Real Estate 2023: More Retirees Can Afford To Buy Homes in These Cities

Some retirees crave a new adventure — a change of scenery once a job no longer keeps them tied to one region or city. And if it’s a new city they seek at a price that won’t eat up their retirement savings or income, they have some choices.

To give you an idea of where you could settle in retirement without becoming house poor, GOBankingRates looked at where you can buy a house and not pay more than $1,383 per month on a mortgage. That figure represents 30% of the annual income of the typical person aged 65 or older — the amount experts say should cap your spending on housing.

In all, 26 cities came in with a monthly mortgage payment of less than $1,383, with the lowest 15 listed here. If you are thinking of heading south — or retiring in Ohio — this collection of cities is ideal for you.

• June 2023 home value: $200,437
• 20% down payment: $40,087
• Primary loan amount: $160,350
• Average property tax rate: 0.84%
• Monthly mortgage payment: $1,203

Fayetteville is one of just two cities in the top 15 with a June 2023 home value exceeding $200,000. The average monthly mortgage payment of $1,203 makes it cheaper to buy than rent in Fayetteville, where the average rent is $1,400, according to Zillow Rental Manager.

• June 2023 home value: $175,620
• 20% down payment: $35,124
• Primary loan amount: $140,496
• Average property tax rate: 1.80%
• Monthly mortgage payment: $1,194

Texas has one of the highest property tax rates in the nation, ranking No. 46. Texans don’t pay any state income tax, however, helping to compensate for what they pay in taxes on their homes.

• June 2023 home value: $201,437
• 20% down payment: $40,287
• Primary loan amount: $161,150
• Average property tax rate: 0.62%
• Monthly mortgage payment: $1,172

Arkansas’ capital city is the second — and final — location on the list with a home value of more than $200,000. Its average property tax rate is the 12^th-lowest in the nation, however, making home ownership more affordable there for retirees.

• June 2023 home value: $171,047
• 20% down payment: $34,209
• Primary loan amount: $136,838
• Average property tax rate: 1.72%
• Monthly mortgage payment: $1,152

New York lives up to its high-tax reputation when it comes to property taxes, with the seventh-highest rate in the nation. That could be why Syracuse is the only New York city represented on the list.

• June 2023 home value: $181,416
• 20% down payment: $36,283
• Primary loan amount: $145,133
• Average property tax rate: 1.09%
• Monthly mortgage payment: $1,126

Retirees will save significant money each month if they buy a home rather than rent in Baltimore, where the median rent is $1,500, according to Zillow Rental Manager statistics. At the end of a year, that’s a savings of nearly $4,500.

• June 2023 home value: $185,978
• 20% down payment: $37,196
• Primary loan amount: $148,783
• Average property tax rate: 0.41%
• Monthly mortgage payment: $1,049

Mobile is the first of three Alabama cities to appear in the GOBankingRates study, and the state’s average property tax rate contributes to that. Only one U.S. state has a lower tax rate, and that’s Hawaii, surprisingly.

• June 2023 home value: $167,807
• 20% down payment: $33,561
• Primary loan amount: $134,245
• Average property tax rate: 0.97%
• Monthly mortgage payment: $1,025

St. Louis, which has nearly 300,000 residents, is the last city in the study where retirees can expect to pay more than $1,000 a month in mortgage payments.

• June 2023 home value: $148,427
• 20% down payment: $29,685
• Primary loan amount: $118,742
• Average property tax rate: 0.71%
• Monthly mortgage payment: $875

With about 621,000 residents, Memphis is the largest city in the study and likely has a variety of housing options for retirees. Tennessee is another of the states that doesn’t have a personal income tax, allowing retirees to keep more of their pension checks.

• June 2023 home value: $138,200
• 20% down payment: $27,640
• Primary loan amount: $110,560
• Average property tax rate: 0.41%
• Monthly mortgage payment: $780

The average cost of a home in Montgomery costs about $50,000 less than homes in Mobile, which lies about 170 miles to the southwest on the Gulf Coast. But if you want to retire in Alabama, its capital city isn’t the lowest-priced state location in the GOBankingRates study.

• June 2023 home value: $114,867
• 20% down payment: $22,973
• Primary loan amount: $91,894
• Average property tax rate: 1.56%
• Monthly mortgage payment: $758

Akron is the first of four consecutive cities in Ohio to appear in the GOBankingRates study, and the monthly mortgage payment is separated by less than $100 among the four. For retirees seeking to buy a home in Ohio, their choice, then, could depend on other factors, such as local amenities or proximity to family, friends or senior services.

• June 2023 home value: $111,305
• 20% down payment: $22,261
• Primary loan amount: $89,044
• Average property tax rate: 1.56%
• Monthly mortgage payment: $735

Toledo is about two hours west of Cleveland along Interstate 90 and is just south of the border with Michigan. The two states — Ohio and Michigan — have a nearly identical property tax rate.

• June 2023 home value: $110,152
• 20% down payment: $22,030
• Primary loan amount: $88,121
• Average property tax rate: 1.56%
• Monthly mortgage payment: $727

Dayton is the only one of the four Ohio cities in the study in the southern half of the state, about 150 miles south of Toledo. Cost-wise, however, the two are nearly identical, with the average monthly mortgage payment separated by just $8, making either city viable for retirees.

• June 2023 home value: $101,135
• 20% down payment: $20,227
• Primary loan amount: $80,908
• Average property tax rate: 1.56% 
• Monthly mortgage payment: $668

Weather is another factor that retirees consider when choosing where to live. And if you don’t like shoveling snow, another Ohio city might prove a better choice. According to the National Weather Service, Cleveland averages 63.8 inches of snow annually, while 37.4 inches fall in Dayton.

• June 2023 home value: $99,433
• 20% down payment: $19,887
• Primary loan amount: $79,546
• Average property tax rate: 0.41%
• Monthly mortgage payment: $561

Alabama retirees will see their money go the farthest in Birmingham, one of just two cities on the list where the home value is less than $100,000. Its monthly mortgage payment of $561 is far lower than the averages in the other Alabama cities, Mobile ($1,049) and Montgomery ($780).

• June 2023 home value: $63,661
• 20% down payment: $12,732
• Primary loan amount: $50,929
• Average property tax rate: 1.54%
• Monthly mortgage payment: $419

Detroit tops the list of affordability for retirees, with the average mortgage payment just $419 per month — just about $5,030 for a full year. Although the property tax rate is on the higher side of the list, the low mortgage payments might just make up for that.

Methodology: For this piece, GOBankingRates calculated how much a typical person 65 or older should spend on a mortgage using the rule that no more than 30% of their pre-tax income should go toward housing. With that in mind, GOBankingRates found the typical person 65 or older has an annual income of $55,335, sourced from the 2021 Bureau of Labor Statistics Consumer Expenditure survey. This figure then was multiplied by 0.3 to give us an annual limit of $16,601, or $1,383 per month to spend on a mortgage. GOBankingRates then looked at the home values for the 150 largest housing markets, according to Zillow’s June 2023 data. GOBankingRates took each city’s June 2023 home value and found the monthly mortgage payments using the following assumptions: a 20% down payment; a 30-year fixed rate mortgage of 6.96%, as sourced from St. Louis Federal Reserve; average state property taxes, as sourced from the Tax Foundation; and the condition that no PMI or HOA dues are included. The 26 cities that had a monthly mortgage payment under $1,383 were included in final rankings, with the lowest 15 listed here. All data was collected and is up to date as of July 13, 2023.