Pittsburgh, Cleveland and Oklahoma City are the Best Cities for First-Time Homebuyers
The factors used for this ranking are:
- Average down payment amount
- Average down payment percent
- Share of buyers using an FHA mortgage
- Average FHA down payment as a percentage of average down payment for all loans - measures how much homebuyers are saving by using FHA loans
- Percentage of buyers who have credit scores below 680
- The Housing Opportunity Index score for the area - measures the percentage of houses affordable to middle-income families
Several down payment variables are included in the ranking because research has identified down payments as the biggest obstacles to homeownership. The down payments variable in this study are not precisely correlated, but each can have an impact on how easy it is for a first-time buyer to find a home.
Key Findings:
Pittsburgh ,Cleveland andOklahoma City offer first-time homebuyers the easiest time purchasing a home. While these metros may not necessarily have the lowest credit score requirements or down payments in the country, they consistently rank highly across all six metrics that were considered in this study. Overall,Pittsburgh andCleveland are tied for first place, while Oklahoma is third.Oklahoma City ,Cleveland andMemphis, Tenn. , have the lowest down payments. The average down payment in these three areas is$32,000 , which is considerably lower than the average down payment for the top 50 metros overall — slightly higher than$50,000 . This means buyers in these areas likely don't need to save up as much to make a down payment as they might in other areas.Salt Lake City ,Oklahoma City andSan Antonio had the lowest down payment percentages out of the top 50 largest metros. These three areas have an average down payment percent of 14 percent, which is two points lower than the average across all 50 metros surveyed.Birmingham, Ala. ,Detroit andColumbus, Ohio , had the highest share of buyers who used an FHA mortgage. Nearly 40 percent of buyers in these cities used FHA financing to secure a mortgage. This is not surprising considering that a large portion of buyers in these areas had credit scores below 680.San Jose, Calif. ,San Francisco andNew Orleans were the metros that saved the most by using FHA financing. In each of these metros those who used FHA financing had down payments that were less than 30 percent of the average down payment in the area.Detroit ,Birmingham, Ala. andCleveland have the largest share of homebuyers with credit scores below 680. People who live in these cities can probably secure a loan with a lower credit score than they might need in some of the other cities on the list.Indianapolis ,Cincinnati andCleveland contain the largest share of homes that are affordable to median income families.
Best cities for first-time homebuyers
Average down payment amount:
Average down payment percentage: 15%
Share of buyers using an FHA mortgage: 36.5%
Average FHA down payment as a percentage of average down payment for all loans: 31.2%
Percentage of buyers who have credit scores below 680: 41.3%
HOI Index Score: 78.4
Average down payment amount:
Average down payment percentage: 15%
Share of buyers using an FHA mortgage: 32.95%
Average FHA down payment as a percentage of average down payment for all loans: 32.7%
Percentage of buyers who have credit scores below 680: 42.8%
HOI Index Score: 82.2
Average down payment amount:
Average down payment percentage: 13%
Share of buyers using an FHA mortgage: 25.4%
Average FHA down payment as a percentage of average down payment for all loans: 32.8%
Percentage of buyers who have credit scores below 680: 36.9%
HOI Index Score: 79
Worst cities for first-time homebuyers
Average down payment amount:
Average down payment percentage: 18%
Share of buyers using an FHA mortgage: 14.1%%
Average FHA down payment as a percentage of average down payment for all loans: 33.6%
Percentage of buyers who have credit scores below 680: 9.2%
HOI Index Score: 9.1
Average down payment amount:
Average down payment percentage: 19%
Share of buyers using an FHA mortgage: 15.5%
Average FHA down payment as a percentage of average down payment for all loans: 38.8%
Percentage of buyers who have credit scores below 680: 16.8%
HOI Index Score: 51.5
Average down payment amount:
Average down payment percentage: 21%
Share of buyers using an FHA mortgage: 9.8%
Average FHA down payment as a percentage of average down payment for all loans: 27.1%
Percentage of buyers who have credit scores below 680: 11.4%
HOI Index Score: 11.1
"The peak home sales season starts next week," said Tendayi Kapfidze, Chief Economist at
To view the full report, visit https://www.lendingtree.com/home/mortgage/best-cities-for-first-time-homebuyers/.
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