Cost of living often plays a huge role for those trying to decide where to settle roots, start a family, or even start a business. One key metric used to measure affordability is the cost of housing in a given area.
According to Zillow, the average value of a four-bedroom house in the U.S. is approximately $369,000. Housing costs vary greatly depending on where you live. In some expensive zip codes, a comparable home could even cost a few million dollars. Are you looking to lower your cost of living? By researching some of the most affordable states to live in, those looking for a new home can strategically save thousands by simply choosing a location with an affordable cost of living.
In this article, FortuneBuilders navigates the cheapest states to live in 2026, what determines state affordability, as well as a few of the most expensive states to live in. We’ve rounded up 12 of the cheapest states to live in so you can explore their real estate markets and determine if that’s the state for you.
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The Cheapest States To Live In: Factors To Consider
Housing affordability is no longer just about the price of a property. While the location plays a role in an area’s popularity, a few key factors are considered when evaluating which states have the cheapest cost of living. Outside of the cost of living, other factors might play a role in how affordable a piece of property might be state by state. The main factors that affect determining the most affordable states to live in include:
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Cost of Living: Cost of living refers to the average price of everyday and basic necessities within an area. This includes food, utilities, transportation, clothing, and healthcare costs. Cost of living is the amount of money someone would need to access the minimum standard of living within a particular area.
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Average Household Income: Household income is the amount of money collected within the combined incomes of all people sharing a residence. All forms of income are included, such as salaries, investments, retirement funding, and any investment gains.
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Housing and Property Costs: The baseline of how many view the affordability of a location is the price of standard housing. This includes the average amount it would cost to rent an apartment or purchase a home in a particular area.
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Taxes: Taxes vary from state to state, so it’s a good idea to look at the tax rates and any tax benefits that those states may offer. For example, there are multiple states that don’t have income tax, which can save you a lot of money. There are also other tax benefits that some states may offer outside of income related taxes. For example, Minnesota doesn’t charge sales tax on clothing or grocery foods.
How Are The Cheapest States To Live In Determined?
With the amount of options for purchasing property, it’s natural to wonder what determines the states included in FortuneBuilder’s guide. The Council for Community and Economic Research is an organization that measures cost of living across the United States. Their Cost of Living Index is a well-regarded and often-cited resource for comparing living costs from state to state. In this guide, we focused on the Council’s reported indexes of overall cost of living, grocery costs, housing costs, and transportation costs of each state.
Each index is compared against a national average score of 100 in each category. For example, the score of 100 would be the national average for housing costs. Any state with a housing cost index below 100 is relatively affordable compared to the national average. Our ranking of the 12 cheapest states to live in was curated by weighing these different indexes. The scores can change year-over-year and do not consider personal preferences such as available industries or climate.
12 Most Affordable States To Live In
Without further ado, the U.S. states with the lowest cost of living are revealed below. Keep reading to take a quick tour of the United States, as we make a pit stop at 12 different states to explore why they are the most affordable in the nation. If you’re looking to invest in properties or establish new roots in a part of the country with affordable housing and cost of living, check out our top 12 cheapest states to live in 2026:
| Rank | State | Cost of Living Index | Housing Index |
|---|---|---|---|
| 1 | Oklahoma | 83.0 | 65.1 |
| 2 | Alabama | 86.0 | 68.6 |
| 3 | Iowa | 86.1 | 70.6 |
| 4 | West Virginia | 87.0 | 69.9 |
| 5 | Kansas | 87.1 | 78.7 |
| 6 | Mississippi | 87.4 | 70.8 |
| 7 | Missouri | 88.2 | 77.7 |
| 8 | Arkansas | 89.0 | 76.9 |
| 9 | Indiana | 89.7 | 77.5 |
| 10 | Tennessee | 89.7 | 80.0 |
| 11 | Georgia | 90.1 | 77.6 |
| 12 | Nebraska | 90.1 | 76.5 |
A Cost of Living Index of 100 represents the national average. A state with an index below 100 therefore has an overall cost of living below the national benchmark. The data comes from the Council for Community and Economic Research (C2ER) Cost of Living Index, as published by MERIC.
It’s important to remember that statewide averages only tell part of the story. The cost of living in a major metropolitan area can be considerably different from the cost of living in a smaller city or rural community within the same state. If you’re considering a state for investment purposes, it’s important to conduct real estate market research at the city and neighborhood level before making a decision.
1. Oklahoma
Cost of Living Index: 83.0
Housing Index: 65.1
Oklahoma takes the top spot as the cheapest state to live in for 2026. Its overall Cost of Living Index of 83.0 is well below the national benchmark, with housing being one of the biggest contributors to its affordability.
Housing costs score just 65.1 on the index, while groceries, transportation, and healthcare also fall below the national average.
Housing prices reinforce the affordability story. As of August 2026, the typical Oklahoma home value was approximately $223,000, compared with roughly $369,000 nationally, according to the Zillow Home Value Index.
For real estate investors, Oklahoma’s relatively low property values can reduce the amount of capital required to enter a market. Cities such as Oklahoma City and Tulsa may be worth researching further, but investors should evaluate rental demand, neighborhood-level prices, employment trends, property taxes, insurance, and potential cash flow before making an investment.
2. Alabama
Cost of Living Index: 86.0
Housing Index: 68.6
Alabama ranks as the second-cheapest state to live in, with an overall Cost of Living Index of 86.0.
Housing is particularly affordable compared with the country as a whole, registering a Housing Index of 68.6. Healthcare costs are also notably below the national benchmark.
The typical Alabama home was valued at approximately $242,000 as of August 2026, making housing substantially less expensive than the national level.
Alabama contains a mix of large and smaller real estate markets, including Birmingham, Huntsville, Montgomery, and Mobile. Investors considering the state should compare these markets individually because property values, rents, employment drivers, population trends, and investment demand can vary considerably from one city to another.
3. Iowa
Cost of Living Index: 86.1
Housing Index: 70.6
Iowa follows closely behind Alabama with an overall Cost of Living Index of 86.1.
One of Iowa’s biggest affordability advantages is housing. Its Housing Index of 70.6 is significantly below the national benchmark, while utilities are also particularly inexpensive compared with much of the country.
As of August 2026, Iowa’s typical home value was approximately $240,000.
For investors, relatively affordable acquisition prices may make it possible to explore rental and other investment opportunities with less upfront capital than would be required in many coastal markets. Des Moines, Cedar Rapids, Davenport, and other Iowa markets can have very different investment fundamentals, however, making local market analysis essential.
4. West Virginia
Cost of Living Index: 87.0
Housing Index: 69.9
West Virginia ranks fourth among the cheapest states to live in for 2026.
Housing is one of its biggest advantages. The state’s Housing Index stands at 69.9, and the typical West Virginia home value was approximately $179,500 as of August 2026—less than half the typical U.S. home value.
That affordability can make West Virginia stand out to buyers and investors focused primarily on purchase price. However, low acquisition costs don’t automatically translate into strong returns. Investors should pay particular attention to population and employment trends, rental demand, vacancy rates, property condition, and the size of the potential tenant and buyer pool in individual markets.
5. Kansas
Cost of Living Index: 87.1
Housing Index: 78.7
Kansas has an overall Cost of Living Index of 87.1, placing it fifth on the list.
The state benefits from below-average costs across several major categories, including housing, groceries, transportation, and healthcare.
As of August 2026, the typical Kansas home value was approximately $250,000.
For real estate investors, markets such as Wichita and the Kansas side of the Kansas City metropolitan area can provide very different opportunities. That makes it important to look beyond statewide affordability and analyze property prices, rents, inventory, employment, neighborhood trends, and expected expenses within a specific market. Our guide to selecting and learning a real estate investing market explains some of the factors investors should consider when narrowing down a target market.
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6. Mississippi
Cost of Living Index: 87.4
Housing Index: 70.8
Mississippi has long been known as one of America’s more affordable states, and it remains near the top of the list in 2026.
Its overall Cost of Living Index is 87.4, while its Housing Index is just 70.8. Healthcare and grocery costs are also below the national benchmark.
Mississippi stands out even more when looking at home values. The typical home was valued at approximately $198,000 as of August 2026.
That low entry price can be attractive to real estate investors, but individual market conditions matter. Jackson, Gulfport, Hattiesburg, Tupelo, and other Mississippi markets have different economic and housing characteristics. Property condition, insurance costs, rents, vacancy, employment, and local demand should all factor into an investment decision.
7. Missouri
Cost of Living Index: 88.2
Housing Index: 77.7
Missouri ranks seventh, with an overall Cost of Living Index of 88.2.
Housing, transportation, groceries, and utilities are all below the national benchmark. The state’s typical home value was approximately $268,000 as of August 2026.
Missouri may be particularly interesting to real estate investors because it contains several distinct housing markets. Kansas City, St. Louis, Springfield, Columbia, and smaller communities can differ considerably in home prices, rents, appreciation, inventory, and tenant demand.
The statewide numbers can therefore be useful for identifying Missouri as an affordable state, but investors should conduct their analysis at the metro, neighborhood, and property level.
8. Arkansas
Cost of Living Index: 89.0
Housing Index: 76.9
Arkansas comes in eighth with an overall Cost of Living Index of 89.0.
Housing remains a major contributor to the state’s affordability, with a Housing Index of 76.9. Grocery, transportation, and healthcare costs are also below the national benchmark.
The typical Arkansas home value was approximately $227,000 as of August 2026.
For investors, Arkansas demonstrates why statewide averages should be viewed as a starting point. Markets such as Little Rock can look very different from faster-growing areas in Northwest Arkansas. Comparing home prices with achievable rents, local employment, construction activity, vacancy, and population trends can help investors determine whether an individual market makes sense for their strategy.
9. Indiana
Cost of Living Index: 89.7
Housing Index: 77.5
Indiana has an overall Cost of Living Index of 89.7 and a Housing Index of 77.5.
The typical Indiana home value was approximately $260,000 as of August 2026, keeping home values below the national level.
Indiana includes a variety of urban, suburban, and smaller markets. Indianapolis is the state’s largest metropolitan area, but investors can also research markets such as Fort Wayne, South Bend, Evansville, and Lafayette.
As with any market, affordability is only one part of the equation. Rental demand, employment, property taxes, insurance, maintenance costs, neighborhood quality, and expected returns should all be considered alongside purchase price.
10. Tennessee
Cost of Living Index: 89.7
Housing Index: 80.0
Tennessee ties Indiana with an overall Cost of Living Index of 89.7.
Housing costs remain below the national benchmark, although home prices vary significantly depending on location. The typical Tennessee home value was approximately $334,000 as of August 2026.
That’s an important reminder that a state’s overall cost of living doesn’t necessarily mean every housing market within it is inexpensive. Nashville, for example, can look dramatically different from Memphis or smaller Tennessee markets.
Investors interested in Tennessee should therefore compare specific cities and neighborhoods instead of relying solely on the statewide ranking.
11. Georgia
Cost of Living Index: 90.1
Housing Index: 77.6
Georgia ranks eleventh among the most affordable states in 2026, with an overall Cost of Living Index of 90.1.
The state’s Housing Index of 77.6 remains well below the national benchmark. However, Georgia’s typical home value was approximately $331,000 as of August 2026, illustrating the difference between a broader cost-of-living housing index and home values alone.
Georgia also contains widely varying real estate markets. Atlanta and its suburbs can have very different prices and investment characteristics than markets such as Augusta, Columbus, Macon, Savannah, or smaller communities.
Investors should evaluate those markets individually and consider both the cost of acquiring a property and the underlying demand supporting rents and future resale.
12. Nebraska
Cost of Living Index: 90.1
Housing Index: 76.5
Nebraska rounds out the 12 cheapest states to live in for 2026.
Its overall Cost of Living Index is 90.1, while its Housing Index is 76.5. Transportation and utilities are also below the national benchmark.
The typical Nebraska home value was approximately $281,000 as of August 2026.
Omaha and Lincoln represent two of the state’s largest housing markets, but conditions can differ significantly throughout Nebraska. Investors should compare acquisition prices with rents, vacancy, employment, population trends, property taxes, and other operating expenses before deciding whether a property fits their investment criteria.
What Makes a State Affordable?
Cost of living is about much more than the price of a house.
The Cost of Living Index used for this ranking considers several major categories of household spending, including:
- Housing
- Groceries
- Utilities
- Transportation
- Healthcare
- Miscellaneous goods and services
The national benchmark is 100. A state with an overall index of 90, for example, has costs represented by the index that are roughly 10% below the national benchmark.
Housing can have an especially large effect on overall affordability, which helps explain why many of the states on this list also have Housing Index scores far below 100.
How We Determined the Cheapest States to Live In
For this ranking, we used second-quarter 2026 Cost of Living Index data published by the Missouri Economic Research and Information Center (MERIC). The underlying cost-of-living data comes from the Council for Community and Economic Research (C2ER).
MERIC calculates its statewide index by averaging data from participating cities and metropolitan areas within each state. Because participation varies and costs can differ substantially within a state, the figures are best viewed as a broad comparison rather than an exact measure of expenses in every community.
The 12 states above are ranked according to their overall Cost of Living Index.
We also reference the Zillow Home Value Index (ZHVI) to provide additional context about residential property values. ZHVI measures typical home values rather than median sale prices, so the two metrics should not be used interchangeably.
For national context, Zillow reported a typical U.S. home value of approximately $369,000 in August 2026.
What Are the Most Expensive States to Live In?
At the opposite end of the spectrum are states where living expenses are considerably higher than the national benchmark.
Based on the same second-quarter 2026 Cost of Living Index, the five most expensive states are:
| Rank | State | Cost of Living Index |
|---|---|---|
| 1 | Hawaii | 185.8 |
| 2 | Massachusetts | 148.1 |
| 3 | California | 140.3 |
| 4 | New York | 132.6 |
| 5 | Alaska | 124.5 |
Washington, D.C., has an index of 133.8, which would place it between California and New York if territories and districts were included, but it is excluded here because it isn’t a state.
Housing is a major contributor to the high cost of living in several of these locations. According to the 2026 Cost of Living Index, Hawaii has a Housing Index of 302.6, while Massachusetts and California have Housing Index scores of 213.2 and 192.1, respectively.
Does a Low Cost of Living Make a State Good for Real Estate Investing?
Not necessarily.
An affordable housing market can provide some advantages for real estate investors. Lower property prices may reduce the amount of money required for a down payment or acquisition, potentially making it easier to enter a market or diversify across multiple properties.
But price alone doesn’t determine whether a real estate investment will perform well.
Investors should also consider factors such as local rents, rent-to-price ratios, population trends, employment and wage growth, housing supply, vacancy rates, property taxes, insurance, maintenance expenses, landlord-tenant regulations, and neighborhood-level demand.
For example, a $150,000 property isn’t automatically a better investment than a $300,000 property. The more important question is what each property can realistically generate in income relative to its acquisition and operating costs. Understanding how to calculate real estate cash flow can help investors compare potential properties based on income and expenses rather than price alone.
Investors considering buy-and-hold properties should also calculate their potential rental property return on investment (ROI) and consider the characteristics that can make a property a strong rental investment.
That’s why market research and deal analysis remain important, even when investing in one of the country’s most affordable states.
Should You Invest in One of the Cheapest States?
Affordable states can be a good place to begin researching potential real estate markets, particularly for investors who are trying to enter the market with less capital.
However, there’s a major difference between finding a cheap property and finding a good real estate investment.
Instead of choosing a market based solely on its cost of living, look at the fundamentals behind the numbers. Is the population growing or shrinking? Are employers moving into the area? What are comparable properties renting for? How long are properties sitting vacant? What will taxes, insurance, repairs, and property management cost?
If you’re specifically considering a buy-and-hold strategy, these tips for buying your first rental property can help you understand what to look for beyond the initial purchase price.
Once you’ve identified a promising market, the next step is evaluating individual properties. Learning how to analyze a real estate deal can help you compare the property’s purchase price, condition, potential value, expenses, and expected profitability before making an offer.
Summary: The Cheapest States to Live In
The cheapest states to live in for 2026 are Oklahoma, Alabama, Iowa, West Virginia, Kansas, Mississippi, Missouri, Arkansas, Indiana, Tennessee, Georgia, and Nebraska.
All 12 have overall costs below the national benchmark, with particularly low housing costs helping many of them earn a spot near the top of the list.
For prospective homeowners, that affordability can make it easier to stretch a housing budget. For real estate investors, it can help identify markets where acquisition costs may be lower.
But affordability should be the beginning of your research—not the end. The strongest real estate opportunities are typically found by combining an affordable purchase price with solid market fundamentals and a property that makes sense based on the numbers.
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