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5 U.S. states where a starter home is still within reach — and 5 where it isn't

Buying a first home means different things depending on where you live. LendingTree found the share who can afford one ranges from 62% to 17%

Ryan Waring / Unsplash

A starter home used to come with trade-offs first-time buyers made willingly. Fewer bedrooms, an older roof, and a smaller yard bought a foothold in the market. That trade-off assumed the price would still fit a beginner's budget. For most nonhomeowner households in the U.S. today, it doesn't. Wages haven't caught up with what an entry-level home now costs, and the mortgage a beginner could once carry on a single paycheck no longer clears for most first-time buyers nationwide. Renters and other nonhomeowners increasingly describe homeownership as a milestone that keeps sliding further out of reach, no matter how carefully they budget. What used to take a few years of saving now stretches on indefinitely for many, with no clear point at which the numbers finally line up.

The national numbers show why that math stopped clearing. The median nonhomeowner household earns about $7,000 less than it needs to qualify for a starter home at the national average price. Millennials come closest to closing that shortfall, and baby boomers have the hardest time clearing it. Most buyers describe a starter home in practical terms rather than aspirational ones. They call it simply cheaper than other homes in the area, smaller than they'd ideally want, or a practical first step toward homeownership rather than a dream home. Even so, most buyers still believe a starter home is realistically within reach where they live.

LendingTree measured, state by state, the share of nonhomeowner households that earn enough to buy a starter home, defined as a home valued at the 25th percentile of local owner-occupied prices. That share climbs above 60% in some states. In others, it falls below 20%. The difference between those two groups of states is the story that follows. Here's where a first paycheck goes furthest toward a starter home, and where it comes up shortest.

Most affordable: Mississippi

LendingTree found the share of nonhomeowner households earning enough to buy a starter home peaks in Mississippi, at 61.8%, the highest rate in the analysis and more than 24 percentage points above the national share of 37.6%. The average starter home there costs $85,000, the cheapest price nationwide, less than half the $200,000 national average, and the only price below $100,000 alongside West Virginia's.

A household needs $29,523 in income to qualify for that home under standard lending terms, well below the $62,099 needed nationally, and the median nonhomeowner household in Mississippi earns $38,800, clearing that threshold with more than $9,000 to spare, the widest surplus of any state LendingTree measured. That cushion shows up in the monthly numbers too. Principal and interest on a Mississippi starter home run just $495 a month, and the full monthly payment, including taxes, insurance, and mortgage insurance, comes to $738, the lowest total nationwide and less than a quarter of what a California household pays for the same categories.

Mississippi's price-to-income ratio, the cost of a starter home divided by the income needed to buy one, comes in at 2.19, among the lowest LendingTree calculated for any state and a third of Rhode Island's ratio at the opposite end of the list. A first-time buyer earning a typical local wage doesn't need to stretch to clear that ratio. Low home values are doing most of the work. The population growth and investor demand that have pushed prices upward elsewhere haven't reached Mississippi, so its housing stock has stayed cheap relative to local pay even as costs climbed nationally. That combination, a low price and a wide income cushion, is rare. Most states with cheap starter homes also have low local wages that erase the advantage. Mississippi is one of the few where both line up in a buyer's favor at once.

Most affordable: West Virginia

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West Virginia has the second-highest share of nonhomeowner households able to afford a starter home, at 58.0%, LendingTree found, trailing Mississippi by less than four percentage points but still more than 20 points above the national rate. Its average starter-home price of $90,000 sits just above Mississippi's, keeping the two states in the only tier where prices stay under $100,000.

The income math favors West Virginia even though its nonhomeowner households earn less than Mississippi's, at a median of $35,000 a year compared with Mississippi's $38,800. The income West Virginia households need to buy a starter home comes to $29,114, close to Mississippi's $29,523, leaving a surplus of nearly $5,900, the second-widest cushion nationally behind only Mississippi's. West Virginia's price-to-income ratio lands at 2.57, still comfortably below the national median. Monthly costs stay low to match. Principal and interest run $524 a month, and the full housing payment, taxes and insurance included, totals $728, the second-cheapest full payment in the country behind only Mississippi's $738.

Lower home values explain most of the difference. West Virginia's population has grown slowly for decades, and its housing stock never saw the price run-up that hit faster-growing states, leaving local wages closer to what local homes actually cost than almost anywhere else measured. Residents age 65 and older also make up one of the country's higher shares of West Virginia's population, a........

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