Home > Mortgages > The States With the Lowest Homeowner Costs

Comments 0 Comments
Advertiser Disclosure


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.

Image: Wavebreak Media

Comments on articles and responses to those comments are not provided or commissioned by a bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by a bank advertiser. It is not a bank advertiser's responsibility to ensure all posts and/or questions are answered.

Please note that our comments are moderated, so it may take a little time before you see them on the page. Thanks for your patience.

Credit.com receives compensation for the financial products and services advertised on this site if our users apply for and sign up for any of them.

Hello, Reader!

Thanks for checking out Credit.com. We hope you find the site and the journalism we produce useful. We wanted to take some time to tell you a bit about ourselves.

Our People

The Credit.com editorial team is staffed by a team of editors and reporters, each with many years of financial reporting experience. We’ve worked for places like the New York Times, American Banker, Frontline, TheStreet.com, Business Insider, ABC News, NBC News, CNBC and many others. We also employ a few freelancers and more than 50 contributors (these are typically subject matter experts from the worlds of finance, academia, politics, business and elsewhere).

Our Reporting

We take great pains to ensure that the articles, video and graphics you see on Credit.com are thoroughly reported and fact-checked. Each story is read by two separate editors, and we adhere to the highest editorial standards. We’re not perfect, however, and if you see something that you think is wrong, please email us at editorial team [at] credit [dot] com,

The Credit.com editorial team is committed to providing our readers and viewers with sound, well-reported and understandable information designed to inform and empower. We won’t tell you what to do. We will, however, do our best to explain the consequences of various actions, thereby arming you with the information you need to make decisions that are in your best interests. We also write about things relating to money and finance we think are interesting and want to share.

In addition to appearing on Credit.com, our articles are syndicated to dozens of other news sites. We have more than 100 partners, including MSN, ABC News, CBS News, Yahoo, Marketwatch, Scripps, Money Magazine and many others. This network operates similarly to the Associated Press or Reuters, except we focus almost exclusively on issues relating to personal finance. These are not advertorial or paid placements, rather we provide these articles to our partners in most cases for free. These relationships create more awareness of Credit.com in general and they result in more traffic to us as well.

Our Business Model

Credit.com’s journalism is largely supported by an e-commerce business model. Rather than rely on revenue from display ad impressions, Credit.com maintains a financial marketplace separate from its editorial pages. When someone navigates to those pages, and applies for a credit card, for example, Credit.com will get paid what is essentially a finder’s fee if that person ends up getting the card. That doesn’t mean, however, that our editorial decisions are informed by the products available in our marketplace. The editorial team chooses what to write about and how to write about it independently of the decisions and priorities of the business side of the company. In fact, we maintain a strict and important firewall between the editorial and business departments. Our mission as journalists is to serve the reader, not the advertiser. In that sense, we are no different from any other news organization that is supported by ad revenue.

Visitors to Credit.com are also able to register for a free Credit.com account, which gives them access to a tool called The Credit Report Card. This tool provides users with two free credit scores and a breakdown of the information in their Experian credit report, updated twice monthly. Again, this tool is entirely free, and we mention that frequently in our articles, because we think that it’s a good thing for users to have access to data like this. Separate from its educational value, there is also a business angle to the Credit Report Card. Registered users can be matched with products and services for which they are most likely to qualify. In other words, if you register and you find that your credit is less than stellar, Credit.com won’t recommend a high-end platinum credit card that requires an excellent credit score You’d likely get rejected, and that’s no good for you or Credit.com. You’d be no closer to getting a product you need, there’d be a wasted inquiry on your credit report, and Credit.com wouldn’t get paid. These are essentially what are commonly referred to as "targeted ads" in the world of the Internet. Despite all of this, however, even if you never apply for any product, the Credit Report Card will remain free, and none of this will impact how the editorial team reports on credit and credit scores.

Your Stories

Lastly, much of what we do is informed by our own experiences as well as the experiences of our readers. We want to tell your stories if you’re interested in sharing them. Please email us at story ideas [at] credit [dot] com with ideas or visit us on Facebook or Twitter.

Thanks for stopping by.

- The Credit.com Editorial Team