10 Cities Where Homeownership Is Still Within Reach for the Middle Class
Written by
Daria Uhlig
Edited by
Zuri Anderson
Commitment to Our Readers
GOBankingRates' editorial team is committed to bringing you unbiased reviews and information. We use data-driven methodologies to evaluate financial products and services - our reviews and ratings are not influenced by advertisers. You can read more about our editorial guidelines and our products and services review methodology.
20 Years
Helping You Live Richer
Reviewed
by Experts
Trusted by
Millions of Readers
National media reports are filled with doom-and-gloom news about how home prices are rising faster than household income, making it impossible for middle-class Americans to buy their own homes. What those reports don’t tell you is that “affordability” on a national scale often looks much different than affordability in any given local market.
The reason is that national average or median home prices include everything from dilapidated fixer-uppers costing less than $100,000 to mega-mansions selling for tens of millions of dollars (or more). Chances are, you won’t find either extreme in your city. By the same token, average or median incomes don’t necessarily reflect incomes in your area.
The best way to determine whether home prices are affordable in your city is to compare them to local incomes. A rule thumb cited by the Federal Deposit Insurance Corporation (FDIC) said that a home is generally affordable if the mortgage loan is no more than two to three times your household income.
GOBankingRates looked at income and home price data from Fannie Mae and the National Association of Realtors, respectively, to identify cities where the middle class can still afford to buy. For this analysis, middle-class income is defined as 80% of the area median income, which is the income level that qualifies buyers for Fannie Mae’s HomeReady mortgage for borrowers with low-to-moderate incomes. The down payment is assumed to be 3% — the minimum for a HomeReady loan.
And if you’re looking for the perfect place with affordable homes, here are the cheapest cities where you can still buy a house for under $150,000.
Amarillo, Texas
- Median home price: $239,900
- Mortgage size: $232,703
- Middle-class income: $79,600
- Mortgage-to-income ratio: 2.92%
Anniston, Alabama
- Median home price: $183,300
- Mortgage size: $177,801
- Middle-class income: $59,200
- Mortgage-to-income ratio: 3
Binghamton, New York
- Median home price: $204,300
- Mortgage size: $198,171
- Middle-class income: $94,500
- Mortgage-to-income ratio: 2.1
Cumberland, Maryland
- Median home price: $166,800
- Mortgage size: $161,796
- Middle-class income: $74,960
- Mortgage-to-income ratio: 2.16
Davenport, Iowa
- Median home price: $193,500
- Mortgage size: $187,700
- Middle-class income: $79,120
- Mortgage-to-income ratio: 2.37
Decatur, Illinois
- Median home price: $149,100
- Mortgage size: $144,627
- Middle-class income: $73,280
- Mortgage-to-income ratio: 1.97
Erie, Pennsylvania
- Median home price: $208,700
- Mortgage size: $201,566
- Median income: $67,520
- Mortgage-to-income ratio: 2.99
Peoria, Illinois
- Median home price: $190,400
- Mortgage size: $184,688
- Middle-class income: $78,080
- Mortgage-to-income ratio: 2.37
Toledo, Ohio
- Median home price: $214,500
- Mortgage size: $208,065
- Median income: $76,160
- Mortgage-to-income ratio: 2.73
Topeka, Kansas
- Median home price: $216,800
- Mortgage size: $210,296
- Median income: $79,280
- Mortgage-to-income ratio: 2.65
More From GOBankingRates
