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Mortgages Reports

The Most Budget-Friendly Cities for Homeowners With a Mortgage

Updated Apr 05, 2023   |   5 mins read

Financial experts generally recommend that no more than 28% of your total household income should be used for monthly mortgage payments.

Keeping your mortgage payment below that percentage usually leads to a more comfortable budget and allows you to either save your extra cash or spend it on things like a student loan payment or vacation.

As a homeowner, you are most likely to adhere to the 28% rule if you find a city where home values are affordable relative to the typical salaries in the area.

To find and highlight these cities, LendEDU analyzed real estate data on over 25,000 American cities. Specifically, we looked at the proportion of houses in each city where the mortgage costs 30% or more of the household income.

Those cities with the lowest percentages of houses with a costly mortgage were recognized by LendEDU as “The Most Budget-Friendly Cities for Homeowners With a Mortgage” and can be found below.

The Most Budget-Friendly Cities for Homeowners With a Mortgage

To see how a city ranked within only its state, either sort the table on the “State” column or type your desired state into the search bar. 

To be considered for this ranking, a city had to have a minimum of 7,000 households with a mortgage.

For each city, statistics were gathered on a house-by-house basis. For example, if a specific house in Newark, New Jersey had a household income of $100,000 and the mortgage payments for the year on that same house totaled $32,000, it was added to the count of houses in Newark where the mortgage costs 30% or more of the household income.

Tips For Buying a Home With a Mortgage

The home buying process is stressful enough by itself, but when you need a mortgage to finance a home purchase it can become quite the complex life event.

LendEDU outlines a few simple steps you should take when in the market for a home loan.

Set a Budget

Homes are expensive and you will likely be paying off your mortgage for at least a decade so it’s vital that you can afford the monthly payments without breaking the bank.

LendEDU has a mortgage calculator that will allow you to estimate your monthly payments depending on your mortgage amount, interest rate, and loan terms.

Compare Your Options

There are so many different mortgage lenders out there today so it’s so important to do your due diligence and compare all of your options in order to receive the best possible deal on a home loan. You can even check out some of the best online mortgage lenders if you want to go the virtual route.

Or, if you are a veteran you should look into the different VA home loan lenders to see what kind of rates and terms each can provide.

It’s also important to get an idea of the current mortgage rates to know what you are getting into. You should compare 30-year mortgage rates from various home loan lenders to compare what’s out there.

Down the Line, Consider Refinancing Your Mortgage

Once you finally decide on a mortgage and become a homeowner, you might want to consider refinancing your mortgage in a few year’s time to see if there is a better deal out there. There are a number of mortgage refinance companies that might be able to get you a better rate or term depending on your financial situation.

LendEDU has a mortgage refinance calculator that should be able to give you a better sense of what a mortgage refinance will do for you.

Methodology

All data found in this report comes from Greatdata.com. LendEDU licensed the dataset provided by Great Data, which derives mainly from the U.S. Census Bureau. For some data points, like “# of Houses Where Mortgage Costs 30% or More of Household Income” and “Total # of Houses With a Mortgage” the data comes from the most recent U.S. Census Bureau update but Great Data also calculates its own projections based on historical trends to provide the most up-to-date data. 

For each city, its total count of houses where the mortgage costs 30% or more of the household income was determined on a house-by-house basis. This means that the mortgage expense on a specific house in a city was compared against the household income for that same exact house in the same city. Citywide median or average figures for either household income or mortgage expense were not used to determine the totals seen in the report.

To find out the mortgage expense for each house, the U.S. Census Bureau asked respondents the following: “How much is the regular monthly mortgage payment on THIS property? Include payment only on FIRST mortgage or contract to purchase.

For some cities listed in the report, Great Data provided multiple ZIP Codes within the city, with each ZIP Code having its own data. In these instances, we combined all ZIP Code data for that city to provide a single stat line for each city.

To be considered, a city, or all of its ZIP Codes, had to have a minimum of 7,000 households with a mortgage.

Resources for Buying a Home

Here are at LendEDU, we have many resources related to mortgages and buying a home. Check out our favorites below:

See more of LendEDU’s Research