Here are the five cities with the lowest first-year homeownership costs

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Two Midwestern cities are the most affordable

Buying a home is more costly than it has been in a decade. Not only have prices risen dramatically since the start of the COVID-19 pandemic, but interest rates are also rising.

Some of those costs are frontloaded into the first year of homeownership. But that first year costs less in some cities than in others. People contemplating a move to a more affordable city might do well to consider those cities that are kindest to the housing budget.

Analysts at SmartAsset, a financial website, compared 20 of America’s major cities, looking at five metrics. They considered a 20% down payment on the median-valued home, the average closing costs, monthly mortgage payment, property taxes, and homeowners insurance. 

Indianapolis ranks first in terms of first-year affordability. The median home price is $220,500 – more than $100,000 below the national average. Closing costs average around $3,000. Property taxes are also low.

It’s followed by another Midwestern city, Columbus, Ohio. The median home price is $236,000 and the average closing costs are second-lowest in the study at just $3,541.

Philadelphia ranks third. While median home prices are higher than in Indianapolis and Columbus,  upfront costs to get into a home are around $55,016. The City of Brotherly Love might rank higher but its average closing costs of more than $8,000 are the second-highest in the study.

Number four and five on the list are both major cities in the South. Houston ranks fourth with an affordable median home value of  $261,500. Upfront costs, including closing costs, averaged $56,400 in 2022. First-year housing costs average $79,000.

Rounding out the top five is Jacksonville, Fla. Buying a home there will cost $85,631 in the first full year of homeownership, including $64,062 in upfront costs and $21,569 in annual recurring expenses.

California cities are a lot more expensive

Those five housing markets are huge bargains compared to the most expensive cities. The top four most expensive cities in the first year are all in California – San Francisco, San Jose, Los Angeles, and San Diego.

That said, no city escaped first-year homeownership costs increases, which, according to SmartAssets, increased dramatically this year. The average monthly mortgage payment exceeds $1,000 in all 20 cities in the study. 

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