In a state known for its lakes communities and vibrant cities like Minneapolis and St. Paul, Minnesota has long attracted first-time homebuyers from around the country.
But in today’s housing market, is it still realistic to buy a home for here? The answer depends on where you look—and how much you earn.
The good news is it won’t take a six-figure salary to get you in the door of a starter home here.
Minnesota’s starter homes require a mid-range salary
Currently, the average price for a starter home in Minnesota is $293,910.
To comfortably afford that, first-time buyers would need an annual income of $70,394, assuming a 7% mortgage rate and 10% down payment. That places Minnesota right around the national average for starter home affordability, offering better access than high-cost coastal states, but less than what’s available in parts of the South and Midwest.
Compared to neighboring states, Minnesota is more expensive than Iowa ($41,749 income needed) and Wisconsin ($61,475), but more affordable than Illinois if you’re buying in Chicago’s pricier suburbs.
Over the past five years, Minnesota’s starter home prices have risen 58%, and the monthly payments on those homes have jumped 123%—a sharp increase that underscores the importance of budgeting carefully before buying.
Where starter homes are accessible—and where they’re not in Minnesota
For first-time homebuyers seeking manageable prices, the following cities stand out in Minnesota:
- Rochester: A hub for healthcare and tech due to the Mayo Clinic, with starter home prices typically near $250,000.
- St. Cloud: A smaller city with easy access to the Twin Cities, starter homes can be found here around $230,000. A bit far for commuters, but still an option.
- Mankato: Home to Minnesota State University, it’s known for its mix of college-town energy and quiet suburbs, with starter homes averaging about $220,000.
These communities offer a realistic shot at homeownership, with livable price points and local economic stability.
However, affordability becomes an issue in other areas, especially within the Minneapolis–St. Paul metro:
- Minneapolis (lakes and Uptown areas): Desirable neighborhoods push prices over $350,000 for starter homes.
- Edina and Wayzata: Both upscale suburbs have been rife with limited inventory and few starter homes under $400,000.
- Stillwater: A historic town with increasing demand due to its proximity to Minneapolis, starter homes now often exceed $330,000 in the area.
In these regions, buyers might need to rely on down payment assistance or explore more creative financing solutions to stay within budget.
Is a Starter Home in Minnesota Worth the Investment?
Minnesota earns a solid “B-” grade from the Realtor.com® housing affordability and homebuilding report card. With a median list price of $394,042 and a median household income of $86,272, the state maintains decent affordability metrics. While Minnesota only accounts for about 1.5% of national building permits, the construction pace is reasonably aligned with its population share of 1.7%.
The new construction premium—at 47.1%—is higher than average, suggesting that newly built homes are significantly more expensive than existing listings, which may limit affordable options for first-time buyers. However, this also signals potential for equity growth in resale homes purchased now.
For those wondering how to qualify for a mortgage or navigate the steps to buying a house, Minnesota offers several first-time homebuyer programs. The Minnesota Housing Finance Agency provides down payment assistance and special loan programs for eligible buyers. FHA and USDA loans are also popular choices in rural and suburban areas.
In summary, while Minnesota may not be the cheapest state for starter homes, it remains a solid choice for buyers who prioritize quality of life and long-term investment. For first-time homebuyers willing to explore beyond the priciest suburbs, the North Star State still shines as a practical and rewarding place to start.
Carol McDaniel is a dedicated and results-driven professional with 5 years of experience and US News. Known for her strong problem-solving skills and collaborative mindset, Carol has built a reputation for delivering high-impact results across diverse teams and projects.
Throughout her career, she has demonstrated expertise in 2 core skills or areas, e.g., client relations and project coordination, and is passionate about continuous learning and meaningful contribution. Carol thrives in dynamic environments and consistently brings professionalism, adaptability, and a focus on growth to every role she takes on.