A starter home is considered affordable. Fixer-upper. First rung of the ladder. The place you buy with a 20-something income and trade after a few years.
Not anymore.
A zillow analysis Found 233 US cities where the typical starter home now costs at least $1 million. Five years ago, only 85 cities crossed that line. The number has almost tripled.
California still has the most cities on the list – 113 of them. But years ago it became just a California story. There are 32 in New York. New Jersey has 20. Florida and Massachusetts have 11 each. Minnesota and Rhode Island have just joined.
Good news? Nationwide, a typical starter home still costs about $192,514, which is more than what a household with an average income can realistically afford. Bad news? In the metros where there are the most jobs and the most people, the mathematics has gone awry.
So if you live in one of these cities and want to buy a first home, what do you do? A lot, actually. Here are eight tricks that still work.
1. Find zip codes just outside the hot code
The line between a $1 million starter home and a $400,000 starter home is often a 15-minute drive. Expensive cities are surrounded by cheaper cities that have similar schools, jobs, and freeways but don’t have brand-name zip codes.
Take the San Francisco Metro. According to Zillow, 43 cities in that metro alone have million-dollar starter homes. Dozens of nearby cities don’t do this. Similar commute for most Bay Area jobs. Same weather. half price.
Draw a map and draw a circle around the place where you really want to be or live. Then check out the towns most buyers overlook.
2. Use an FHA Loan and Save 20% Off
The 20%-down rule is a holdover from a different era. This is not a law. This is not a requirement. And in today’s market, this could deprive you of home ownership for an additional decade while prices continue to rise.
According to Bankrate, the Federal Housing Administration offers down rates as low as 3.5% to qualified buyers with a FICO score of 580 or higher. On a $400,000 home, that’s $14,000 instead of $80,000.
Yes, you will pay mortgage insurance until you have built up enough equity. Yes, it costs more over time. But if you’re a renter and home prices are rising 5% per year, waiting the next five years to pay a larger down payment is the more expensive option.
3. Buy a house for less than the bank can afford
This is the rule that has made more people rich than any other home buying advice. The lender’s job is to tell you the maximum loan they will give you. Your job is to ignore that number.
I’ve been writing about money since 1991, and I’ve seen the same mistakes destroy the same people every decade. Maximizing your housing budget leaves no margin for property tax increases, insurance increases and the surprise repairs that happen with every home.
Especially in Florida and California, insurance premiums have doubled or tripled over the past few years. Property taxes are reassessed when you buy. A house that fits your budget on paper may crush you in practice when the bills come – this is one of those foolish mistakes that almost everyone makes while buying a house.
Aim for a mortgage payment that will take up a maximum of 25% of your take-home pay. Not what the bank says you can afford.
4. Live where you really want to be, not where everyone else wants to be
Zillow data tells you something useful if you read it sideways. Million-dollar starter homes are in a handful of areas – coastal California, the NYC tri-state area, Florida, and parts of Massachusetts. The rest of the country is still affordable.
If your job is remote or portable, the move you really need is geographic. Buying a real home in Pittsburgh, Indianapolis, Birmingham, or Kansas City for $250,000 is not a downgrade. Regular people still build wealth this way.
I’m not saying leave your family or your career behind. I’m saying that “I have to live in San Francisco” is sometimes a story you tell yourself, not a fact.
Quick gut-check – If your money advice is coming from random online influencers, you’re playing a dangerous game. I’ve been a CPA since 1981 and have been writing about money since before the Internet existed. Sign up for the free Money Talks newsletter and get time-tested expert advice.
5. Buy where employment is actually growing
When people ask me whether to buy a home in a certain area, the first criteria I cite aren’t interest rates, construction trends, or even tax policy. These are jobs. Specifically, whether the local job market is expanding or contracting.
Buy a $250,000 home in a city where employment is growing 3% per year, and in 10 years you’ll likely have a $400,000 home.
Buy that same $250,000 home in a city where employment is stagnant or falling, and in 10 years you’ll still have a $250,000 home, or worse.
That’s why I tell every first-time buyer to start their search at the Bureau of Labor Statistics. View metro-area employment data. Look at the five-year trend. See which industries are growing locally.
In cities with growing jobs, rents are rising, demand is rising and home values are increasing. Cities with shrinking employment are the opposite – and no great deal on a home is worth catching the falling knife.
(This makes me wonder about tech hubs like San Francisco and Seattle. If AI really is going to replace a lot of tech jobs, might that lead to fewer job opportunities? It hasn’t happened yet, but it’s interesting to keep an eye on.)
6. Explore down-payment help most people don’t know about
There are these programs in every state. Most cities do this too. The federal government does. And most first-time buyers walk away with money because they think they won’t qualify.
The programs come in three types: grants that you don’t repay, second mortgages with deferred payments, and forgivable loans that disappear if you stay in the home long enough. The income range is usually higher than people expect.
Start with the U.S. Department of Housing and Urban Development’s homeownership page for your state. Then check your state housing finance agency. Then check your city. The down payment for one evening of digging can range from $10,000 to $20,000 — and if you need more options here are 10 ways to put together a down payment for a house.
7. Do the math of rent vs buy honestly
Owning a home is not always better than renting.
The math depends on how long you’ll be staying, what rents are in your area, what your actual total monthly costs are (taxes, insurance, maintenance, HOA fees), and what you can earn by investing the down payment elsewhere.
If you’re going to move in three years, renting is almost always beneficial. If you’re going to settle down for more than 10 years, buying usually wins. The middle is dirty. Go through the real tradeoffs before committing.
Before you hand over a third of your income for a house just because your parents said you should, do the real numbers.
8. Stop waiting for rates to fall
The average 30-year fixed mortgage was about 6.5% in May 2026, according to freddie mac. That’s lower than a year ago but nowhere near 2021’s 3% rates. A lot of buyers are still on the sidelines and are hoping for these numbers to bounce back.
Don’t hold your breath. Federal Reserve policy, steady inflation and the federal deficit all point to higher levels being more likely for a longer period of time than a return to pandemic-era lows. And even if rates drop, you’ll be competing with everyone else who was waiting.
Play Smart: Buy when you can afford to pay at today’s rates. Refinance later if rates fall. No one refinances a low rate loan they got a decade ago into a higher rate loan.
bottom line
A million-dollar starter home shouldn’t exist. The whole concept is contradictory. But the data says they’re present in 233 cities and growing, which means the rules you grew up with — save 20%, buy young, take advantage — need updating.
The buyers who will be successful in this market are the ones who choose the right zip code, the right loan, and a payment they can comfortably afford when the property tax bill comes that regular Tuesday in February.
Not the ones who engage in bidding wars for fixer-uppers at the price their grandparents would call “rich.”
You are not trapped. You just have to be smarter than the average buyer. And the average buyer in 2026 is making some very unwise decisions.