States with the most mortgage-free homes

Top 5 states for mortgage-free homes

People living in mortgage-free homes fall under two umbrellas: those fortunate enough to pay all cash for their property and those who have painstakingly paid off their mortgages.

Paying off your mortgage is a financial milestone that most Americans don’t achieve until later in life. In fact, data from the National Association of Realtors suggests that around 80% of buyers in the U.S. needed some kind of financing to purchase a home from July 2022 to June 2023. But increasingly, despite what’s been depicted as an unaffordable housing market, a higher percentage of homeowners (nearly 40% nationally) are living mortgage-free.

So what’s behind this surge of mortgage payoffs? Jessica Lautz, NAR’s deputy chief economist and vice president of research, says it’s a perfect storm of fewer first-time buyers and millions of long-term homeowners who took advantage of the refinancing boom to bring their interest rates and loan length down and so have been able to pay their loan off faster.

ConsumerAffairs research suggests the states that have higher rates of mortgage-free homeownership have two things in common: a lower median home price and higher-than-average rates of long-term residency. In short, the math works in your favor when your house costs less and you stay in it longer.

“This is likely a factor of home prices and how long the owner has been in the home,” said Lautz. “It is more likely that seniors who have been in their homes for longer periods would be mortgage-free. In areas like Colorado and Utah, which had pandemic-fueled housing booms, there may be more recent home buyers who have not yet had an opportunity to pay off their mortgage.”

About one-half of mortgage-free homeowners are 65 and older, and that percentage has grown over time.

Another factor driving up mortgage-free homeowners is an influx of all-cash buyers, said Lautz.

“The U.S. still has tight housing inventory, and when there are multiple offers, the all-cash buyer is likely to win,” said Lautz. “In December of 2023, the share of all-cash buyers was 27% of home buyers.”

1. West Virginia

It’s less of an uphill battle to own your home free and clear in West Virginia, which has one of the lower median home prices in the country. More than half of the homeowners (52.6%) in the Mountain State are mortgage-free.

Unlike in neighboring Virginia, which ranks in the top five states with the lowest percentage of mortgage-free owner-occupied homes, a clear majority of homeowners in metro areas of West Virginia own their homes free and clear, with the exception of Morgantown, home of West Virginia University, and the tri-state metro region of Huntington-Ashland.

• Owner-occupied housing units without a mortgage: 288,497
• Percentage of mortgage-free homes: 52.6%
• Median home price: $290,000
• Area with highest rate of mortgage-free homeownership: Bluefield (63.1%)
• Area with lowest rate of mortgage-free homeownership: Morgantown (43.4%)

2. Mississippi

Mississippi is the only other state in the U.S. where a majority of owner-occupied homes are mortgage-free. This may come as a surprise since, according to the U.S. Census Bureau, Mississippi also has the lowest median household income in the U.S. However, a below-average median home price means it takes residents less time to chip away at their home loan principal.

Some metro areas in Mississippi are doing quite a bit of heavy lifting to ensure the state’s ranking as a mortgage-free mecca. These include Laurel, where mortgage-free homeownership reaches 59.1%, and Meridian, where it tops 55%. Both of these metro areas lie about 90 miles from Jackson, home to Mississippi’s lowest rates of mortgage-free homeownership, at 43.7%.

• Owner-occupied housing units without a mortgage: 402,249
• Percentage of mortgage-free homes: 50.1%
• Median home price: $251,100
• Area with highest rate of mortgage-free homeownership: Laurel (59.1%)
• Area with lowest rate of mortgage-free homeownership: Jackson (43.7%)

3. Louisiana

Louisiana is another state where it’s relatively cheap to buy a home, but there can be a big difference in median home prices depending on the metro area. For instance, in New Orleans, the median home price in January 2024 was $350,000, according to Realtor.com.

Despite the crush of higher interest rates, many Louisiana homeowners are still managing to get out from under the heavy burden of a mortgage. The highest rates of mortgage-free homeownership are in Opelousas, about 25 miles north of Lafayette, where 63.1% of homeowners are mortgage-free.

• Owner-occupied housing units without a mortgage: 594,377
• Percentage of mortgage-free homes: 48.4%
• Median home price: $240,000
• Area with highest rate of mortgage-free homeownership: Opelousas (63.1%)
• Area with lowest rate of mortgage-free homeownership: Shreveport-Bossier City (40.8%)

4. Arkansas

The median home price in Arkansas is among the lowest in the U.S., so it makes sense that many Arkansas homeowners are free of financing.

However, there’s a significant difference between rates of mortgage-free homeownership in some parts of the state compared with others. Fayetteville’s 36.1% mortgage-free rate is much lower than in the smaller Pine Bluff metro area, where 55.2% of Arkansas homeowners live mortgage-free.

• Owner-occupied housing units without a mortgage: 381,530
• Percentage of mortgage-free homes: 47.2%
• Median home price: $245,200
• Area with highest rate of mortgage-free homeownership: Pine Bluff (55.2%)
• Area with lowest rate of mortgage-free homeownership: Fayetteville-Springdale-Rogers (36.1%)

5. New Mexico

As the first Western state to make the top five, more New Mexico homeowners are getting out from under the shadow of a monthly mortgage payment in recent years. In fact, the percentage of New Mexico’s owner-occupied mortgage-free homes has risen from 41.6% to 46.4% over the last decade.

Of particular note is the metro region of Gallup, New Mexico, which leads the entire nation in mortgage-free homeownership. According to data ConsumerAffairs collected, a whopping three-quarters (75.8%) of Gallup homeowners own their homes free and clear of financing. This may be in part due to programs that support financing and private homeownership for Native American families, who make up a large part of the population in Gallup.

• Owner-occupied housing units without a mortgage: 279,358
• Percentage of mortgage-free homes: 46.4%
• Median home price: $366,400
• Area with highest rate of mortgage-free homeownership: Gallup (75.8%)
• Area with lowest rate of mortgage-free homeownership: Albuquerque (37.5%)

Which states have the lowest percentage of ‘free and clear’ homes?

There’s no shame in needing financing to buy a home. While rates of mortgage-free homeownership are historically high, a majority of Americans still owe money on their homes. There can be several factors at work in states that have lower rates of mortgage freedom, including higher home prices, an influx of new residents and a larger number of first-time buyers.

It’s also worth pointing out that paying off your home isn’t always the best financial move in every situation. As Debt.org explains, “It’s important to make sure you’re paying down the right debts first. There’s little point in paying off a mortgage early if you have more pressing loans with higher interest rates on deck.”

1. Maryland

With its middle-of-the-pack median home price and one of the highest household incomes in the country, it’s surprising to find Maryland at the bottom of the barrel when it comes to mortgage-free homeownership. But a closer look at city-level data reveals a clearer picture.

The vast majority of homes in Maryland lie within the sprawling Baltimore metro region, where about 10% of the population lives below the poverty line and mortgage-free homeownership hovers just below 30%. But it’s not all about the Benjamins. In the Cumberland metro area, which has a poverty rate higher than the national average, 51.9% of owner-occupied homes are mortgage-free.

• Owner-occupied housing units without a mortgage: 465,360
• Percentage of mortgage-free homes: 28.9%
• Median home price: $404,800
• Area with highest rate of mortgage-free homeownership: Cumberland (MD-WV) (51.9%)
• Area with lowest rate of mortgage-free homeownership: Baltimore-Columbia-Towson (29.9%)

2. Colorado

Some housing booms have silver linings, shoring up state budgets and bolstering home values. But Colorado is learning that a sudden influx of new residents can have drawbacks too, such as a tighter housing market, skyrocketing home prices and all the complications that come with it.

While the Pueblo, Colorado, area has a 40.4% mortgage-free rate, most Colorado metros trail far behind, with the Greeley (27.6%) and Denver (26.9%) metro areas posting the second- and third-lowest rates of mortgage-free homeownership in the country.

• Owner-occupied housing units without a mortgage: 490,516
• Percentage of mortgage-free homes: 31.0%
• Median home price: $622,600
• Area with highest rate of mortgage-free homeownership: Pueblo (40.4%)
• Area with lowest rate of mortgage-free homeownership: Denver-Aurora-Lakewood (26.9%)

3. Utah

Another Western state experiencing a surge of new residents, Utah has a housing market that’s poised to break the bank, literally. After a pandemic-fueled housing boom, the income needed to afford a home in the state’s largest metro doubled in the space of just two years.

Sunny southern cities like St. George are best for mortgage freedom; the metro area has a mortgage-free rate of 40.1%. Homes in Provo-Orem are much harder to pay off, with rates of mortgage-free homeownership at a state-low 28.4%.

• Owner-occupied housing units without a mortgage: 253,201
• Percentage of mortgage-free homes: 31.5%
• Median home price: $553,700
• Area with highest rate of mortgage-free homeownership: St. George (40.1%)
• Area with lowest rate of mortgage-free homeownership: Provo-Orem (28.4%)

4. California

If there’s a state in the country that conjures up images of palatial mansions and inflated real estate, it’s California. And although California does have the highest median home price in the U.S., more than 2 million Californian households live in their homes mortgage-free.

Although there’s a lot of variability across California’s multitude of metro areas, there are two clear outliers. A majority of homeowners in the Northern California regions of Clearlake and Uikah own their homes free of financing.

• Owner-occupied housing units without a mortgage: 2,488,970
• Percentage of mortgage-free homes: 32.9%
• Median home price: $799,200
• Area with the highest rate of mortgage-free homeownership: Ukiah (54.0%)
• Area with lowest rate of mortgage-free homeownership: Merced (28.2%)

5. Virginia

While many of the states that lead the country in mortgage-free homeownership are Southern states, Virginia’s proximity to Washington, D.C., and the Northeast complicates its housing market significantly. Overall median home prices for most of the state are similar to those in nearby Maryland, but Realtor.com data puts the median home price in Fairfax County — the state’s most populous, which is just outside Washington, at nearly $780,000.

Drilling down into city-level data further highlights this disparity. The Washington-Arlington-Alexandria metro area has the worst rate of mortgage-free homeownership in the country, with only 24.9% of homeowners in their homes free and clear of financing payments. In contrast, Danville, a small metro area tucked on the other side of the state, boasts 57.3% mortgage-free homeownership.

• Owner-occupied housing units without a mortgage: 754,487
• Percentage of mortgage-free homes: 33.1%
• Median home price: $419,400
• Area with highest rate of mortgage-free homeownership: Danville (57.3%)
• Area with lowest rate of mortgage-free homeownership: Washington-Arlington-Alexandria (DC-VA-MD-WV) (24.9%)

States with the highest portion of mortgage-free homes, ranked

The following table presents a state-by-state view of the data we collected on owner-occupied housing units both with and without mortgages.

Bottom line

Having a home comes with a price tag. Most Americans can’t afford the cost of a home out of pocket and instead secure long-term financing in the form of mortgages that traditionally span 30 years. Being able to pay off your mortgage early can significantly reduce the burden of household living expenses and enable you to save more, especially as you near retirement age.

While your ability to pay off a mortgage largely relies on how long you stay in your home, your interest rate and your income, where you choose to settle down can also influence this timeline.

Choosing a state with a low median home price and a relatively stable, consistent housing market can help you ditch the mortgage payments sooner and hopefully ride off into the sunset of financial independence.

Methodology

To determine rates of mortgage-free homeownership in states and metro areas across the U.S., ConsumerAffairs analyzed data from the most recent American Community Survey, conducted by the U.S. Census Bureau. We specifically identified owner-occupied homes without mortgages to avoid homes being used as investments or sources of income. The data incorporates all mortgage-free owner-occupied homes, including homes purchased without mortgages and homes where mortgages have been paid off.

Comparing the same data from the American Community Survey in 2012 allowed us to identify trends over time, including which states stayed consistent as leaders in mortgage-free homeownership, and more closely track the growing percentage of mortgage-free homes across the country.