As 2025 begins with average mortgage rates exceeding 7%, American households are increasingly concerned about housing affordability. A recent Pew Research survey found that 69% of Americans expressed a high degree of concern over the cost of housing, up from 61% in 2023. At the same time, concerns over food prices and consumer goods have stayed relatively the same.
With rising borrowing costs and tightening budgets, many families are now spending over 30% of their household income on housing expenses, particularly in high-cost states. This puts many families in a tough financial position, requiring them to allocate more of their savings or income toward mortgage payments, leaving less for other necessities. So, in which states can a median household income go furthest?
Zoocasa calculated the average monthly mortgage payment in all 50 U.S. states and determined how much of a median household’s monthly income would be required to cover the average monthly mortgage payment in each. To further explore housing affordability, we also calculated the house price-to-income ratio in every state.
The house price-to-income ratio is calculated by dividing the state median home price by the state median household income. This calculation helps to identify how affordable a place is relative to the area’s income. A low ratio indicates that homes are relatively affordable for local home buyers, whereas a high ratio indicates that homes are unaffordable for the average local buyer.
The Five Most Affordable States for Local Home Buyers
When John Denver sang “Country Roads, Take Me Home,” he wasn’t talking about housing affordability, but it is a major draw to settling in West Virginia. West Virginia’s median home price of $163,700 is the lowest among all 50 U.S. states. Though the state’s median household income is also low, at $55,948, the house price-to-income ratio of 2.9 indicates that West Virginia home buyers have the greatest housing affordability among all 50 states.
Oklahoma home buyers are not far behind with a house price-to-income ratio of 3.0 and a median home price of $188,794. Mississippi, Iowa, and North Dakota trail with the third, fourth, and fifth lowest house price-to-income ratios.
Housing affordability depends on balancing sufficient income growth and accessible home prices. However, the five states with the lowest house price-to-income ratios have relatively low median household incomes, illustrating the role of home prices in determining affordability.
Take New Hampshire, for example. While it ranks 30th for its house price-to-income ratio, the state boasts one of the highest median household incomes at $96,838. Despite this, a 20% down payment for the median home price is nearly equal to the median household income.
This demonstrates that a home buyer needs more than a high income to break into the housing market. Higher incomes don’t necessarily translate into greater housing accessibility and similarly, low incomes don’t necessarily mean homeownership is out of reach. Housing affordability is relative to each area and prospective buyers should work with a knowledgeable real estate professional in their city to find the best options within their budget.
The Five Least Affordable States for Local Home Buyers
A combination of limited land, home building regulations, international and out-of-state demand, and its remote location makes Hawaii the most expensive state to buy a home in. It is the only state with a house price-to-income ratio above 10 and the only state with a median home price higher than $1,000,000. For context, Hawaii’s median home price is $150,000 higher than California’s, which has the second-highest house price-to-income ratio.
- Read: The Real Cost of Living: How U.S. Housing Budgets Stack Up Against Home Price and Income Growth
In comparison, Montana, with the third-highest house price-to-income ratio, has a median price of $544,400—nearly $300,000 less than California’s. Meanwhile, Washington and Massachusetts, with the fourth and fifth highest house price-to-income ratios, have median home prices above $600,000 and median household incomes of $94,605 and $99,858 respectively.
Borrowing Costs in 2025: The Average Monthly Mortgage Payment in Every State
In 92% of U.S. states, the average monthly mortgage payment is less than $3,000, while in 28% of U.S. states, the average monthly mortgage payment is under $1,500. These lower-than-average mortgage payments can be found in states like Kentucky, Indiana, Ohio, and Missouri.
However, in half of the country, mortgage payments consume a significant portion of household earnings. In 25 states, the average monthly mortgage payment requires over 30% of a household’s monthly income, including in South Carolina (31.2%), Florida (35.9%), and Arizona (36.5%). According to the U.S. Department of Housing and Urban Development, households spending more than 30% of their income on housing (including mortgage payments and rent) are considered to be cost-burdened.
Further highlighting Hawaii’s unaffordability, 67.9% of the median household’s monthly income is needed to cover the average mortgage payment of $5,396. This likely leaves many Hawaiians locked out of the local housing market or forced to compete for a limited number of affordable housing options. California is the only other state that requires more than 50% of a household’s monthly income to cover the average mortgage payment.
Affording Housing in 2025 Requires Unique Approaches
While the financial strain of homeownership is concerning in several states, this doesn’t mean you can’t find affordable options within these more expensive areas. Opting for a small detached home or a condo apartment could allow you to spend less than 30% of your monthly income on housing, especially in states like Delaware, Tennessee, and Vermont where the cost burden is not as severe.
You could also consider rentvesting, an equity-building strategy where you purchase a property in a more affordable city and rent it out to earn investment income. This would allow you to build equity in your investment property while also earning monthly rental income. After a few years, you would be able to sell the investment property and use the gains for a down payment on a home in your desired, typically more expensive city.
It’s important to remember that your first home will not likely be your dream home, and that’s okay. Getting into the market first and building equity will allow you to upgrade later on. If you have questions about your local real estate market, our agents are here to help! Give us a call today to speak with an agent in your area and start planning your next real estate endeavor.
Methodology:
Average monthly mortgage payments were calculated based on the state’s median home price, assuming a 20% down payment on a 30-year fixed-rate mortgage at an interest rate of 7.04%.
Median home prices were sourced from each state’s real estate board. In cases where this data was unavailable, data from the U.S. Census Bureau was used.
Median household income figures were sourced from the U.S. Census Bureau (U.S. Census Bureau, U.S. Department of Commerce. "Income in the Past 12 Months (in 2023 Inflation-Adjusted Dollars)." American Community Survey, ACS 1-Year Estimates Subject Tables)
