move your family to Ohio, the affordable living, vibrant cities and ample cultural offerings just might.

The state also has a lot of natural beauty and offers outdoorsy types plenty of opportunities for adventure, from the splendor of Hocking Hills State Park to the sunny islands off the coast of Lake Erie.

Homes Currently For Sale

3000 Van Aken Blvd, Shaker Heights

$289,000 – 4 beds, 2 baths – 2,281 square feet

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#4 Cheapest State: West Virginia

  • West Virginia population: 1,792,147
  • Median household income: $48,850
  • Median home value: $124,600

Mountainous, beautiful West Virginia is a great choice for those who love nature and every activity that takes place in it, including hiking, fishing or even white-water rafting. In this state, you’ll get beautiful natural views no matter where you are.

West Virginia also has a few smaller cities, such as the charming state capital of Charleston, for those who don’t want to feel quite so remote.

#5 Cheapest State: Michigan

  • Michigan population: 9,986,857
  • Median household income: $59,584
  • Median home value: $169,600

Michigan is an extremely diverse state, both in terms of its people and its locales. There’s the bustle and economic opportunity of Detroit and its many surrounding suburbs, the eternal coolness of Ann Arbor, the liveliness of Grand Rapids, the charm of Traverse City, the tranquility of the Upper Peninsula, and much more.

Avid hikers will find refuge in the state’s abundant natural offerings, while suburbanites will love the convenience of being close to so much shopping and so many dining options.

#6 Cheapest State: Wyoming

  • Wyoming population: 578,759
  • Median household income: $65,003
  • Median home value: $235,200

Wild Wyoming draws millions of visitors each year to Yellowstone, one of its most well-known sites, but it’s also a beautiful and affordable place for those looking to buy a home and settle down – provided you like a quiet, unbothered lifestyle.

Wyoming is a big state with few people, so its population density is pretty low. This means that many places tend to have a small town feel and you might need to drive a few miles before you get to your neighbor’s house.

Wyoming has no state income tax, further boosting its reputation of affordability.

#7 Cheapest State: Wisconsin

  • Wisconsin population: 5,822,434
  • Median household income: $64,168
  • Median home value: $197,200

Wisconsin is an ideal place to live. With all the cultural amenities and conveniences of its many bustling cities and suburbs, its affordability may come as a shock to those who are used to living in less interesting places with higher costs of living.

Breweries, nightlife, dining, art, outdoor activities and friendly people abound in this dynamic state. Plus, state capital Madison consistently makes “top places to live in the U.S.” lists.

Homes Currently For Sale

Duplex For Sale Madison Wisconsin

4310 Melody Ln, Madison

$114,900 – 2 beds, 1 bath – 987 square feet

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#8 Cheapest State: Missouri

  • Missouri population: 6,137,428
  • Median household income: $57,409
  • Median home value: $168,000

Food lovers, this is the state for you. Missouri boasts not one but two iconic, signature dishes: St. Louis-style pizza and Kansas City barbecue.

Missouri is very affordable, great for families and its cities have offerings for every type of interest, whether that be sports, the arts, shopping or dining.

#9 Cheapest State: North Dakota

  • North Dakota population: 762,062
  • Median household income: $64,577
  • Median home value: $205,400

North Dakota is another beautiful but quiet state that isn’t for everyone, but for the right person, it can be a wonderful place to live. It’s got one of the lowest unemployment rates in the country, and a surprisingly impressive food scene throughout the state.

Folks who love spending most of their time outdoors will love North Dakota and all of its offerings, from hiking and biking to hunting and fishing – or ice fishing in the winter.

Speaking of winter, North Dakota’s winters are infamous, and anyone who settles down here should be sure they’re OK with frigidly cold weather.

#10 Cheapest State: South Carolina

  • South Carolina population: 5,148,714
  • Median household income: $56,227
  • Median home value: $179,800

South Carolina isn’t just a beautiful, sunny vacation destination – it’s also a great and affordable place to live.

Home buyers looking for a warm climate, diverse culture and great food will feel right at home in South Carolina. Whether you’re soaking up the sun on one of the state’s many beautiful beaches or soaking up the history of its many famous sites and landmarks, you’ll never be bored living in this endlessly fascinating state.

The Bottom Line

An area’s affordability isn’t the only thing you should consider when you’re thinking about moving to a new place, but it is one of the most important factors.

If you’re moving to a new state, understanding its average real estate costs and cost of living can help you plan out what your future budget will look like when you get there.

Considering a change of pace? When you work with a Rocket Homes® Verified Partner Agent, you can buy with confidence.

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Molly Grace

Molly Grace is a staff writer focusing on mortgages, personal finance and homeownership. She has a B.A. in journalism from Indiana University. You can follow her on Twitter @themollygrace.