U.S. Markets closed

Best and Worst Cities for First-Time Homebuyers

Daria Uhlig
1 / 54

Best and Worst Cities for First-Time Homebuyers

Buying your first home shows you’ve achieved a level of financial success and maturity to take on the responsibilities of homeownership. But taking that step is easier in some cities than it is in others.

GOBankingRates looked at a variety of economic data to determine which cities are the best and worst for first-time homebuyers. The rankings include factors like foreclosure rates, share of homebuyers with non-prime credit and the percentage of FHA-insured loans — which over one-third of first-time buyers choose because of low down payment requirements. Keep reading to see the best and worst places for buying a home.

Best and Worst Cities for First-Time Homebuyers, FHA, insurance, real estate, homebuyers, foreclosure, single-family, home median price, mortgage, down payment

Buying your first home shows you've achieved a level of financial success and maturity to take on the responsibilities of homeownership . But taking that step is easier in some cities than it is in others.

GOBankingRates looked at a variety of economic data to determine which cities are the best and worst for first-time homebuyers. The rankings include factors like foreclosure rates, share of homebuyers with non-prime credit and the percentage of FHA-insured loans — which over one-third of first-time buyers choose because of low down payment requirements.

Click through to see the best and worst cities for buying a home.

Best and Worst Cities for First-Time Homebuyers, FHA, insurance, real estate, homebuyers, foreclosure, single-family, home median price, mortgage, down payment

Worst Cities for First-Time Homebuyers

Geographically, the worst cities for homebuyers tend toward the western U.S., with notable pockets in Florida and the Northeast. Regarding FHA share of housing, the worst cities report rates of 20 percent or often less. The non-prime credit share of homebuyers is generally 25 percent or lower among the worst cities.

Orlando, Florida, FHA, insurance, real estate, homebuyers, foreclosure, single-family, home median price, mortgage, down payment

25. Orlando, Fla.

Foreclosure Rate: 1 in every 2,571 homes
FHA Share: 18 percent
Single-Family Home Median Price: $299,000

Florida is one state where home prices are skyrocketing. Orlando — the lowest-rated Florida city in this study — is more suited to better-established, move-up buyers, considering its low FHA and non-prime credit shares and low foreclosure rates.

Phoenix, Arizona, FHA, insurance, real estate, homebuyers, foreclosure, single-family, home median price, mortgage, down payment

24. Phoenix, Ariz.

Foreclosure Rate: 1 in every 1,776 homes
FHA Share: 20 percent
Single-Family Home Median Price: $290,000

Phoenix is one city where the cost of living was expected to soar this year. With Arizona mortgage interest rates at 4.43 percent, monthly payments average almost $1,428 a month in Phoenix. The listing price for single-family homes has jumped nearly $60,000 in the last four years: from about $231,000 in March 2014 to $290,000 in March 2018. Phoenix has a lower-than-average share of FHA loans, too.

Philadelphia, Pennsylvania, FHA, insurance, real estate, homebuyers, foreclosure, single-family, home median price, mortgage, down payment

23. Philadelphia, Pa.

Foreclosure Rate: 1 in every 1,029 homes
FHA Share: 26 percent
Single-Family Home Median Price: $234,900

Philadelphia is one of the most popular cities for women to buy homes, and the average monthly mortgage payment is just $1,170, which is less than the city's median rent, $1,600, according to Zillow.

Affordability doesn't stop Philadelphia from making the "worst" list, however. Its high rates of foreclosure and mediocre numbers for FHA and non-prime homebuyer shares bring it down to the bottom ranks.

San Antonio, Texas, FHA, insurance, real estate, homebuyers, foreclosure, single-family, home median price, mortgage, down payment
Sacramento, California, FHA, insurance, real estate, homebuyers, foreclosure, single-family, home median price, mortgage, down payment

21. Sacramento, Calif.

Foreclosure Rate: 1 in every 2,122 homes
FHA Share: 25 percent
Single-Family Home Median Price: $401,875

Six places in California made the list of the worst cities for first-time homebuyers, and Sacramento is the first one. With a median price of $401,875 for a single-family residence, Sacramento certainly isn't the most expensive market in California. But a monthly mortgage payment of $1,952 is heavy on the budget and runs higher than the monthly cost to rent in the city, according to Zillow.

Jacksonville, Florida, FHA, insurance, real estate, homebuyers, foreclosure, single-family, home median price, mortgage, down payment

20. Jacksonville, Fla.

Foreclosure Rate: 1 in every 963 homes
FHA Share: 26 percent
Single-Family Home Median Price: $268,000

Jacksonville home prices are low for a city positioned this far down the list of best cities for first-time homebuyers, but the foreclosure rate is the study's fourth-highest despite low interest rates.

El Paso, Texas, FHA, insurance, real estate, homebuyers, foreclosure, single-family, home median price, mortgage, down payment

19. El Paso, Texas

Foreclosure Rate: 1 in every 1,099 homes
FHA Share: 16 percent
Single-Family Home Median Price: $161,096

El Paso has the fifth-lowest FHA share in the study. But this West Texas border town has a relatively high share of non-prime credit at 35 percent --which might appeal to cash-strapped first-time buyers.

Austin, Texas, FHA, insurance, real estate, homebuyers, foreclosure, single-family, home median price, mortgage, down payment

18. Austin, Texas

Foreclosure Rate: 1 in every 5,956 homes
FHA Share: 16 percent
Single-Family Home Median Price: $332,900

In recent years, Austin has benefited enormously from economic prosperity and a growing population of newcomers. The boom, however, carries the drawback of higher home prices and cost of living. Neither help first-time homebuyers — nor does the city's low share of FHA-insured and non-prime buyers.

See Where Austin Ranks: The Best Cities for Aspiring Millennial Homeowners

Raleigh, North Carolina, FHA, insurance, real estate, homebuyers, foreclosure, single-family, home median price, mortgage, down payment

17. Raleigh, N.C.

Foreclosure Rate: 1 in every 1,806 homes
FHA Share: 19 percent
Single-Family Home Median Price: $319,000

Raleigh's high foreclosure rate, along with having a lower rate of FHA and non-prime shares, suggest that it's a challenging economic environment for first-time buyers to hold on to their houses.

Charlotte, North Carolina, FHA, insurance, real estate, homebuyers, foreclosure, single-family, home median price, mortgage, down payment

16. Charlotte, N.C.

Foreclosure Rate: 1 in every 1,328 homes
FHA Share: 21 percent
Single-Family Home Median Price: $300,000

Charlotte has low foreclosure and mortgage interest rates going for it, but a median list price of $300,000 — which has increased almost $100,000 since March 2014 — makes it pricey for first-time buyers.

Denver, Colorado, FHA, insurance, real estate, homebuyers, foreclosure, single-family, home median price, mortgage, down payment

15. Denver, Colo.

Foreclosure Rate: 1 in every 6,077 homes
FHA Share: 20 percent
Single-Family Home Median Price: $465,000

Foreclosures are rare in Denver, but that isn't enough to lift it out of the "worst" cities list. With a median listing price of $465,000, single-family homes are costly. Also, first-time shoppers face a market where three-quarters of homebuyers have prime credit, making the competition for good houses more difficult.

Tulsa, Oklahoma, FHA, insurance, real estate, homebuyers, foreclosure, single-family, home median price, mortgage, down payment

14. Tulsa, Okla.

Foreclosure Rate: 1 in every 1,233 homes
FHA Share: 17 percent
Single-Family Home Median Price: $188,000

You can purchase a house in Tulsa for less than $40,000 down, thanks to a median list price of $188,000. A purchase at that price results in a $953-per-month mortgage payment, which is the 12th lowest on the list.

Despite affordability, high rates of foreclosure and lower-than-average FHA share of homebuyers drag Tulsa down into the worst cities for first-time homebuyers.

San Diego, California, FHA, insurance, real estate, homebuyers, foreclosure, single-family, home median price, mortgage, down payment

13. San Diego, Calif.

Foreclosure Rate: 1 in every 4,618 homes
FHA Share: 35 percent
Single-Family Home Median Price: $699,000

As in Boston, a 20-percent down payment on a median-priced home in San Diego costs more than $100,000: $139,815 down with monthly mortgage payments of $3,345. Add on the low share of non-prime homebuyers and San Diego comes in at the No. 12 worst city for first-time homebuyers.

Boston, Massachusetts, FHA, insurance, real estate, homebuyers, foreclosure, single-family, home median price, mortgage, down payment

12. Boston

Foreclosure Rate: 1 in every 3,723 homes
FHA Share: 23 percent
Single-Family Home Median Price: $515,000

Boston's housing market is not conducive to buying a home for the first time. For one, single-family homes are not cheap in the Boston area, and given current rates and prices, a 20 percent down payment would exceed $100,000.

Oklahoma City, Oklahoma, FHA, insurance, real estate, homebuyers, foreclosure, single-family, home median price, mortgage, down payment

11. Oklahoma City, Okla.

Foreclosure Rate: 1 in every 1,164 homes
FHA Share: 16 percent
Single-Family Home Median Price: $225,000

Oklahoma City's modest median list price keeps the city accessible to first-time buyers. However, the city also suffers from one of the lowest FHA and non-prime credit shares in the study.

Miami, Florida, FHA, insurance, real estate, homebuyers, foreclosure, single-family, home median price, mortgage, down payment

10. Miami

Foreclosure Rate: 1 in every 1,653 homes
FHA Share: 18 percent
Single-Family Home Median Price: $399,900

In Miami, wealth inequality is a major issue, and this affects conditions for homebuyers. The FHA share of homebuyers is only 18 percent, whereas the median price for a single-family home is about $400,000 — which doesn't seem to make sense for a city where the median household income is, according to the U.S. Census Bureau, just $31,624 a year.

Riverside, California, FHA, insurance, real estate, homebuyers, foreclosure, single-family, home median price, mortgage, down payment

9. Riverside, Calif.

Foreclosure Rate: 1 in every 1,691 homes
FHA Share: 15 percent
Single-Family Home Median Price: $379,900

Home values in Riverside increased well over $100,000 in the five years from March 2013 to 2018. Zillow forecasts prices only to go higher, making Riverside — along with its low 15 percent FHA share — not a great place for first-time homebuyers.

Colorado Springs, Colorado, FHA, insurance, real estate, homebuyers, foreclosure, single-family, home median price, mortgage, down payment

8. Colorado Springs, Colo.

Foreclosure Rate: 1 in every 4,614 homes
FHA Share: 10 percent
Single-Family Home Median Price: $341,950

You'll need a hefty salary and strong credit to buy in Colorado Springs. With the study's second-lowest share of FHA loans and the lowest share of non-prime credit, this city is a tough nut for first-time homebuyers to crack.

Los Angeles, California, FHA, insurance, real estate, homebuyers, foreclosure, single-family, home median price, mortgage, down payment

7. Los Angeles

Foreclosure Rate: 1 in every 4,106 homes
FHA Share: 29 percent
Single-Family Home Median Price: $750,000

This shouldn't come as much of a surprise given the notoriety of Los Angeles real estate markets. With a 4.42% 30-year fixed rate and 20 percent down, first-time homebuyers have to shell out around $150,000 on the down payment and $3,500 every month.

Durham, North Carolina, FHA, insurance, real estate, homebuyers, foreclosure, single-family, home median price, mortgage, down payment

6. Durham, N.C.

Foreclosure Rate: 1 in every 4,629 homes
FHA Share: 11 percent
Single-Family Home Median Price: $349,000

Durham's median list price falls in the top 15 highest of cities surveyed. First-time homebuyers will have to put down close to $70,000 and expect to pay a mortgage that's over $1,700 per month.

Baltimore, Maryland, FHA, insurance, real estate, homebuyers, foreclosure, single-family, home median price, mortgage, down payment

5. Baltimore, Md.

Foreclosure Rate: 1 in every 641 homes
FHA Share: 26 percent
Single-Family Home Median Price: $295,000

Baltimore is the only Maryland city included in the study. Baltimore's high foreclosure rate — the study's highest — suggests the city's average $1,325 mortgage payment is more than many buyers can manage.

Find Out: How You Can Afford to Live in the Most Expensive States in America

New York City, New York, FHA, insurance, real estate, homebuyers, foreclosure, single-family, home median price, mortgage, down payment

4. New York

Foreclosure Rate: 1 in every 18,171 homes
FHA Share: 19 percent
Single-Family Home Median Price: $669,000

Notably, New York has the lowest foreclosure rate out of all the cities in the study: Just one foreclosure in 18,171 homes. Still, that doesn't help first-time homebuyers much, as the median price for a home is nearly $670,000.

Las Vegas, Nevada, FHA, insurance, real estate, homebuyers, foreclosure, single-family, home median price, mortgage, down payment

3. Las Vegas, Nev.

Foreclosure Rate: 1 in every 1,371 homes
FHA Share: 9 percent
Single-Family Home Median Price: $300,000

Las Vegas' $300,000-plus median list price places the city in an entirely different price band than cities with $299,999-and-under homes. Plus, the city has the lowest rate of FHA shares in the study.

San Francisco, California, FHA, insurance, real estate, homebuyers, foreclosure, single-family, home median price, mortgage, down payment

2. San Francisco

Foreclosure Rate: 1 in every 4,406 homes
FHA Share: 22 percent
Single-Family Home Median Price: $799,000

With San Francisco's notoriously high home prices, there's little room among homebuyers for non-prime credit or FHA share.

Find Out: Do You Work Enough to Afford a Home in America's 25 Largest Cities?

San Jose, California, FHA, insurance, real estate, homebuyers, foreclosure, single-family, home median price, mortgage, down payment

1. San Jose, Calif.

Foreclosure Rate: 1 in every 3,217 homes
FHA Share: 29 percent
Single-Family Home Median Price: $1,135,000

San Jose tops the list of worst cities for first-time homebuyers. That's thanks to a median list price that's over $1 million — $366,000 more than the next worst city for first-time homebuyers.

Best and Worst Cities for First-Time Homebuyers, FHA, insurance, real estate, homebuyers, foreclosure, single-family, home median price, mortgage, down payment

Best Cities for First-Time Homebuyers

The best cities geographically tended to fall in the old Midwest — for example, Michigan, Ohio and Indiana — and the southern US. The share of homebuyers using an FHA mortgage averages around 35 percent, and often higher. Non-prime credit share of homebuyers is around 45 percent or more.

Stockton, California, FHA, insurance, real estate, homebuyers, foreclosure, single-family, home median price, mortgage, down payment

25. Stockton, Calif.

Foreclosure Rate: 1 in every 7,006 homes
FHA Share: 27 percent
Single-Family Home Median Price: $379,800

Inland from the San Francisco Bay Area, Stockton is the only California city to make the "best" cities list.

See Where California Ranks: Here Are the Best and Worst States to Build Your Home, Study Finds

Atlanta, Georgia, FHA, insurance, real estate, homebuyers, foreclosure, single-family, home median price, mortgage, down payment

24. Atlanta, Ga.

Foreclosure Rate: 1 in every 2,071 homes
FHA Share: 29 percent
Single-Family Home Median Price: $280,000

Atlanta's $275,000 median home list price is higher than those in a couple of cites rated worse for first-time buyers. But the foreclosure rate is relatively low, and the average mortgage interest rate is among the lowest in the study.

Spokane, Washington, FHA, insurance, real estate, homebuyers, foreclosure, single-family, home median price, mortgage, down payment

23. Spokane, Wash.

Foreclosure Rate: 1 in every 4,106 homes
FHA Share: 26 percent
Single-Family Home Median Price: $242,160

Spokane is the only Washington city to make the list, and the study shows it to be a financially stable one. FHA and non-prime credit shares are low, and Spokane has one of the study's lowest foreclosure rates. The city is also the best in the state for stretching your paycheck.

Missouri, St Louis, FHA, insurance, real estate, homebuyers, foreclosure, single-family, home median price, mortgage, down payment

22. St. Louis, Mo.

Foreclosure Rate: 1 in every 1,937 homes
FHA Share: 29 percent
Single-Family Home Median Price: $183,900

St. Louis rates about average across factors like foreclosure rate and FHA and non-prime credit shares, but list prices and monthly mortgage payments keep the city in the top 25.

Virginia, Richmond, FHA, insurance, real estate, homebuyers, foreclosure, single-family, home median price, mortgage, down payment

21. Richmond, Va.

Foreclosure Rate: 1 in every 3,582 homes
FHA Share: 30 percent
Single-Family Home Median Price: $242,160

Richmond's median home price and compatible FHA and non-prime credit share suggest that it is an expensive place for first-time buyers to purchase a home.

Birmingham, Alabama

20. Birmingham, Ala.

Foreclosure Rate: 1 in every 1,140 homes
FHA Share: 32 percent
Single-Family Home Median Price: $209,977

Birmingham is the highest rated city to have a median list price of more $200,000. A higher-than-average share of FHA loans corresponds to a high percentage of non-prime credit, which might indicate a high number of first-time buyers.

Knoxville, Tennessee, FHA, insurance, real estate, homebuyers, foreclosure, single-family, home median price, mortgage, down payment

19. Knoxville, Tenn.

Foreclosure Rate: 1 in every 3,451 homes
FHA Share: 26 percent
Single-Family Home Median Price: $229,800

Knoxville's median home list price is slightly low for its position on the list. Plus, the foreclosure rate is one of the study's lowest, making this city a safe bet for first-time buyers.

Winston, Salem, North Carolina, FHA, insurance, real estate, homebuyers, foreclosure, single-family, home median price, mortgage, down payment

18. Winston-Salem, N.C.

Foreclosure Rate: 1 in every 966 homes
FHA Share: 34 percent
Single-Family Home Median Price: $194,440

Median home prices are higher in Winston-Salem than in the other top 10 cities, but an above-average FHA share and one of the study's highest non-prime credit shares make the city a good option. Just outside Winston-Salem in Bermuda Run is where you'll find one of the best suburbs for retirement.

Omaha, Nebraska, FHA, insurance, real estate, homebuyers, foreclosure, single-family, home median price, mortgage, down payment

17. Omaha, Neb.

Foreclosure Rate: 1 in every 2,085 homes
FHA Share: 32 percent
Single-Family Home Median Price: $229,500

Omaha's foreclosure rates fall about in the middle of the list, and its median home price is relatively low. Buying a home here with about $46,000 down lets you avoid paying mortgage insurance.

Milwaukee, Wisconsin, FHA, insurance, real estate, homebuyers, foreclosure, single-family, home median price, mortgage, down payment

16. Milwaukee, Wis.

Foreclosure Rate: 1 in every 930 homes
FHA Share: 39 percent
Single-Family Home Median Price: $234,900

Milwaukee's median list price and corresponding mortgage payment are on par with its position on the list, but its FHA and non-prime credit shares are above average — and the foreclosure rate is the list's third-highest.

Louisiana, New Orleans, FHA, insurance, real estate, homebuyers, foreclosure, single-family, home median price, mortgage, down payment

15. New Orleans, La.

Foreclosure Rate: 1 in every 2,185 homes
FHA Share: 31 percent
Single-Family Home Median Price: $235,000

Homes are relatively inexpensive in New Orleans, and FHA and non-prime credit shares are slightly high, indicating you don't need perfect credit or a big down payment to buy a home here.

See How Much You'll Need in Louisiana: This Is the Salary You Need to Afford the Average Home in Every State

Pittsburgh, Pennsylvania, FHA, insurance, real estate, homebuyers, foreclosure, single-family, home median price, mortgage, down payment

14. Pittsburgh, Pa.

Foreclosure Rate: 1 in every 1,653 homes
FHA Share: 35 percent
Single-Family Home Median Price: $169,500

A relatively low average mortgage payment of $844 and a competitive foreclosure rate helps make Pittsburgh an attractive city for first-time homebuyers.

Memphis, Tennessee

Memphis, Tennessee

13. Memphis, Tenn.

Foreclosure Rate: 1 in every 1,771 homes
FHA Share: 32 percent
Single-Family Home Median Price: $165,000

With one of the study's lowest median home prices and a solid share of FHA loans, Memphis has plenty to offer first-time homebuyers.

Louisville, Kentucky, FHA, insurance, real estate, homebuyers, foreclosure, single-family, home median price, mortgage, down payment

12. Louisville, Ky.

Foreclosure Rate: 1 in every 1,402 homes
FHA Share: 37 percent
Single-Family Home Median Price: $219,900

Louisville's $215,700 median home list price is lower than median prices in any city falling lower on the list. FHA loans are common here, so down payments can be as low as 3.5 percent.

Cincinnati, Ohio, FHA, insurance, real estate, homebuyers, foreclosure, single-family, home median price, mortgage, down payment

11. Cincinnati, Ohio

Foreclosure Rate: 1 in every 1,275 homes
FHA Share: 39 percent
Single-Family Home Median Price: $215,000

Cincinnati's high FHA share puts the city's $209,000 median list price within reach of first-time buyers because of the low down payment requirements. But Cincinnati has a relatively high foreclosure rate despite an average monthly mortgage payment of less than $1,000.

See Where Cincinnati Ranks: The Richest and Poorest People in America Live in These ZIP Codes

Wichita, Kansas, FHA, insurance, real estate, homebuyers, foreclosure, single-family, home median price, mortgage, down payment

10. Wichita, Kan.

Foreclosure Rate: 1 in every 2,176 homes
FHA Share: 35 percent
Single-Family Home Median Price: $164,900

The average mortgage payment is just $841 in Wichita, thanks to the city's low median list price, which translates to a modest $32,000 down payment for a conventional mortgage.

Indianapolis, Indiana, FHA, insurance, real estate, homebuyers, foreclosure, single-family, home median price, mortgage, down payment

9. Indianapolis, Ind.

Foreclosure Rate: 1 in every 1,693 homes
FHA Share: 37 percent
Single-Family Home Median Price: $225,000

You can buy a house listed at the median price with $44,598 down payment but expect to pay more for it here — Indianapolis interest rates are in the top 10 percent of cities included on the list.

Minneapolis, Minnesota, FHA, insurance, real estate, homebuyers, foreclosure, single-family, home median price, mortgage, down payment

8. Minneapolis, Minn.

Foreclosure Rate: 1 in every 3,360 homes
FHA Share: 37 percent
Single-Family Home Median Price: $334,283

Despite high FHA and non-prime credit shares, Minneapolis ties for the highest median home list price. The city's low foreclosure rate indicates that buyers are purchasing within their means, but perhaps well beyond the means of a first-time buyer.

Baton Rouge Lousiana

7. Baton Rouge, La.

Foreclosure Rate: 1 in every 3,248 homes
FHA Share: 35 percent
Single-Family Home Median Price: $224,700

Baton Rouge is one city where home prices are getting slashed. It ranks significantly higher than New Orleans, the only other Louisiana city on the list, for first-time homebuyers, thanks to a higher FHA share and lower median list price. Baton Rouge foreclosure rates are much lower, too.

Cleveland, Ohio, FHA, insurance, real estate, homebuyers, foreclosure, single-family, home median price, mortgage, down payment

6. Cleveland, Ohio

Foreclosure Rate: 1 in every 915 homes
FHA Share: 47 percent
Single-Family Home Median Price: $159,999

Cleveland stands out as having one of the highest shares of FHA, which might explain the high foreclosure rate. Nevertheless, the high FHA loan share suggests a high percentage of first-time buyers.

Columbus, Ohio, FHA, insurance, real estate, homebuyers, foreclosure, single-family, home median price, mortgage, down payment
McAllen, Texas, FHA, insurance, real estate, homebuyers, foreclosure, single-family, home median price, mortgage, down payment

4. McAllen, Texas

Foreclosure Rate: 1 in every 1,866 homes
FHA Share: 38 percent
Single-Family Home Median Price: $180,000

McAllen's FHA and non-prime shares are high, but a median list price of $180,000 and an average mortgage payment of $971 keeps this city one of the top five most affordable for first-time buyers.

Detroit, Michigan, FHA, insurance, real estate, homebuyers, foreclosure, single-family, home median price, mortgage, down payment

3. Detroit, Mich.

Foreclosure Rate: 1 in every 2,324 homes
FHA Share: 42 percent
Single-Family Home Median Price: $189,900

Detroit ranks near the top of the list for both FHA and non-prime shares. Loan availability for less-qualified buyers and a modest average mortgage payment of $867 boosts Detroit's suitability for first-time buyers.

Toledo, Ohio, FHA, insurance, real estate, homebuyers, foreclosure, single-family, home median price, mortgage, down payment

2. Toledo, Ohio

Foreclosure Rate: 1 in every 1,023 homes
FHA Share: 44 percent
Single-Family Home Median Price: $127,700

With the lowest median list price of any city on the list, and one of the highest percentages of buyers using FHA loans, Toledo earns the runner-up position as America's best city for first-time homebuyers.

Grand Rapids, Michigan, FHA, insurance, real estate, homebuyers, foreclosure, single-family, home median price, mortgage, down payment

1. Grand Rapids, Mich.

Foreclosure Rate: 1 in every 2,899 homes
FHA Share: 49 percent
Single-Family Home Median Price: $235,000

FHA loans make up nearly half of home loans in Grand Rapids — which is helpful for first-time buyers and anyone included in the nearly 60 percent non-prime credit share. The city boasts the highest share of non-prime credit homebuyers at 59 percent.

Best and Worst Cities for First-Time Homebuyers, FHA, insurance, real estate, homebuyers, foreclosure, single-family, home median price, mortgage, down payment

How the Best and Worst Cities for First-Time Homebuyers Compare

The best cities to buy a home tend to have the lowest median prices whereas the worst cities tended to have the highest median prices. But there's no clear line between the lists.

What first-time homebuyers can take away from this study is the importance of thoroughly looking at the different factors when considering where to purchase. Look at the whole range of factors that influence a home purchase, including the ones that appear unimportant at first glance, such as small differences in mortgage interest rates. Over the life of a large loan, even a small difference in your mortgage interest rate can save — or cost — you thousands of dollars. Long-term factors like foreclosure rates are also critical to consider.

Read More About: The Best City in Every State to Buy a Home

Methodology: GOBankingRates determined the best and worst cities for first-time homebuyers based on the following factors: 1) share of buyers using an FHA mortgage, sourced from LendingTree; 2) percentage of buyers who have less than prime credit -- below 680; first-time buyers often have lower credit scores than repeat buyers so they are more competitive in areas without as many prime borrowers, sourced from LendingTree; 3) foreclosure rates, sourced from RealtyTrac; 4) Median listing price of single-family home, 5) mortgage down payment, based on 20% down, 6) monthly mortgage payment, calculated using Zillow's Mortgage Calculator, and Zillow's index for single-family residences in each metro area of the cities featured in study.

 

This article originally appeared on GOBankingRates.com: Best and Worst Cities for First-Time Homebuyers

Buying your first home shows you’ve achieved a level of financial success and maturity to take on the responsibilities of homeownership. But taking that step is easier in some cities than it is in others.

GOBankingRates looked at a variety of economic data to determine which cities are the best and worst for first-time homebuyers. The rankings include factors like foreclosure rates, share of homebuyers with non-prime credit and the percentage of FHA-insured loans — which over one-third of first-time buyers choose because of low down payment requirements. Keep reading to see the best and worst places for buying a home.

Worst Cities for First-Time Homebuyers

Geographically, the worst cities for homebuyers tend to be toward the western U.S., with notable pockets in Florida and the Northeast. Regarding the FHA share of housing, the worst cities report rates of 20 percent or often less. The non-prime credit share of homebuyers is generally 25 percent or lower among the worst cities.

25. Orlando, Fla.

Foreclosure Rate: 1 in every 2,571 homes
FHA Share: 18 percent
Single-Family Home Median Price: $299,000

Florida is one state where home prices are skyrocketing. Orlando — the lowest-rated Florida city in this study — is more suited to better-established, move-up buyers, considering its low FHA and non-prime credit shares and low foreclosure rates.

24. Phoenix, Ariz.

Foreclosure Rate: 1 in every 1,776 homes
FHA Share: 20 percent
Single-Family Home Median Price: $290,000

With Arizona mortgage interest rates at 4.43 percent, monthly payments average almost $1,428 a month in Phoenix. The listing price for single-family homes has jumped nearly $60,000 in the last four years: from about $231,000 in March 2014 to $290,000 in March 2018. Phoenix has a lower-than-average share of FHA loans, too.

23. Philadelphia, Pa.

Foreclosure Rate: 1 in every 1,029 homes
FHA Share: 26 percent
Single-Family Home Median Price: $234,900

Philadelphia is one of the most popular cities for women to buy homes, and the average monthly mortgage payment is just $1,170, which is less than the city’s median rent, $1,600, according to Zillow.

Affordability doesn’t stop Philadelphia from making the “worst” list, however. Its high rates of foreclosure and mediocre numbers for FHA and non-prime homebuyer shares bring it down to the bottom ranks.

22. San Antonio, Texas

Foreclosure Rate: 1 in every 1,408 homes
FHA Share: 23 percent
Single-Family Home Median Price: $261,125

Like Phoenix, San Antonio boasts comparatively affordable home prices, but other factors undermine its final rank in the study. Specifically, less than a quarter of homebuyers have FHA-insured loans, and only 30 percent have non-prime credit.

21. Sacramento, Calif.

Foreclosure Rate: 1 in every 2,122 homes
FHA Share: 25 percent
Single-Family Home Median Price: $401,875

Six places in California made the list of the worst cities for first-time homebuyers, and Sacramento is the first one. With a median price of $401,875 for a single-family residence, Sacramento certainly isn’t the most expensive market in California. But a monthly mortgage payment of $1,952 is heavy on the budget and runs higher than the monthly cost to rent in the city, according to Zillow.

20. Jacksonville, Fla.

Foreclosure Rate: 1 in every 963 homes
FHA Share: 26 percent
Single-Family Home Median Price: $268,000

Jacksonville home prices are low for a city positioned this far down the list of best cities for first-time homebuyers, but the foreclosure rate is the study’s fourth-highest despite low interest rates.

19. El Paso, Texas

Foreclosure Rate: 1 in every 1,099 homes
FHA Share: 16 percent
Single-Family Home Median Price: $161,096

El Paso has the fifth-lowest FHA share in the study. But this West Texas border town has a relatively high share of non-prime credit at 35 percent — which might appeal to cash-strapped first-time buyers.

18. Austin, Texas

Foreclosure Rate: 1 in every 5,956 homes
FHA Share: 16 percent
Single-Family Home Median Price: $332,900

In recent years, Austin has benefited enormously from economic prosperity and a growing population of newcomers. The boom, however, carries the drawback of higher home prices and cost of living. Neither help first-time homebuyers — nor does the city’s low share of FHA-insured and non-prime buyers.

17. Raleigh, N.C.

Foreclosure Rate: 1 in every 1,806 homes
FHA Share: 19 percent
Single-Family Home Median Price: $319,000

Raleigh’s high foreclosure rate, along with having a lower rate of FHA and non-prime shares, suggest that it’s a challenging economic environment for first-time buyers to hold on to their houses.

16. Charlotte, N.C.

Foreclosure Rate: 1 in every 1,328 homes
FHA Share: 21 percent
Single-Family Home Median Price: $300,000

Charlotte has low foreclosure and mortgage interest rates going for it, but a median list price of $300,000 — which has increased almost $100,000 since March 2014 — makes it pricey for first-time buyers.

15. Denver, Colo.

Foreclosure Rate: 1 in every 6,077 homes
FHA Share: 20 percent
Single-Family Home Median Price: $465,000

Foreclosures are rare in Denver, but that isn’t enough to lift it out of the “worst” cities list. With a median listing price of $465,000, single-family homes are costly. Also, first-time shoppers face a market where three-quarters of homebuyers have prime credit, making the competition for good houses more difficult.

14. Tulsa, Okla.

Foreclosure Rate: 1 in every 1,233 homes
FHA Share: 17 percent
Single-Family Home Median Price: $188,000

You can purchase a house in Tulsa for less than $40,000 down, thanks to a median list price of $188,000. A purchase at that price results in a $953-per-month mortgage payment, which is the 12th-lowest on the list.

Despite affordability, high rates of foreclosure and lower-than-average FHA share of homebuyers drag Tulsa down into the worst cities for first-time homebuyers.

13. San Diego, Calif.

Foreclosure Rate: 1 in every 4,618 homes
FHA Share: 35 percent
Single-Family Home Median Price: $699,000

As in Boston, a 20 percent down payment on a median-priced home in San Diego costs more than $100,000: It equates to $139,815 down with monthly mortgage payments of $3,345. Add on the low share of non-prime homebuyers and San Diego comes in at the No. 12 worst city for first-time homebuyers.

12. Boston

Foreclosure Rate: 1 in every 3,723 homes
FHA Share: 23 percent
Single-Family Home Median Price: $515,000

Boston’s housing market is not conducive to buying a home for the first time. For one, single-family homes are not cheap in the Boston area, and given current rates and prices, a 20 percent down payment would exceed $100,000.

11. Oklahoma City, Okla.

Foreclosure Rate: 1 in every 1,164 homes
FHA Share: 16 percent
Single-Family Home Median Price: $225,000

Oklahoma City’s modest median list price keeps the city accessible to first-time buyers. However, the city also suffers from one of the lowest FHA and non-prime credit shares in the study.

10. Miami

Foreclosure Rate: 1 in every 1,653 homes
FHA Share: 18 percent
Single-Family Home Median Price: $399,900

In Miami, wealth inequality is a major issue, and this affects conditions for homebuyers. The FHA share of homebuyers is only 18 percent, whereas the median price for a single-family home is about $400,000 — which doesn’t seem to make sense for a city where the median household income is, according to the U.S. Census Bureau, just $31,624 a year.

Check Out: Major Cities Where Home Prices Are Plummeting

9. Riverside, Calif.

Foreclosure Rate: 1 in every 1,691 homes
FHA Share: 15 percent
Single-Family Home Median Price: $379,900

Home values in Riverside increased well over $100,000 in the five years from March 2013 to 2018. Zillow forecast prices to go only higher, making Riverside — along with its low 15 percent FHA share — not a great place for first-time homebuyers.

8. Colorado Springs, Colo.

Foreclosure Rate: 1 in every 4,614 homes
FHA Share: 10 percent
Single-Family Home Median Price: $341,950

You’ll need a hefty salary and strong credit to buy in Colorado Springs. With the study’s second-lowest share of FHA loans and the lowest share of non-prime credit, this city is a tough nut for first-time homebuyers to crack.

7. Los Angeles

Foreclosure Rate: 1 in every 4,106 homes
FHA Share: 29 percent
Single-Family Home Median Price: $750,000

This shouldn’t come as much of a surprise given the notoriety of Los Angeles real estate markets. With a 4.42 percent 30-year fixed rate and 20 percent down, first-time homebuyers have to shell out around $150,000 on the down payment and $3,500 every month.

6. Durham, N.C.

Foreclosure Rate: 1 in every 4,629 homes
FHA Share: 11 percent
Single-Family Home Median Price: $349,000

Durham’s median list price falls in the top 15 highest of cities surveyed. First-time homebuyers will have to put down close to $70,000 and expect to pay a mortgage that’s over $1,700 per month.

5. Baltimore, Md.

Foreclosure Rate: 1 in every 641 homes
FHA Share: 26 percent
Single-Family Home Median Price: $295,000

Baltimore is the only Maryland city included in the study. Baltimore’s high foreclosure rate — the study’s highest — suggests the city’s average $1,325 mortgage payment is more than many buyers can manage.

Find Out: How You Can Afford to Live in the Most Expensive States in America

4. New York

Foreclosure Rate: 1 in every 18,171 homes
FHA Share: 19 percent
Single-Family Home Median Price: $669,000

Notably, New York has the lowest foreclosure rate out of all the cities in the study: Just one foreclosure in 18,171 homes. Still, that doesn’t help first-time homebuyers much, as the median price for a home is nearly $670,000.

3. Las Vegas, Nev.

Foreclosure Rate: 1 in every 1,371 homes
FHA Share: 9 percent
Single-Family Home Median Price: $300,000

Las Vegas’ $300,000-plus median list price places the city in an entirely different price band than cities with $299,999-and-under homes. Plus, the city has the lowest rate of FHA shares in the study.

2. San Francisco

Foreclosure Rate: 1 in every 4,406 homes
FHA Share: 22 percent
Single-Family Home Median Price: $799,000

With San Francisco’s notoriously high home prices, there’s little room among homebuyers for non-prime credit or FHA share.

Find Out: Do You Work Enough to Afford a Home in America’s 25 Largest Cities?

1. San Jose, Calif.

Foreclosure Rate: 1 in every 3,217 homes
FHA Share: 29 percent
Single-Family Home Median Price: $1,135,000

San Jose tops the list of worst cities for first-time homebuyers. That’s thanks to a median list price that’s over $1 million — $366,000 more than the next worst city for first-time homebuyers.

Best Cities for First-Time Homebuyers

The best cities geographically tended to fall in the old Midwest — for example, Michigan, Ohio and Indiana — and the southern U.S. The share of homebuyers using an FHA mortgage averages around 35 percent, and often higher. Non-prime credit share of homebuyers is around 45 percent or more.

25. Stockton, Calif.

Foreclosure Rate: 1 in every 7,006 homes
FHA Share: 27 percent
Single-Family Home Median Price: $379,800

Inland from the San Francisco Bay Area, Stockton is the only California city to make the “best” cities list.

See Where California Ranks: Here Are the Best and Worst States to Build Your Home, Study Finds

24. Atlanta, Ga.

Foreclosure Rate: 1 in every 2,071 homes
FHA Share: 29 percent
Single-Family Home Median Price: $280,000

Atlanta’s $275,000 median home list price is higher than those in a couple of cites rated worst for first-time buyers. But the foreclosure rate is relatively low, and the average mortgage interest rate is among the lowest in the study.

23. Spokane, Wash.

Foreclosure Rate: 1 in every 4,106 homes
FHA Share: 26 percent
Single-Family Home Median Price: $242,160

Spokane is the only Washington city to make the list, and the study shows it to be a financially stable one. FHA and non-prime credit shares are low, and Spokane has one of the study’s lowest foreclosure rates. The city is also the best in the state for stretching your paycheck.

22. St. Louis, Mo.

Foreclosure Rate: 1 in every 1,937 homes
FHA Share: 29 percent
Single-Family Home Median Price: $183,900

St. Louis rates about average across factors like foreclosure rate and FHA and non-prime credit shares, but list prices and monthly mortgage payments keep the city in the top 25.

21. Richmond, Va.

Foreclosure Rate: 1 in every 3,582 homes
FHA Share: 30 percent
Single-Family Home Median Price: $242,160

Richmond’s median home price and compatible FHA and non-prime credit shares suggest that it is an expensive place for first-time buyers to purchase a home.

20. Birmingham, Ala.

Foreclosure Rate: 1 in every 1,140 homes
FHA Share: 32 percent
Single-Family Home Median Price: $209,977

Birmingham is the highest-rated city to have a median list price of more $200,000. A higher-than-average share of FHA loans corresponds to a high percentage of non-prime credit, which might indicate a high number of first-time buyers.

19. Knoxville, Tenn.

Foreclosure Rate: 1 in every 3,451 homes
FHA Share: 26 percent
Single-Family Home Median Price: $229,800

Knoxville’s median home list price is slightly low for its position on the list. Plus, the foreclosure rate is one of the study’s lowest, making this city a safe bet for first-time buyers.

18. Winston-Salem, N.C.

Foreclosure Rate: 1 in every 966 homes
FHA Share: 34 percent
Single-Family Home Median Price: $194,440

Median home prices are higher in Winston-Salem than in the other top 10 cities, but an above-average FHA share and one of the study’s highest non-prime credit shares make the city a good option. Just outside Winston-Salem in Bermuda Run is where you’ll find one of the best suburbs for retirement.

17. Omaha, Neb.

Foreclosure Rate: 1 in every 2,085 homes
FHA Share: 32 percent
Single-Family Home Median Price: $229,500

Omaha’s foreclosure rates fall about in the middle of the list, and its median home price is relatively low. Buying a home here with about $46,000 down lets you avoid paying mortgage insurance.

16. Milwaukee, Wis.

Foreclosure Rate: 1 in every 930 homes
FHA Share: 39 percent
Single-Family Home Median Price: $234,900

Milwaukee’s median list price and corresponding mortgage payment are on par with its position on the list, but its FHA and non-prime credit shares are above average — and the foreclosure rate is the list’s third-highest.

15. New Orleans, La.

Foreclosure Rate: 1 in every 2,185 homes
FHA Share: 31 percent
Single-Family Home Median Price: $235,000

Homes are relatively inexpensive in New Orleans, and FHA and non-prime credit shares are slightly high, indicating you don’t need perfect credit or a big down payment to buy a home here.

See How Much You’ll Need in Louisiana: This Is the Salary You Need to Afford the Average Home in Every State

14. Pittsburgh, Pa.

Foreclosure Rate: 1 in every 1,653 homes
FHA Share: 35 percent
Single-Family Home Median Price: $169,500

A relatively low average mortgage payment of $844 and a competitive foreclosure rate help make Pittsburgh an attractive city for first-time homebuyers.

13. Memphis, Tenn.

Foreclosure Rate: 1 in every 1,771 homes
FHA Share: 32 percent
Single-Family Home Median Price: $165,000

With one of the study’s lowest median home prices and a solid share of FHA loans, Memphis has plenty to offer first-time homebuyers.

12. Louisville, Ky.

Foreclosure Rate: 1 in every 1,402 homes
FHA Share: 37 percent
Single-Family Home Median Price: $219,900

Louisville’s $215,700 median home list price is lower than median prices in any city falling lower on the list. FHA loans are common here, so down payments can be as low as 3.5 percent.

11. Cincinnati, Ohio

Foreclosure Rate: 1 in every 1,275 homes
FHA Share: 39 percent
Single-Family Home Median Price: $215,000

Cincinnati’s high FHA share puts the city’s $209,000 median list price within reach of first-time buyers because of the low down payment requirements. But Cincinnati has a relatively high foreclosure rate despite an average monthly mortgage payment of less than $1,000.

See Where Cincinnati Ranks: The Richest and Poorest People in America Live in These ZIP Codes

10. Wichita, Kan.

Foreclosure Rate: 1 in every 2,176 homes
FHA Share: 35 percent
Single-Family Home Median Price: $164,900

The average mortgage payment is just $841 in Wichita, thanks to the city’s low median list price, which translates to a modest $32,000 down payment for a conventional mortgage.

9. Indianapolis, Ind.

Foreclosure Rate: 1 in every 1,693 homes
FHA Share: 37 percent
Single-Family Home Median Price: $225,000

You can buy a house listed at the median price with a $44,598 down payment, but expect to pay more for it here — Indianapolis interest rates are in the top 10 percent of cities included on the list.

8. Minneapolis, Minn.

Foreclosure Rate: 1 in every 3,360 homes
FHA Share: 37 percent
Single-Family Home Median Price: $334,283

Despite high FHA and non-prime credit shares, Minneapolis ties for the highest median home list price. The city’s low foreclosure rate indicates that buyers are purchasing within their means, but perhaps well beyond the means of a first-time buyer.

7. Baton Rouge, La.

Foreclosure Rate: 1 in every 3,248 homes
FHA Share: 35 percent
Single-Family Home Median Price: $224,700

Baton Rouge is one city where home prices are getting slashed. It ranks significantly higher than New Orleans, the only other Louisiana city on the list, for first-time homebuyers, thanks to a higher FHA share and lower median list price. Baton Rouge foreclosure rates are much lower, too.

6. Cleveland, Ohio

Foreclosure Rate: 1 in every 915 homes
FHA Share: 47 percent
Single-Family Home Median Price: $159,999

Cleveland stands out as having one of the highest FHA shares, which might explain the high foreclosure rate. Nevertheless, the high FHA loan share suggests a high percentage of first-time buyers.

5. Columbus, Ohio

Foreclosure Rate: 1 in every 1,925 homes
FHA Share: 40 percent
Single-Family Home Median Price: $234,990

Of the four Ohio cities on the list, Columbus has the lowest foreclosure rate and highest shares of FHA loans and non-prime credit, making it easier to buy — and hold on to — your first home.

See Where Columbus Ranks: 13 US Cities Where You Can Live Comfortably on Less Than $60,000 a Year

4. McAllen, Texas

Foreclosure Rate: 1 in every 1,866 homes
FHA Share: 38 percent
Single-Family Home Median Price: $180,000

McAllen’s FHA and non-prime shares are high, but a median list price of $180,000 and an average mortgage payment of $971 keeps this city one of the top five most affordable for first-time buyers.

3. Detroit, Mich.

Foreclosure Rate: 1 in every 2,324 homes
FHA Share: 42 percent
Single-Family Home Median Price: $189,900

Detroit ranks near the top of the list for both FHA and non-prime shares. Loan availability for less-qualified buyers and a modest average mortgage payment of $867 boosts Detroit’s suitability for first-time buyers.

2. Toledo, Ohio

Foreclosure Rate: 1 in every 1,023 homes
FHA Share: 44 percent
Single-Family Home Median Price: $127,700

With the lowest median list price of any city on the list, and one of the highest percentages of buyers using FHA loans, Toledo earns the runner-up position as America’s best city for first-time homebuyers.

1. Grand Rapids, Mich.

Foreclosure Rate: 1 in every 2,899 homes
FHA Share: 49 percent
Single-Family Home Median Price: $235,000

FHA loans make up nearly half of home loans in Grand Rapids — which is helpful for first-time buyers and anyone included in the nearly 60 percent non-prime credit share. The city boasts the highest share of non-prime credit homebuyers at 59 percent.

How the Best and Worst Cities for First-Time Homebuyers Compare

The best cities to buy a home tend to have the lowest median prices whereas the worst cities tended to have the highest median prices. But there’s no clear line between the lists.

What first-time homebuyers can take away from this study is the importance of thoroughly looking at the different factors when considering where to purchase. Look at the whole range of factors that influence a home purchase, including the ones that appear unimportant at first glance, such as small differences in mortgage interest rates. Over the life of a large loan, even a small difference in your mortgage interest rate can save — or cost — you thousands of dollars. Long-term factors like foreclosure rates are also critical to consider.

Click through to see the best cities for aspiring millennial homeowners.

More on Real Estate

We make money easy. Get weekly email updates, including expert advice to help you Live Richer™

Methodology: GOBankingRates determined the best and worst cities for first-time homebuyers based on the following factors: 1) share of buyers using an FHA mortgage, sourced from LendingTree; 2) percentage of buyers who have less than prime credit, or below 680 — first-time buyers often have lower credit scores than repeat buyers, so they are more competitive in areas without as many prime borrowers — sourced from LendingTree; 3) foreclosure rates, sourced from RealtyTrac; and 4) median listing price of a single-family home, 5) mortgage down payment, based on 20 percent down, and 6) monthly mortgage payment, calculated using Zillow’s Mortgage Calculator, all sourced from Zillow’s index for single-family residences in each metro area of the cities featured in the study.