Top 15 Cheapest States to Buy a House in 2023

Have you ever wondered what state is cheap to buy a house?  Housing costs are an important part of finding what is the most affordable state to live in. Here, I have collected information to help you find cheap states to buy houses by comparing the median monthly homeownership cost with the median annual household income.

Median Homeowner Costs In The U.S.

The U.S. Census Bureau states median homeowner costs in the U.S. are $1,595 per month when including a mortgage. On the basis of a median household income of $62,843 this represents 30.5% of a household’s monthly income.

Most financial advisors encourage homeowners to keep their homeownership expenses below 30% of their monthly income. Homeownership expenses include the cost of repaying the loan including private mortgage insurance (PMI) if applicable, property taxes, and homeowner insurance. You can better protect your financial security by buying a home in a state with higher income potential but low home prices.

What Factors Impact Your Housing Costs?

When looking for cheap states to move to housing costs are probably at the top of your list.  What’s more important is to know what factors are included in housing costs.  Here is what to consider:

• Home Prices – The most obvious is the actual cost of the home.  Home prices are simply more expensive in some states than in others.  The more expensive the home the higher the monthly cost it will be to pay for the home.  Cheaper states to live in have cheaper houses.
• Property Taxes – Property taxes affect the cost of owning a home.  Property taxes can not be avoided.  Therefore, homebuyers would be wise to look at states with strong defenses against increasing property taxes.  Indiana is a great example.  Indiana has written into its constitution the effective property tax rate on a resident’s primary home can not be greater than 1% of the assessed value of the home.
• Insurance Costs – We all say your home is your #1 investment.  So, I bet you intend to insure the home against losses or disasters.  Therefore, homes in lower disaster likelihood areas typically have lower insurance costs.
• Utility Costs – What good is a home if it is cold in the winter and hot in the summer?  We all need comfortable shelter.  Many states have regulate utilities in a different ways.  Choose to live in a state where utility service providers are regulated in a way that is likely to keep the cost of energy stable over time.

Most Affordable States to Buy a House

Here, I have narrowed down the list to tell you which one are the cheap states to buy houses.

1. Indiana

• Median Household Income: $56,303
• Median Home Price: $141,700
• Median Monthly Ownership Costs With A Mortgage: $1,148

The number one of all the states to buy cheap houses is Indiana.  Indiana is the state with the most affordable housing in the U.S. when compared to household income. Monthly median homeowner costs are just 24.4% of the median household income.

Indiana is largely a rural state but does have several large cities and metro areas. Some of these include Indianapolis, Ft. Wayne, and Northwest Indiana locally referred to as The Region. This portion of Indiana is home to over 900,000 residents and is within daily commuting distance of Chicago, the third largest U.S. city.  Also, since Indiana has the cheapest home prices relative to income, it is the best state to buy a big house for cheap.

Other features which make Indiana an affordable place to live include it’s low flat income tax and it’s property tax structure. The Indiana income tax rate is a low 3.23% regardless of how much you earn. Also, Indiana law limits property taxes for your primary residence to no more than 1% of the assessed value for the home. All this makes Indiana the most affordable state to live.

Did you know that Quadwalls.com is from Indiana?  Yep, that is true!  So, if you are ready to buy a home in the state with the cheapest houses for sale click here to start searching for homes for sale in Indiana.

2. Iowa

• Median Household Income: $60,523
• Median Home Price: $147,800
• Median Monthly Ownership Costs With A Mortgage: $1,260

Iowa is the second most affordable state when looking at housing alone. The median Iowan spends 25% of monthly household income on homeownership costs. This makes Iowa the second most affordable place to own a home in the U.S. relative to your earning potential in the state.

Beyond Iowa being one of the cheaper states to live in, Iowa is mostly a rural state made up of small towns and cities. Iowa offers homebuyers a low stress, low congestion type of place to live with lower crime rates than the U.S. average. Iowa has a stable economic outlook and relatively low income taxes, too.

Be prepared for the weather, though. Iowa experiences all four seasons with drastic changes from summer to winter. You will experience hot weather in the summer and bitter cold in the winter. But, if you are searching for a cheap state to buy house take a look at some Iowa real estate.

3. North Dakota

• Median Household Income: $64,894
• Median Home Price: $193,900
• Median Monthly Ownership Costs With A Mortgage: $1,426

Another cheap state to buy a house is North Dakota. If you are thinking about moving to North Dakota, plan to spend about 26.4% of your monthly income on homeownership expenses. That’s not bad. Not bad at all. North Dakota is actually one of the most affordable places to buy a home in the U.S. when compared to earning potential.

North Dakota offers its residents a very low cost of living. The income tax rate is just 1.1% to 2.9% depending on your income. The sales tax rate is low, too, at just 5%. Property taxes are extremely low, too. North Dakota has a pretty complex scheme for determining property taxes. What you need to know is most homeowners pay an effective rate of 0.40% to 1.3% of their home’s market value. That is low.

Though landlocked and the recipient of some mighty cold winter weather, North Dakota can be a great place to live. The state is large but home to less than 800,000 people meaning it should be easy to find a home without neighbors right on top of you. North Dakota also has a very stable economic outlook and low crime rates.

4. Arkansas

• Median Household Income: $49,475
• Median Home Price: $133,600
• Median Monthly Ownership Costs With A Mortgage: $1,103

Arkansas is one of the cheap states to buy land and homes.  The cost of homeownership is just 26.7% of the median annual household income in the state.  Other factors making Arkansas one of the cheaper states to live in is its low income tax rate and low effective property tax rate of just 0.61% making it the 12th lowest in the U.S.

Large cities in Arkansas include Little Rock, Jonesboro, and the Fayetteville metro area.  Arkansas overall is a stable state that does not have either meaningful growth potential or the likelihood of a deteriorating economy. Arkansas is home to Wal-Mart corporate headquarters which is the largest employer in the U.S.

5.  Nebraska

• Median Household Income: $63,015
• Median Home Price: $164,000
• Median Monthly Ownership Costs With A Mortgage: $1,412

Nebraskans spend just 26.9% of their annual income on homeownership costs.  This makes Nebraska one of the cheap states to move to in the U.S.  Nebraskans haver a low to moderate annual income tax rate and a lower state sales tax rate.  Nebraskans have the higher property tax, though, with an average effective rate of 1.61%.

Nebraska is a farm state but does have some larger cities.  Large cities in Nebraska include Lincoln and Omaha.  The state is relatively insulated from many natural disasters.  However, if you like being near the water Nebraska might not be for you.  Nebraska has no shoreline and few lakes.

6. West Virginia:

• Median Household Income: $46,711
• Median Home Price: $119,600
• Median Monthly Ownership Costs With A Mortgage: $1,050

West Virginia is a cheap state to buy a house.  Homeownership is affordable in West Virginia. Residents of West Virginia spend about 27% of their monthly income on housing. This makes West Virginia the third most affordable place to buy a home in the U.S. West Virginia has a homeownership rate of over 73%.

West Virginia is a state of over 1.8 million people located in the Appalachian region of the continental U.S. The state has a low cost of living with income tax rates of just 35 to 6.5% depending on your annual earnings. West Virginia boasts having a stable economic outlook upwards. Unfortunately, the state is starting from a low as its core industry of mining fossil fuels has been deteriorating over the years. The optimism is in the fact the state is working to diversify its economy.

7. Ohio

• Median Household Income: $56,602
• Median Home Price: $145,700
• Median Monthly Ownership Costs With A Mortgage: $1,282

Ohio is one of the cheap states to live in USA. Ohioans spend 27.2% of their monthly income on housing. This makes Ohio one of the most affordable places to be a homeowner. Ohio is a more populated rural state. There are several large cities to choose from including Cincinnati, Cleveland, Toledo, Columbus, and Dayton. The state has many smaller towns and cities, too.

Ohio offers homebuyers a relatively low cost of living, too. Most people living in Ohio pay less than 3.7% in state income taxes. High earners’ highest tax bracket tops out at 3.99%, too. The state has a robust education system including Ohio State University. Ohio continues to make economic progress, too.

There are a surprisingly large number of companies based in Ohio. Some of these include Proctor & Gamble, Goodyear, Kroger, and Cleveland Clinic. Ohio offers a lot of opportunities to grow your career.

8. Michigan

• Median Household Income: $57,144
• Median Home Price: $154,900
• Median Monthly Ownership Costs With A Mortgage: $1,298

Michigan came in 8th place among the cheaper states to live in.  Michiganders spend just 27.3% of their monthly income on homeownership costs. This makes Michigan one of the most affordable states to call home.  The median home sale price in Michigan was $154,900.

Michigan real estate is diverse. The southern half of the state is quite populated. However, the northern half has far fewer people and opportunities. Therefore, homebuyers will see a big difference in home prices between southern and northern Michigan. Waterfront homes also affect the prices, too.

If you have dreamed of owning a waterfront home, think about moving to Michigan. Michigan is in the top 10 states with the most shoreline. Over 3,200 miles of shoreline exists in Michigan which borders lakes Michigan, Superior, Huron, and Erie.

9.  South Dakota

• Median Household Income: $59,896
• Median Home Price: $174,600
• Median Monthly Ownership Costs With A Mortgage: $1,367

South Dakota is one of the cheap states to buy a house.  South Dakotans spend just 27.4% of their income on homeownership costs.  The median household income in South Dakota is $59,896 vs. a median monthly homeownership cost of $1,367.  Other factors making South Dakota a cheaper state to live in is the fact there is no personal state income tax and a low state sales tax.

South Dakota is largely a rural state made up of towns and small cities.  South Dakota’s largest cities are Sioux Falls and Rapid City.  Homeowners in South Dakota likely pay lower homeowner insurance costs.  South Dakota has a low probability of wide area natural disasters.  Cons of living in South Dakota is the weather which can be both very hot in the summer and very cold in the winter.

10.  Kansas

• Median Household Income: $61,091
• Median Home Price: $157,600
• Median Monthly Ownership Costs With A Mortgage: $1,400

Kansas is a cheap state to buy a house.  Kansans spend just 27.5% of their annual income on homeownership costs.  The median home sale price in Kansas is $157,600.  With a median house payment of just $1,400 this makes Kansas one of the cheaper states to live in.  Other factors making Kansas an affordable place to live is its low income tax rate and moderate state sales tax.

Kansas is a rural farm state located in the center of the continental U.S.  Homeowner insurance costs are likely low, too, due to the low probability of mass damage natural disasters like floods, earthquakes, and hurricanes.  Population centers in Kansas include Topeka and Kansas City.

11. Missouri

• Median Household Income: $55,461
• Median Home Price: $157,200
• Median Monthly Ownership Costs With A Mortgage: $1,277

Missouri is one of the states to buy cheap houses.  Missouri homeowners currently spend about 27.6% of their monthly income on homeownership expenses. Such a low rate makes Missouri one of the most affordable states to own a home.

Missouri is a landlocked state located centrally in the U.S. The state is home to over 6,000,000 people making it quite populated. The state possesses a lot of natural beauty especially in the southeastern region near the Ozarks.

Missouri offers other economic benefits, too. The state’s income tax rate is 5.4%. This is low compared to many other states.  The sales tax rate is just 4.225%, too. Missouri has a diverse economy but does lean heavily on manufacturing. Missouri frequently ranks high on surveys about the best state to do business. However, there is some work to be done when it comes to quality of life.

12.  Alabama

• Median Household Income: $52,035
• Median Home Price: $149,600
• Median Monthly Ownership Costs With A Mortgage: $1,196

Alabama is a cheap state to buy a house.  This is because the median homeownership cost is just 27.6% of the median Alabaman’s household annual income.  Alabama residents get to enjoy a relatively low income tax.  Also, Alabama real estate is taxed at only 20% of its fair market value.  The median effective rate for property taxes in Alabama is $3.33 per $1,000 of real estate value.  Combined, this makes Alabama property taxes relatively low.

Alabama is home to several large cities including Mobile and Birmingham.  The state even has a small portion located on the Gulf of Mexico.

13. Kentucky

• Median Household Income: $50,589
• Median Home Price: $141,000
• Median Monthly Ownership Costs With A Mortgage: $1,178

Kentucky is one of the states with cheap houses.  The median Kentucky household spends about 27.9% of their monthly annual income on homeownership expenses. Due to this, Kentucky is one of the most affordable places to buy a home relative to the state’s median household income. Kentucky is affordable in other ways, too.

Kentucky is in the lower 40% of cost of living. Kentucky has a flat income tax with a rate of 5%. The Kentucky state sales tax is 6%, too. Home ownership and rent costs are about 22% lower than the U.S. average. Centrally located Kentucky offers a lot of opportunities to residents, too.

Kentucky is not too big yet has over 4 million residents. The opportunities are where the people are. This state is located in the middle of it all in the more populated half of the U.S. Major industries in Kentucky include automotive, aeronautics, logistics, chemical production, and healthcare.

14. Oklahoma

• Median Household Income: $52,919
• Median Home Price: $136,800
• Median Monthly Ownership Costs With A Mortgage: $1,234

When looking for cheap states to move to think of Oklahoma.  Okies spend about 28% of their monthly income on homeownership expenses. This may make Oklahoma attractive to many homebuyers looking to make a home purchase. With a median household income of $52,919 but median monthly homeownership costs of just $1,234 including a mortgage Oklahoma real estate is attractive.

Oklahoma has other characteristics which make it financially attractive, too. Most people pay just a 5% state income tax rate, which is low compared to many other states. The cost of living in Oklahoma is lower in every category except for healthcare, too. Oklahoma can be a great state to start a business due to its low cost of living.

15. Mississippi

• Median Household Income: $45,081
• Median Home Price: $119,000
• Median Monthly Ownership Costs With A Mortgage: $1,147

Mississippi comes in at #10 amongst the states to buy cheap houses.  If you choose to call Mississippi you can expect a median home purchase price of $119,000. At that price, along with the median salary you can expect your monthly homeownership costs to be about 30.5%. This makes Mississippi one of the more affordable states to buy a home.

However, various surveys have called into question the overall Mississippi living experience. Mississippi does have a rather high state income tax of 7%. Additionally, many surveys lowly rank Mississippi’s economic future. The state also ranks poorly regarding infrastructure. However, the state does grade well on overall quality of life.

Most Expensive States to Buy a House

If you are curious about the other end of the spectrum here are is a list of the states with the most expensive houses.  These states have some of the highest homeownership costs in the U.S.

Hawaii

• Median Household Income: $83,173
• Median Home Price: $636,400
• Median Monthly Ownership Costs With A Mortgage: $2,443

Hawaiian housing costs are high coming at over 35% of the median household’s annual income.  Yikes!  Luckily the natural beauty of the area and enjoying the island climate are free because you might not have much left to do much else with.  On top of high housing costs Hawaii consistently ranks amongst the U.S. states with the highest cost of living.

California

• Median Household Income: $78,672
• Median Home Price:  $538,500
• Median Monthly Ownership Costs With A Mortgage: $2,422

The middle of the road Californian is spending nearly 37% of his or her annual household income on home ownership expenses.  Whoa, Nellie, is that a lot.  California is a very diverse state, though, and it is likely there are more affordable areas in the state.  However, with such high housing costs it is hard to see how California can continue to grow.

Oregon

• Median Household Income:  $65,667
• Median Home Price: $336,700
• Median Monthly Ownership Costs With A Mortgage: $1,741

If you are planning to buy a home in Oregon be prepared for some sticker shock.  The median Oregon home will cost you nearly 32% of the median household income.  This makes Oregon one of the states with the most expensive housing.

Washington

• Median Household Income: $77,006
• Median Home Price: $366,800
• Median Monthly Ownership Costs With A Mortgage: $1,939

Washington state residents are also burdened with high housing costs.  When living in Washington state as a homeowner expect to put about 30% of your earnings towards housing costs.

Colorado

• Median Household Income: $75,231
• Median Home Price: $369,900
• Median Monthly Ownership Costs With A Mortgage: $1,808

Colorado is one of the most expensive states to buy a home.  Based on data from the U.S. Census Bureau you should expect to spend 28.8% of your annual earnings on homeownership.

Conclusion

When looking at just housing, Indiana is the most affordable state to live in. can expect to earn. Rounding out the top five are Iowa, North Dakota, West Virginia, and Ohio. When looking at the most affordable states to buy a home it is important to keep in mind earning potential, too.

If you are thinking about buying a home in Indiana Quadwalls.com can help you. Quadwalls is a real estate website founded in Valparaiso, Indiana and is run by some of the best Indiana real estate agents in the industry. Start searching for your new Indiana home today!

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About Quadwalls.com

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Data Source

The median household home prices and median household income data are sourced from the most recent data for these metrics from the U.S. Census Bureau.