You can buy a home for $150,000
There are 125 metro areas where starter homes cost $150,000 or less – sometimes far less. Learn where the homes are, and how you can buy one.
Believe it or not, you can get into a $150,000 starter home with less than $2,500 in savings. You'll need to leverage the new $8,000 federal tax incentive and have at least average credit, but your monthly payment would work out to about $1,000 a month including taxes and insurance. (MSN Money walks you through the math.)
According to National Association of Realtors economist Lawrence Yun, starter homes are usually priced about 30% below a local market's median. (The "median" is where half the homes cost more and half cost less.) So the most promising cities for families to buy a first home would have median prices of $215,000 or below (as a $150,000 home is about 30% less than the $215,000 median).
According to the NAR, 125 metro areas had a median price of less than $215,000 at the end of the first quarter; you'll find the list below, plus links to find homes priced 30% below each market's median. (Check out the NAR’s interactive U.S. map for your town's median price if you don’t see it listed.) In some of these markets, that starter home will cost far less than $150,000.
NOTE: You may need to disable your pop-up blocker before clicking links in the right-hand column of the table below.
3 tips for new buyers
Before you beat a path to the nearest open house, educate yourself on the homebuying process.
Curt Lorden, senior loan officer with Residential Finance Corp. in Tampa, Fla., offers this guidance:
1. Buy less home than you can afford. "Just because we might be able to qualify you for it, doesn't mean you should go for the max," the loan officer says. Leave slack for retirement and college savings. Rather than what you want, consider what, realistically, you need: "We, as Americans, got a little bit egregious as to how much house do you get," he says. "The reality is, you got there and you only needed half of it." Use the Home Affordability Calculator to determine how much house you should really buy.
2. Think ahead. Since prices are still dropping, be prepared to stay in your new home at least five years. When prices recover, you should at least break even when you sell. Forget about making a fortune on a home. Those days are probably over for a while. And, if your family is growing, get a home big enough to meet your needs five years out rather than going for granite countertops and high-end upgrades now.
3. Stash the credit. If you don't need the tax credit for a down payment, use it to pay down consumer debt, to start a college fund for your kids or to fatten your retirement account.
Bing: Search & decide
You also can educate yourself on the homebuying process by taking a class. Banks, credit unions, financial counseling agencies, community colleges and state extension services offer free or inexpensive classes and workshops. Watch your local papers and TV for announcements or see HUD's list of state and local government homebuying programs here, including classes and counselors.
Get free counseling from someone who has no stake in selling you a loan. Find HUD-certified nonprofit counselors in your area:
Find a loan
Once you're ready to get serious, your first step is to find the loan, Lorden says, even though it may seem backward when what you want to do right now is shop.
"If I had a friend or a family member looking to buy their first home, I think it would be very important to sit down or talk over the phone with a mortgage consultant, even before they retain [a real-estate agent]," Lorden says.
Apply to several lenders. Compare annual percentage rates (APRs) to see who's offering the best deal. (Use this worksheet, from the Washington State Department of Financial Institutions, to compare loan offers.)
Lenders will offer to "pre-qualify” you, giving a rough idea of what you can borrow. They'll chat about your finances and pull your credit score (read "Your 5-minute guide to credit scores" on MSN Money). But what's the point? It's only an estimate. You can't hold them to it. You won't know how much they'll truly lend you and what the cost is until you get a lender to commit to a loan amount and interest rate — a "good faith estimate." For that, you must apply.
Lenders will ask for documents proving:
- Your income
- Your bank account balance
- Your monthly expenses, including what you owe and whom you owe it to.
You can practice filling out the Uniform Residential Loan Application that's used by every lender: View or download it here, at FreddieMac.com.
Once you have your finances in order and know your own price point, start your search using one of the following links:
You also can consider foreclosures. They are not necessarily recommended for first-time buyers, but given the steep discounts these often present, they could be worth a look in the right circumstances.
live in ILlinois and strangely found that lower income people do not get consideration for mortgages unless you are black. All the grants, donations and other support are offered to blacks with the old fashion FALSE belief that BLACKS ARE AMERICAs poor.. Anyone check OPRAHS checkbook or Michael Jordon. Im White and was denied and had a decent credit rating. I was also turned down on Section 8 and other US govt services by Black employees who only want to SERVE BLACKS. I think its REVERSE DISCRIMINATION AND IM COMPLAINING AS WHITE WOMAN!Did someone tell you this? How do you know this happened because of the color of your skin? Maybe you don't qualify based on the information you put on your application. And believe me, HUD and section 8 did not come into existance to support poor black people, when the black population as a whole only accounts for 12 - 15% of the US population.
I live in central NJ but I grew up in southern jersey....How old are you Rebecca because either that is habitat for humanity or a senior community or a HUD home and it is probably a place like vineland or something.....or salem...or pennsgrove...
If you can find a house in jersey for 150K that is not a distressed property, it's in the inner city and if it is in a suburb, it's a fixer upper and the taxes are still going to be high. Oh, and it will probably be an older home with outdated electrical wiring, oil heat, and no central air.
Good credit cannot always get you where you want to live. You still need to earn enough and have enough saved to impress the lender. Beyond wishing for the perfect starter home, what else do you "buy" into and get for 150k or less? Dirty city streets, less than perfect schools, Wal-Mart as the ONLY place to shop within 50 miles, and for myself; Mark Twain all around me as the only attraction that brings in the tourism. Does your town/city only beautify Main Street? If so, then maybe it is time to buy and move into one of these 150k or less homes there are so many of and suck it up!
No problems in Denver. Can buy something quite nice for $150,000, and that includes single family and condos. I bought a 2bd, 2 ba 1750 sq ft condo last year on the 15th floor with underground parking and amazing views of northeast Denver for $187,000. There are other units in this building for around $134k. Like anywhere else, jobs can take a while to find here, but they're there.
Come to Denver, where the livin is easy!
You get what you pay for. ABQ, NM is nothing but dirt, drunk drivers, and bums. Don't believe anything you hear about this place - there is nothing cool about Albuquerque. Stay away, save your money, buy somewhere else.
BTW, this includes Rio Rancho, or as the locals call it, Rio Rathole.
Best home/career I have found is in Tulsa, Oklhoma. I moved out here from San Diego north county. They just built the BOK center and the surrounding cities of Owasso,Collinsville,Jenks,Broken Arrow are building up which is good for construction and real estate. Other additions are Bass Pro mega-store, Dave and Busters, Automax, Car Max, Golds Gym, Jenks river project and more!
We are beating the economy!
This is very frustrating. Most of the homes you have shown that ARE under $150,000 where built in the early 1900's.
For those of us who are LOOKING for a starter home, most houses are STILL out of our grasp.
The older homes need new roofs, etc., and there is NO mention of this.
Nice pictures of old homes are wonderful to look at, but you have to think about the reality of what you read here.
After MUCH investigation on affordable houses, around here, they are usually beat up, and need lots of work, and that IS
the HONEST truth.
Many of the places listed are cheap for a reason...half of them are terribly far out suburbs with no services other than fast food joints and maybe a Wal-Mart. Or they are towns that are drying up with talent leaving by the droves. Save up, spend a little more and be in good city with a short commute and experience more culture, better food, etc.
This list is sooo incomplete. Not a single city in Idaho is listed, where we have beautiful homes well under the $150K price point in cities with populations over 50,000. And houses you'd actually want to buy too!
Terrible traffic? REALLY? I have a 23 mile commute where I have to drive through downtown (as I live in the NW suburb but work in the SE suburb) and it never takes more than 35 minutes.