How Long Does It Take Minimum-Wage Workers to Afford a Home Down Payment?

Minimum Wage Down Payment

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 a minimum wage of $7.25 per hour and a 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. 

But, as is true with many things, this time frame varies greatly from state to state. In Hawaii, it takes 34.2 years for a minimum-wage earner to save for an 8% down payment, the longest time period of any U.S. state. Despite an above-average minimum wage of $12.00 per hour, the median home value in Hawaii is over $850,000, making affording a home more challenging in the Aloha state than in any other. 

Close behind is Utah, the only other state where the average minimum-wage worker would have to save for over three decades to afford a down payment. With a median home value of $515,000 and a minimum wage of just $7.25 an hour, employees would need 34.1 years to save for a down payment. 

US map showing how many years it takes to save for a down payment by state

A similar trend continues in New Hampshire and Idaho. In both states, the median home value is under $500,000, but the $7.25 per hour minimum wage extends the savings timeline. In New Hampshire, the average minimum-wage employee would need to work 29.9 years to save for a down payment, while the average minimum-wage Idaho worker needs 29.7 years

On the other hand, the American dream is a bit more realistic in several states. For instance, in Mississippi, the minimum wage is $12.00 per hour, and the median home value is under $178,000. That means minimum-wage workers could save 8% in just 7.1 years — under a quarter of the time it takes the average Hawaii resident to do the same. 

West Virginia, Arkansas, and Illinois 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 rankings 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.