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During a period of dramatic growth in home prices across the country, finding an affordable place to live is more urgent for many Americans than ever. How much it costs to buy a home is merely one part of the affordability equation, however; the price of utilities, groceries, transportation and other items, plus a state's median household income, also factor in.
To compile the list of the most affordable states to live in 2021, Experian primarily drew on the Q1 2021 Cost of Living Index published by the Council for Community and Economic Research. Supporting data comes from the U.S. Census (median household income), Experian's own research (average mortgage balance, median rent, average FICO® Score☉ ) and Zillow (median home value).
Here are the top 10 most affordable states in the U.S. as of Q1 2021.
10 Cheapest States to Live in America
The most affordable states to live in are concentrated in the South and the Midwest, while those with the highest cost of living are located on the coasts.
1. Mississippi
Mississippi earned the top affordability spot from the Council for Community and Economic Research. Its average housing costs are the lowest of any state, and the only states with lower transportation costs on average are Tennessee and Virginia. Its median household income, however, is the lowest on the list, at $45,792.
2. Kansas
Next-most affordable is Kansas, with the third-lowest average housing costs in the country (behind Mississippi and Alabama). Kansas' median household income is almost $20,000 more per year than Mississippi's, and its median home value is nearly $35,000 more.
3. Oklahoma
Median rent in Oklahoma is lower than in Kansas or Mississippi; in fact, Arkansas is the only state on this list with a lower median rent. Compared with Kansas, however, Oklahoma's median home value is nearly $30,000 less.
4. Alabama
Alabama's median household income is slightly lower than Oklahoma's—$51,734 compared with $54,449 per year—but both its median home value and median rent are higher.
5. Tennessee
Tennessee is one of two states on the list, along with Georgia, whose median home values are over $200,000. It's also one of three states, alongside Georgie and Indiana, with median rent above $1,000 per month.
6. Arkansas
Arkansas has the lowest median rent and the second-lowest median home value on the list, just above Mississippi.
7. Georgia
Georgia has the highest median home value and outstanding mortgage balance of the states in the top 10, but it has the median household income to match. Georgians earn $61,980 per year at the median, the most on the list.
8. Indiana
Median household income in Indiana is about the same as the next-most-affordable state on the list, Missouri, but the average mortgage balance is about $20,000 less than in Missouri.
9. Missouri
Renters in Missouri benefit from lower median rent than many states on our list; only Iowa, Arkansas, Oklahoma and Kansas have less expensive rental costs.
10. Iowa
Iowans have the highest average FICO® Score on our list, at 726—higher than the national average of 711 in 2020. The median household income is the third-highest in the top 10, after Kansas and Georgia.
How Are the Cheapest States Determined?
The Council for Community and Economic Research (known as C2ER) determines its Cost of Living Index by looking at six component categories in each state: housing, utilities, grocery items, transportation, health care, and miscellaneous goods and services. C2ER assesses about 60 types of goods and services in metropolitan statistical areas and counties throughout the country.
To create the index, C2ER considers the number 100 to be the average cost of living across the whole country. If a state has a cost of living that is less than 100, it costs less than average and is more affordable. If a state has a cost of living that is more than 100, it costs more than average and is less affordable.
Experian's state-by-state list is based on the average cost of living for all participating metropolitan areas in each state, as calculated by the Missouri Economic Research and Information Center.
1. Mississippi
- Average cost of living: 84.6 / 100
- Median household income: $45,792
- Median home value: $140,771
- Average mortgage balance: $123,062
- Median rent: $986
- Average FICO® Score: 675
2. Kansas
- Average cost of living: 86.8 / 100
- Median household income: $62,087
- Median home value: $175,459
- Average mortgage balance: $141,610
- Median rent: $944
- Average FICO® Score: 718
3. Oklahoma
- Average cost of living: 87.9 / 100
- Median household income: $54,449
- Median home value: $148,986
- Average mortgage balance: $138,752
- Median rent: $894
- Average FICO® Score: 690
4. Alabama
- Average cost of living: 88.1 / 100
- Median household income: $51,734
- Median home value: $167,810
- Average mortgage balance: $144,272
- Median rent: $989
- Average FICO® Score: 687
5. Tennessee
- Average cost of living: 88.5 / 100
- Median household income: $56,071
- Median home value: $226,456
- Average mortgage balance: $165,260
- Median rent: $1,190
- Average FICO® Score: 697
6. Arkansas
- Average cost of living: 88.8 / 100
- Median household income: $48,952
- Median home value: $146,996
- Average mortgage balance: $132,973
- Median rent: $875
- Average FICO® Score: 690
7. Georgia
- Average cost of living: 89.7 / 100
- Median household income: $61,980
- Median home value: $241,218
- Average mortgage balance: $180,378
- Median rent: $1,360
- Average FICO® Score: 689
8. Indiana
- Average cost of living: 89.8 / 100
- Median household income: $57,603
- Median home value: $182,770
- Average mortgage balance: $124,454
- Median rent: $1,031
- Average FICO® Score: 708
9. Missouri
- Average cost of living: 90.4 / 100
- Median household income: $57,409
- Median home value: $191,107
- Average mortgage balance: $143,545
- Median rent: $945
- Average FICO® Score: 707
10. Iowa
- Average cost of living: 90.4 / 100
- Median household income: $61,691
- Median home value: $164,388
- Average mortgage balance: $135,111
- Median rent: $941
- Average FICO® Score: 726
Evaluating Affordability by State
When determining which state would be most affordable for you and your family, look at your own circumstances and consider the factors that are most important to you. Are you hoping to have a short commute or afford a larger home for your growing family? Take the general data points we've listed as a starting point, then look into the particulars that will affect your financial life in that state.