Housing affordability is a growing issue, with homeowners spending a higher proportion of their earnings toward homeownership compared to previous years.

The average homeowner paid 26.5% of their household income toward principal and interest (P&I) in November 2023 vs. 14.7% in 2020, according to the National Association of REALTORS® (NAR) Housing Affordability Index. Meanwhile, the median single-family home price rose from $300,200 in 2022 to $392,100 in November 2023.[1]

Luckily, there are still more than a handful of places in the United States where the average American can afford to buy a home on a middle-class income. To find the best cities for the average homebuyer, Insurify’s data science team analyzed mortgage, tax, and average home insurance costs in cities nationwide.

Housing costs are based on a projected interest rate of 6.6% from Fannie Mae and a 20% down payment to eliminate the variable of private mortgage insurance (PMI). Our data scientists also factored in unemployment rates, increases in home values, cost of living, crime rates, and population growth to identify the 10 best cities for homebuyers making the U.S. median income of $75,000.

Why buying a home is so unaffordable in 2024

Changes in the real estate market over the past several years have contributed to housing affordability issues in 2024.

Thirty-year mortgage rates plummeted to the lowest recorded rate, 2.65%, in January 2021, according to Freddie Mac. Historically low rates, pent-up demand from first-time homebuyers, and a desire for private property – fueled by COVID-19 lockdowns – caused a spike in demand for homeownership.

The increased demand inflated the median price of homes by 18.8% in 2021, the highest calendar-year increase in more than three decades of data, according to the S&P CoreLogic Case-Shiller U.S. National Home Price Index.[2]

But in 2022 and 2023, the Federal Reserve raised interest rates 11 times to combat inflation. Mortgage rates hit a 20-year high of 7.79% in October 2023. Homeowners who purchased their first home or refinanced at 3% or 4% interest rates bought when real estate prices were high. These homeowners were unintentionally locked into a mortgage and home that would be unaffordable in today’s market, creating a golden handcuff effect.

The wealth disparity between Americans able to buy and refinance when interest rates were low and those who weren’t grew even more stark.

The difference in mortgage refinancing savings between high- and low-income borrowers increased by 10 times in the first half of 2020, according to the Federal Deposit Insurance Corporation (FDIC) Center for Financial Research.[3] The top income quintile saved a collective $5 billion more than the rest of the market, the FDIC estimates.

Where to buy a home with a $75,000 income in 2024

Despite higher interest rates, prospective homeowners are eager to escape skyrocketing rent and start building equity. These affordable cities are the best places to buy cheap homes for people making the average U.S. household income.

1. Champaign, Illinois

Monthly housing costs: $1,422

Median home value: $196,732

Average annual home insurance rate: $1,753

Champaign is the top city on Insurify’s list for homebuyers with a median household income of $75,000. Home values in Champaign increased by 4% between 2022 and 2023. In the same year, the annual average cost of homeowners insurance dropped by 2%, making coverage slightly less expensive than the national average of $1,770.

The University of Illinois Urbana-Champaign draws more than 55,000 students to the city of approximately 89,000 residents. Arts and culture lovers can catch a classic movie at the historic Virginia Theater or stroll through the Krannert Art Museum. Champaign has numerous amenities, with a shopping district featuring nearly 250 retailers within a square mile.

2. Peoria, Illinois

Monthly housing costs: $1,090

Median home value: $141,649

Average annual home insurance rate: $1,753

Homebuyers looking for cheap real estate can find it in Peoria. At less than $150,000, Peoria has the lowest median home value of the cities ranked in this study. Average home insurance costs decreased by 2%, while home values rose 4% in 2023.

The centrally located city is nestled along the Illinois River, providing opportunities for outdoor recreation at the Peoria Riverfront Park. Residents enjoy shops, restaurants, and entertainment downtown, and a major mixed-use development project for the Warehouse District is in the works. The Peoria International Airport also plans to expand its service in 2024.

3. Detroit, Michigan

Monthly housing costs: $1,697

Median home value: $240,338

Average annual home insurance rate: $3,060

More than a decade after Detroit declared bankruptcy, the payoff from ongoing revitalization efforts is clear. However, its home insurance costs are the highest among the top 10 cities. Waterfront projects transformed the Detroit River greenway, and home values in the now-trendy Rivertown-Warehouse District average $260,148, according to the Zillow Home Value Index.

Local businesses thrive in the city’s distinct neighborhoods, and Campus Martius Park draws residents year-round with a summer urban beach and winter ice skating rink. Nearby Lake Erie offers opportunities for outdoor recreation, including boating, kayaking, fishing, and swimming.

Homebuyers can still find a deal in Detroit, but the average home price in the desirable University District, bolstered by Wayne State University’s approximately 24,000 students, has climbed above $300,000, according to Zillow.

4. Mansfield, Ohio

Monthly housing costs: $1,075

Median home value: $166,899

Average annual home insurance rate: $1,192

Situated between Columbus and Cleveland, the city of Mansfield offers a small-town suburban feel with access to major job markets. Monthly housing costs barely exceed $1,000 on average and average property values are less than $167,000, making Mansfield an inexpensive place to buy a home on a budget. Healthcare and manufacturing are the largest industries in the former railroad hub.

Significant city revitalization is underway, with a $14 million Main Street Corridor Improvement project scheduled to start construction in 2025. First Friday Shop Hops and outdoor concerts encourage residents to explore shopping, dining, breweries, and wineries in Mansfield’s historic Carrousel District.

5. El Paso, Texas

Monthly housing costs: $1,527

Median home value: $210,010

Average annual home insurance rate: $1,976

El Paso is the biggest city on this list, with an estimated population of 677,456, according to U.S. Census Bureau data. El Paso has a more affordable cost of living than the national average, making it a cheaper alternative to other major cities like Dallas or Houston. The median home value is nearly 30% lower than the U.S. average but increased 6% in 2023. Homebuyers on a budget may also find the lack of state income tax in Texas appealing.

Located on the Mexico-United States border, El Paso has a unique blend of cultures and history surrounded by natural beauty. Residents can camp, hike, rock climb, and birdwatch at Franklin Mountains State Park or explore cultural attractions along the historic Mission Trail. The growing Union Plaza district offers dining and nightlife in Downtown El Paso.

6. Duluth, Minnesota

Monthly housing costs: $1,468

Median home value: $229,846

Average annual home insurance rate: $1,989

The scenic port city of Duluth, situated on the shores of Lake Superior, has a lower cost of living and unemployment rate than the national average. Housing costs, including a mortgage, taxes, and insurance, cost an average of less than $1,500 monthly. However, homeowners coverage is nearly 12% more expensive than the U.S. average.

Duluth has more than 9,168 acres of parks and natural areas, making it a great place for nature lovers. The city also has a local arts and culture scene. Residents enjoy summer concerts at the Bayfront Festival Park; music, plays, and ballet at the Duluth Entertainment Convention Center; and hands-on learning at the Duluth Children’s Museum.

7. Bangor, Maine

Monthly housing costs: $1,495

Median home value: $250,233

Average annual home insurance rate: $1,208

The small New England city of Bangor, with a population of about 32,000, is an affordable place for homebuyers who want a balance of downtown amenities and outdoor recreation. Home insurance in Bangor is nearly 38% cheaper than the national average, and rates in the city decreased by 3% in 2023.

The city has freezing, snowy winters, but warm summers and colorful falls offer opportunities to explore the outdoors. Outdoor enthusiasts can stroll the Bangor Waterfront or leaf-peep in the City Forest, a wildlife habitat spanning more than 680 acres.

8. Lansing, Michigan

Monthly housing costs: $1,457

Median home value: $216,402

Average annual home insurance rate: $1,671

Michigan’s state capital, Lansing, is a welcoming, affordable city with a population of around 112,500. Residents pay a 5.7% lower price for home insurance than the U.S. average of $1,770. Government, education, manufacturing, healthcare, and technology are the city’s top industries, and Michigan State University attracts young talent to nearby East Lansing.

Families enjoy hands-on learning at the Impression 5 Science Center, exploring the 102-acre Potter Park Zoo, and walking the scenic Lansing River Trail. The city’s unique districts, REO Town and Old Town, offer shopping, dining, art, and nightlife.

9. Rochester, New York

Monthly housing costs: $1,728

Median home value: $235,391

Average annual home insurance rate: $1,942

Nestled along Lake Ontario in Western New York, Rochester is conveniently located between the sister cities of Buffalo and Syracuse. Home values in the city increased by 9% in the past year. However, homebuyers on a budget can still find affordable property in Rochester, with a median home value that’s 18% lower than the national average of $281,900.

New York Governor Kathy Hochul awarded Rochester $10 million in funding through the Downtown Revitalization Initiative in 2022.[4] The plan includes the construction of the Main Street Commons, a new public outdoor space in Downtown Rochester. The development of mixed-used buildings with middle-income housing and storefronts will start in February.

10. Syracuse, New York

Monthly housing costs: $1,597

Median home value: $215,724

Average annual home insurance rate: $1,942

Homebuyers can find affordable properties in Syracuse if they’re willing to brave the 127.3 inches of snowfall it receives annually. Home values increased by 9% between 2022 and 2023, so buying in Syracuse could be a smart investment. Syracuse University, a private research university, draws more than 22,000 students to the city of 145,000 residents.

Syracuse is full of family-friendly activities, including the Rosamond Gifford Zoo and the Milton J. Rubenstein Museum of Science and Technology (MOST). Residents enjoy nightlife, theater, and dining in Downtown Syracuse. The nearby Green Lakes State Park provides a scenic place to bike, fish, hike, camp, golf, or cross-country ski.

Look at up-and-coming cities to buy a home on a budget

Median-priced single-family properties are less affordable compared to historical averages in 99% of analyzed U.S. counties, according to the fourth-quarter 2023 Home Affordability Report from real estate data provider ATTOM.

The housing market has cooled since 2021, but the median home price outpaces wages in 50.7% of the 580 counties examined. In Brooklyn, New York, buying a single-family house requires 114% of annualized local wages, reports ATTOM.[5] But there are still cities in the U.S. where the typical home value allows the average homebuyer to put down roots.

Prospective homebuyers working with a household income of $75,000 get the most for their money in small-to-midsize Midwestern cities, especially up-and-coming areas like Mansfield where housing prices are low. Most of the least expensive places for homebuyers on this list have undergone multi-million-dollar revitalization projects in recent years and have plans for ongoing growth and development.

However, the cost of homeowners insurance could strain homeowner budgets as rates continue rising. Insurance rates have spiked most dramatically in states affected by climate catastrophes due to severe weather damages. Taking climate risk into account when trying to find the cheapest place to buy a home can help prospective buyers future-proof their finances.

Methodology

Insurify’s data scientists looked at housing costs, broader cost of living, crime rates, and unemployment rates to determine the best cities for homebuyers with a household income of $75,000 or less in 2024.

For each metropolitan area in the U.S., the Insurify data science team calculated how much the median homeowner would spend each month on housing costs, which include mortgage payments, home insurance, and property taxes. Monthly mortgage costs are based on a city’s median home value and assume a 30-year fixed-rate mortgage with a 20% down payment and a 5.5% interest rate. Insurify data scientists estimated yearly property tax rates by dividing the median per-capita property tax payment among homeowners in each metropolitan area by the median home value in that area.

By the “30% rule,” which advises that a financially responsible person should not spend more than 30% of their gross income on housing, a household earning $75,000 per year should spend at most $22,500, or $1,865 monthly, on housing. Thus, Insurify only considered metro areas with average monthly housing costs below $1,865 per month for this study.

Additionally, the Insurify data science team removed any cities with an above-average crime rate (measured by an overall index combining major violent and property crimes) from consideration. They then ranked the qualifying cities on a desirability metric, which rewards cities for having a low cost of living (excluding housing costs), a low unemployment rate, and a low overall crime rate.

In this report, average home insurance costs come from Insurify’s proprietary data of real-time insurance quotes and from Quadrant Information Services. Median home value, median property property tax, and population data come from the U.S. Census Bureau. Cost of living data come from the U.S. Bureau of Economic Analysis, and unemployment rates from the U.S. Bureau of Labor Statistics. Crime rates come from the Federal Bureau of Investigation.

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