GOBankingRates

Ranked: The Best States for Millennials To Buy a Home

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The financial picture for millennials today is a mixed bag — unemployment is falling, but the lingering pandemic means that many businesses are either using skeletal staffs or aren’t even reopening yet. Young workers also have to contend with a staggering $1.7 trillion in student loan debt.  On top of that, millennials are reaching the age where they’re thinking about buying a home — or, at least that’s what their parents did a generation ago — thanks in part due to record-low interest rates.

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In order to help millennials find affordable housing, GOBankingRates evaluated median home prices across America relative to each state’s median income for people ages 25 to 34.. Assuming millennials put away 20% of their salary each month to save for a down payment on a home, GOBankingRates determined the amount of time it would take to afford a 20% down payment and calculated the estimated monthly mortgage payment in every state based on a 30-year, fixed-rate mortgage.

Keep reading to see the best places for millennial homebuyers.

Last updated: Mar. 16, 2021

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15. Tennessee

  • Median home value: $206,714
  • Months to save for down payment: 42.4
  • Monthly mortgage payment: $806

Even though it’s only the 15th-most affordable state for millennials to buy a home, median prices in Tennessee barely crack the $200,000 barrier. Prospective homeowners only have to save for about 3.5 years to have enough for an average down payment.

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14. Michigan

  • Median home value: $190,206
  • Months to save for down payment: 36.21
  • Monthly mortgage payment: $854

In Michigan, millennials need to set aside $1,050 of their $5,252 monthly income on average to afford a 20% down payment.

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13. Nebraska

  • Median home value: $192,721
  • Months to save for down payment: 33.79
  • Monthly mortgage payment: $899

Millennials in Nebraska are among the highest earners on this list, pulling down a median income of $68,448. This means they can put $1,141 per month towards their down payment, based on a 20% savings rate.

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12. Louisiana

  • Median home value: $179,636
  • Months to save for down payment: 38.99
  • Monthly mortgage payment: $669

Louisiana millennials only need to save $922 per month for just over three years to have enough for the average 20% down payment in the state.

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11. Missouri

  • Median home value: $181,171
  • Months to save for down payment: 34.39
  • Monthly mortgage payment: $749

If you’re a millennial debating between renting or buying a home, Kansas City is one of the best big cities for renters. However, a 20% down payment for a house is still relatively affordable at $36,234, which the average millennial there can save in less than three years.

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10. Ohio

  • Median home value: $169,516
  • Months to save for down payment: 32.28
  • Monthly mortgage payment: $787

Ohio’s relatively high property taxes help push up the average monthly mortgage payment. However, incomes in the state are also relatively high, meaning the average millennial only need save for 2.7 years to afford a down payment.

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9. Indiana

  • Median home value: $173,033
  • Months to save for down payment: 33.2
  • Monthly mortgage payment: $695

People ages 25 to 34 earn a median monthly income of $5,211, making the average monthly mortgage payment of below $700 quite affordable in Indiana.

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8. Kansas

  • Median home value: $167,945
  • Months to save for down payment: 30.72
  • Monthly mortgage payment: $739

Kansas millennials earn relatively high incomes, meaning they can save the average down payment of $33,589 in just 2.6 months.

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7. Kentucky

  • Median home value: $160,659
  • Months to save for down payment: 33.16
  • Monthly mortgage payment: $639

Average monthly mortgage payments in Kentucky are among the lowest in the country. The average-earning millennial in the state has to sock away just $969 per month for 2.8 years to save enough for a down payment.

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6. Alabama

  • Median home value: $158,136
  • Months to save for down payment: 34.62
  • Monthly mortgage payment: $573

Alabama is the first state on the list to have an average monthly mortgage payment below $600. This makes homes in the state quite affordable for the average millennial pulling down $4,568 per month.

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5. Iowa

  • Median home value: $160,181
  • Months to save for down payment: 27.94
  • Monthly mortgage payment: $727

Iowa has the 12th-highest property taxes in the country, helping push up the monthly mortgage payment even though homes themselves are quite affordable in the state.

 

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4. Arkansas

  • Median home value: $141,769
  • Months to save for down payment: 32.06
  • Monthly mortgage payment: $542

Millennials earn $53,036 per year on average in Arkansas, making the average $141,769 home quite affordable.

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3. Mississippi

  • Median home value: $133,952
  • Months to save for down payment: 32.47
  • Monthly mortgage payment: $513

Millennials in Mississippi are the only group on the list with an average income below $50,000. However, low median home prices keep housing extremely affordable, with the average monthly mortgage payment just a hair above $500.

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2. Oklahoma

  • Median home value: $142,612
  • Months to save for down payment: 29.2
  • Monthly mortgage payment: $574

The average millennial in Oklahoma earns an annual salary of $58,612, or $4,884 per month. Oklahoma is one of only five states on the list with an average monthly mortgage payment below $600.

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1. West Virginia

  • Median home value: $113,476
  • Months to save for down payment: 24.91
  • Monthly mortgage payment: $426

With a median home value barely cracking $100,000, West Virginia has the lowest monthly mortgage payments in the country. In fact, it’s the only state with an average mortgage payment of below $500. It would take the average-earning millennial just over 2 years to save a 20% down payment of $22,695.

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The Best Places to Buy a Home Have This in Common

The study found that the 15 most affordable states for millennial homebuyers are all clustered in the Midwest and the South. No states in the West or the Northeast fall onto this affordable list. The strategy for millennials is clear: Find your dream home in the Midwest or South, and stake your claim while prices in these areas are still low.

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Grace Lin contributed to the reporting for this article.

Methodology: To determine millennial home affordability, GOBankingRates evaluated median home value for each state in conjunction with each state’s median income for people ages 25 to 34. Assuming millennials put away 20 percent of their salary each month to save for a down payment on a home, GOBankingRates calculated (1) the amount of time it would take to afford a 20 percent down payment on a house with the median home value for each state. The (2) estimated monthly mortgage payment in every state was based on a 30-year, fixed-rate mortgage, with a fixed rate of 2.81% (the current national average according to the Federal Reserve Bank of St. Louis) and the average property tax rate in each state, sourced from the Tax Foundation. Those two numbers— the time to save for a down and the mortgage payment amount— were scored to develop the final state affordability ranking. All data was collected on and up to date as of February 24, 2021.