Written by: Jon McDonald
Edited by: Ashley Fricker
Reviewed by: Andrew Allen
Owning a home is a big part of the American Dream, representing financial security and personal accomplishment. But for minimum-wage workers, buying a house may seem like a far-off dream due to financial hurdles and rising home prices across the country.
The average first-time homebuyer makes an estimated 8% down payment on a home. Using this benchmark, we correlated the median home value in every U.S. state to each state’s minimum wage. Assuming an individual saves 10% of their income and works 40 hours per week for 52 weeks each year, we calculated the number of years it would take to save for a down payment.
Read on to see where your state ranks in home affordability for minimum-wage employees.
States Where Minimum-Wage Workers Can Afford a Down Payment the Fastest and Slowest
So, exactly how long would it take the average minimum-wage worker in the U.S. to afford a down payment? Roughly 23.1 years, based on the national minimum wage of $7.25 per hour and the median home value of $349,000. If a person were to save 10% of their income starting at age 18, they’d be ready to pony up an 8% down payment by age 41.
Comparatively, someone making the median income, which is roughly $68,000 in the U.S. could achieve the same milestone in just 5.1 years.
But, as is true with many things, this time frame varies greatly from state to state. In Utah, it takes 34.1 years for a minimum-wage earner to save for an 8% down payment, the longest time period of any U.S. state. Utah’s minimum wage lines up with the federal $7.25, but the median home value of $515,000 is higher than the national average. On Utah’s median income of nearly $80,000 annually, the same goal could be met in 6.5 years.
Close behind is New Hampshire, where the average minimum-wage worker would have to save for just shy of three decades to afford a down payment. With a median home value of $451,000 and a minimum wage of just $7.25 an hour, employees would need 29.9 years to save for a down payment.
A similar trend continues in Idaho and Hawaii. In both states, minimum-wage workers would need around 29 years to save for a down payment. In Hawaii, this is due to the steep real estate market, with a median home value of $853,000. In Idaho, the minimum wage is still $7.25.
On the other hand, the American dream is a bit more realistic in several states. For instance, in Illinois, the minimum wage is $14.00 per hour, and the median home value is roughly $250,000. That means minimum-wage workers could save 8% in just 8.6 years — approximately a quarter of the time it takes the average Utah resident to do the same.
West Virginia, Arkansas, and Missouri follow suit as states where minimum-wage workers can realistically save for a down payment in less than 10 years. In West Virginia, the median home value is the lowest of any U.S. state at $158,000, meaning $8.75 an hour can add up to a down payment in 8.7 years.
The midwest dominates when it comes to affordability, with Ohio, Michigan, and Nebraska all appearing among the top of the ranking where minimum-wage employees can afford a home down payment quickest.
Full Dataset
Curious to see where your state ranks in down payment affordability? Scroll through the table below to see the minimum wage, median home value, and years it takes the average worker to save in every U.S. state.
Closing Thoughts
Saving for a home doesn’t happen overnight, and that’s especially true for those earning low wages. Setting aside funds to save for a down payment is a key factor in making this dream a reality — but it’s a factor that isn’t realistic for many low-wage earners.
In addition to prioritizing saving money, having a strong credit history can go a long way in speeding up a homeownership journey. Refer to our blog for the latest finance news to boost your financial literacy and take major strides toward achieving your goals — from homeownership and beyond.
Methodology
To identify how long it takes minimum-wage workers to afford a home down payment, we analyzed median SFR (single-family residence) and condo home values according to Zillow over the last 12 months (May 2023 to April 2024). We correlated that to the minimum wage in every U.S. state, according to the Department of Labor.
We assumed an 8% down payment (typical for first-time homebuyers per NAR). To calculate the years someone needs to save, we assumed saving 10% of total income while working 40 hours per week, 52 weeks per year.
