Why These Midwestern Cities Are the Best Places for First-Time Homebuyers

See which Midwest city topped the list.
  • Get the most value for your money when buying your first place.
  • GOBankingRates determined the best cities to buy a home for first-time buyers.
  • Midwest cities with the best home values included Indianapolis, St. Louis and Cincinnati.

Buying your first house can be stressful. Many critical decisions go into buying your first home — and how you’ll manage financially. But first, it’s important to research the best cities to buy a home where you can get the most value for your money.

GOBankingRates ranked the best places to buy a home for first-time homebuyers. The cities were scored based on seven key factors, including foreclosure rates, median household listing price, salary and affordability of the given area. This study also showed the Housing Opportunity Index for each area, which measures the share of homes sold that were affordable to a family earning the local median household income. Considering these factors can help you find the best places to buy your first home. Keep reading to see how far your money will go in these key cities.

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See the Full Study: Best Places to Buy a Home for First-Time Homebuyers

The Top 12 Cities to Buy a Home

The study found the best and worst cities to purchase your first place. Surprisingly, some of the larger metro areas made the top 12.

Top 12 Best Cities for First-Time Homebuyers
Rank City State
1 Indianapolis Indiana
2 Pittsburgh Pennsylvania
3 Virginia Beach Virginia
4 St. Louis Missouri
5 Buffalo New York
6 Oklahoma City Oklahoma
7 Memphis Tennessee
8 Kansas City Missouri
9 Louisville Kentucky
10 Cincinnati Ohio
11 Austin Texas
12 Minneapolis Minnesota

Many Midwest metro areas made the cut with affordability to match, indicating the region is most optimal if you’re looking for your first home. It’s less crowded, and the amount of square footage you can get for the price cannot be beat.

Also Consider: Best and Worst States for First-Time Homebuyers

A Closer Look at the Top 5 Midwestern Cities to Buy a Home for the First Time

You don’t need to move to Los Angeles or New York to experience big-city living. The Midwest is home to some of the largest cities in the U.S. with affordable housing options for potential buyers. Here are the top five places in the Midwest to search for a new home.

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1. Indianapolis

This city ranks high in every category, including an HOI of 86.1, making it the most affordable city to find a new home. Indianapolis’ median home list price is $221,990 with an average down payment of $44,398. The difference between the median household income and salary needed to afford a median home in Indianapolis is a small difference of $1,811.

Check Out: The Average Down Payment on a House Is Now Below 10%

2. St. Louis

The median household income to live in St. Louis is $38,664. That figure is far lower than the national average of $61,372, according to CNBC. First-time homebuyers should have an easier time managing their annual mortgage payment of $12,084, with the median home list price at just $189,900.

3. Kansas City, Missouri

Missouri has the potential to be one of the best states for first-time homebuyers, with Kansas City as the state’s second metro area in the top 10 on this list. The median home list price is far higher than St. Louis, though, at an even $259,000. The foreclosure rate percentage for the city is 0.0365% with one in every 2,741 homes in foreclosure.

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Find Out: 40 Cities in Danger of a Housing Crash This Year — Is Yours on the List?

4. Cincinnati

Cincinnati is ranked No.10 in the best places to find your first home. The affordability for the area is impressive with an HOI score of 81.1. The variation between the median household income and salary needed to afford a median home is $9,971, one of the higher differences within this study. The median home list price is $221,493 with a required down payment of $44,299.

Don’t Miss: The Best Cities for Aspiring Millennial Homeowners

5. Minneapolis

Considered one of the largest cities in Minnesota, Minneapolis is a surprisingly affordable option for the area with an HOI of 72.6. The foreclosure rate in Minneapolis is the lowest among the Midwestern cities listed here at .0274%, with one in every 3,643 homes in foreclosure. However, the median list home price is a steep $337,500, with a required down payment of $67,500.

Find out the salary you need to afford the average home in your state.

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Methodology: Cities were ranked according to seven factors, including 1) foreclosure rates, which are based on the number of foreclosure actions to housing units as of February 2019, sourced from RealtyTrac; 2) median household listing price, sourced from Zillow and using February 2019 data; 3) The cost of the average down payment based on the rule-of-thumb 20% down payment; 4) the salary needed to afford the median home, which was calculated using Zillow’s mortgage calculator and keeping the 30-year fixed-rate set at 4.31% which was sourced from the St. Louis Fed on March 20, 2019; 5) the median household income for each city, sourced from the Census Bureau’s 2017 American Community Survey; 6) the difference between the median household income and salary needed to afford the median home  for each city; and 7) the Housing Opportunity Index Sourced from the National Association of Homebuilders, which measures the share of homes sold that are affordable to median income families in a given area. The seven factors were scored and then combined to determine each state’s ranking.

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