In today’s challenging real estate market, finding an affordable city for your first home purchase has never been more important. With mortgage rates hovering around 6.65% and limited inventory in many regions, first-time homebuyers—especially Millennials and Gen Z—need reliable information about where they can actually afford to live.
According to a recent Consumer Reports study highlighted on Good Morning America, several unexpected cities are emerging as affordable havens for young homebuyers. Let’s explore these top cities and what makes them stand out in 2025’s competitive housing market.
The Most Affordable Cities for First-Time Homebuyers
1. Chesapeake, Virginia
Taking the top spot in Consumer Reports’ ranking is Chesapeake, Virginia. This city has become particularly attractive due to its:
- Growing Millennial and Gen Z population
- Relative affordability compared to nearby metropolitan areas
- Proximity to waterways and outdoor recreation
- Strong job market in the Hampton Roads region
Chesapeake offers a balance of suburban comfort with access to urban amenities, making it an ideal landing spot for young professionals buying their first home.
2. Virginia Beach, Virginia
Coming in second place, Virginia Beach offers first-time homebuyers:
- 38 miles of beautiful beaches
- Diverse neighborhoods at various price points
- Strong tourism economy providing job opportunities
- Outdoor lifestyle and recreational activities year-round
The coastal city’s popularity among younger buyers demonstrates the increasing importance of quality of life factors in homebuying decisions.
3. Fort Wayne, Indiana
Known as the “Crossroads of the Midwest,” Fort Wayne secured the third position thanks to:
- Significantly lower housing costs than national averages
- Central location with easy access to major Midwest cities
- Revitalized downtown area
- Strong manufacturing and healthcare job sectors
Fort Wayne’s affordability index makes it particularly attractive for first-time buyers looking to maximize their purchasing power.
4. Aurora, Illinois
Located approximately 40 miles from Chicago, Aurora offers first-time homebuyers:
- Proximity to Chicago’s job market without the high housing costs
- Easy access to outdoor recreation
- Historic downtown with growing amenities
- Good public transportation options
Aurora represents an increasingly popular trend of buyers choosing near-city suburbs over expensive urban centers.
5. Gilbert, Arizona
Rounding out the top five is Gilbert, Arizona, dubbed “Phoenix’s coolest suburb.” Gilbert attracts first-time homebuyers with:
- Year-round warm weather
- Master-planned communities with amenities
- Strong school systems
- Growing tech job market
- Vibrant downtown area with restaurants and entertainment
The Phoenix metro area continues to draw younger buyers looking for affordability combined with lifestyle benefits.
The Least Affordable Cities for First-Time Homebuyers
Consumer Reports also identified the most challenging markets for first-time buyers, with California cities dominating the list:
- Oakland, California
- Newark, New Jersey
- San Jose, California
- Los Angeles, California
- San Francisco, California
These cities rank poorly on affordability due to the significant gap between median incomes and housing costs. First-time buyers typically face extreme challenges entering these markets without substantial financial resources.
Mortgage Rate Reality Check
Rebecca Jarvis from GMA offered important context about current mortgage conditions:
- The average 30-year fixed mortgage rate is approximately 6.65%
- Despite potential Federal Reserve rate cuts, mortgage rates are expected to decline only modestly in 2025
- JP Morgan forecasts home prices to increase by approximately 3% in 2025
- Limited housing inventory remains a significant challenge, as current homeowners with 3% mortgage rates are reluctant to sell
First-Time Homebuyer Tips
For those entering the market in 2025, experts recommend:
- Focus on affordability rather than trying to time interest rate drops
- Ensure you can comfortably make monthly payments at current rates
- Plan to stay in your home for at least five years to justify transaction costs
- Explore alternatives to the traditional 20% down payment through FHA loans, VA loans, USDA loans, and state/local assistance programs
- Consider expanding your search to include emerging affordable cities
The Bottom Line
While the housing market remains challenging for first-time buyers in 2025, opportunities exist in specific markets that offer the right combination of affordability, amenities, and quality of life. By focusing on personal financial readiness rather than market timing, and by considering locations beyond traditional high-demand areas, first-time buyers can still find pathways to homeownership.
This article references information shared on Good Morning America. For the most current data and personalized advice, consult with a qualified real estate professional in your target market.
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