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The States With the Lowest Homeowner Costs

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Many Americans dream of owning a home, but affordability can be a challenge. Not only does a consumer’s ability to buy a home depend on credit scores, interest rates and home prices, but location also plays a huge part.

Following the housing crisis, lawmakers made it a requirement for lenders to verify a mortgage applicant’s ability to repay the loan, making income a greater determining factor in loan approval. Loan officers also look at an applicant’s debt-to-income ratio, which shows how much debt obligations (including the proposed mortgage payments) consume a borrower’s gross income. Starting Jan. 10, that ratio limit will be 43%.

Other homeowner costs make up a lot less than that remaining 57% of income, but it varies from consumer to consumer. Census Bureau data gives a state-by-state look at homeowner costs, and of course, some states are more expensive than others.

Based on results from the American Community Survey, an annual estimate of population, demographic and housing data, new homeowners will find some of the lowest costs in Midwestern and Southern states. Among the 50 states and the District of Columbia, average owner costs, including mortgage payments, made up between roughly 19% and 29% of household income in 2012.

States with the Lowest Homeowner Costs

New homeowners in the following 15 states will encounter homeowner costs amounting to less than 22% of household income, on average. Owner costs include mortgage payments, insurance, taxes, fees and any utility bills that may apply to a living unit, according to the Census Bureau. The margin of error varies by state, between plus or minus 0.1 and 0.7 percentage points across the nation, and between 0.2 and 0.4 percentage points among the states listed below.

With that in mind, these states fall among the lowest average owner costs. These percentages encompass homes with a mortgage — owner costs among all homes or costs for homes without mortgages vary slightly.

  • North Dakota — 18.9%
  • West Virginia — 19.2%
  • Indiana — 20%
  • Iowa — 20%
  • Arkansas — 20.2%
  • Wyoming — 20.6%
  • Nebraska — 20.7%
  • Kansas — 20.8%
  • Oklahoma — 20.8%
  • Louisiana — 20.9%
  • South Dakota — 20.9%
  • Kentucky — 21.1%
  • Alabama — 21.3%
  • Missouri — 21.6%
  • Ohio — 21.7% (Given the margin of error, Minnesota, Texas and South Carolina are all at 22.1%, could tie or have a lower percentage than Ohio)

The average owner costs among mortgaged homes is about 23% of household income nationwide, brought up significantly by home costs in Hawaii, California, New Jersey and Florida.

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