Amazon Prime Day is here. This is a four-day sales event running from Tuesday, June 23, through Friday, June 26.

While many of these sales don't have deep discounts, I use them as a chance to score discounts on items that improve my home's functionality and safety. On this end, Prime Day doesn't disappoint.

But first, make sure you have an Amazon Prime membership to shop the event. If you don't have one and you're new to Prime, you can sign up for a 30-day free trial. Now, here are a few items that can give you peace of mind, improve your home's functionality and potentially save you money.

This deal protects your biggest asset

I bought an older home a few years ago, and one of my main concerns was its electrical. Then, I found out about the Ting sensor. It's a smart home sensor you plug into a wall that detects electrical irregularities that could result in a house fire.

Once you install the plug, you download the free Ting app on your phone to monitor it. You'll receive real-time alerts when it detects issues. Some issues it detects include micro-arcing, caused by faulty wiring, malfunctioning devices or loose connections.

Now, I have peace of mind knowing that if any hazards arise, I can fix them before a fire occurs. During Prime Day, you'll save $20 on a Ting sensor.

This deal adds another layer of protection to your home

Smart locks are among the smartest home security upgrades you'll make. They're easy to install. And I like them for the convenience and security they offer.

These devices typically feature a keypad for PIN codes or biometric sensors, allowing you to secure your home without fumbling for physical keys. You can install them on any entry point, such as your front door, and even assign temporary codes for guests or service providers.

Worried you didn't lock your front door when you left home? Access the app and lock it remotely, instead of driving back home. You should also look for ones, like the one I recommend here, that offer weatherproofing and battery backup, so you still have access during a power outage.

And during Prime Day, you can save up to $65 on this option:

Lower your home's energy costs with this deal

Electric bills continue to surge. With the summer months driving up demand, the average household will spend 10.5% more, per the National Energy Assistance Directors Association.

The main culprit behind your energy costs? Your air conditioner. This is where a smart thermostat helps you control costs. If you plan to be away from home for days or weeks at a time, you can set your thermostat at a higher temperature. This reduces the demand placed on your AC unit and the energy it uses.

Over time, setting your thermostat by 7 to 10 degrees warmer when you're away from home lowers your energy costs by around 10%. This could equate to hundreds of dollars per year. On top of that, you can save $50 on a new unit during Prime Day.

Ultimately, while Prime Day isn't overflowing with deep discounts, it doesn't mean you can't find good deals. Being strategic when shopping can help you find deals that add value to your home, both now and into the future. These three deals represent ways you can improve your home's functionality, ensure it remains safe and save money on energy costs.

Related content

• Amazon Products You Should Skip on Prime Day
• Amazon Prime Day 2026: When It Starts and What to Know Before You Shop
• The Hidden Cost Driving Higher Electric Bills and Shorter Appliance Lifespans

When people think about moving to another country, they often picture retirees chasing warmer weather or digital nomads working from a beach somewhere. But a growing number of millionaires are packing up and relocating, too.

Around the world, wealthy individuals are increasingly choosing where they live based on such factors as taxes, business opportunities, safety and overall quality of life. Some seek a better place to grow a business. Others want a more predictable tax environment or simply a lifestyle that better fits their priorities.

While most Americans aren't planning an international move soon, it's still worth paying attention to where wealthy people are going. Their decisions often reflect broader economic trends and reveal what they value most when it comes to building and preserving wealth.

Why wealthy individuals have more flexibility to relocate

For many affluent households, location has become more of a choice than a necessity.

Technology has made it easier to run businesses remotely, manage investments from anywhere and stay connected with clients and colleagues around the world. At the same time, many countries have rolled out residency and investor visa programs designed to attract wealthy newcomers.

As a result, more high-net-worth individuals are treating relocation as part of their overall financial strategy rather than simply deciding where they'd like to retire.

What attracts wealthy residents?

Taxes often grab the headlines, but they're rarely the only reason people move. The countries attracting wealthy newcomers tend to offer a combination of financial advantages and lifestyle benefits.

Favorable tax policies

Lower income taxes or special tax programs for foreign residents can help make a country more appealing, particularly for business owners and investors.

Political and economic stability

People with significant assets generally value predictability. Stable governments, strong economies and reliable institutions can be just as important as tax savings.

Strong property rights

Whether someone owns businesses, real estate or investment assets, legal protections matter.

Access to business opportunities

Many wealthy individuals are still actively growing companies or managing investments. Being close to financial centers and global markets can be a major advantage.

Healthcare, education and quality of life

Good schools, quality healthcare, safety and overall lifestyle often play a big role, especially for families.

1. United Arab Emirates

The United Arab Emirates continues to be one of the world's biggest magnets for wealthy newcomers. A major reason is its zero personal income tax policy, which allows high earners to keep more of what they make. But taxes aren't the whole story.

Cities such as Dubai have worked hard to become global business hubs, offering modern infrastructure, investor-friendly visa programs and easy access to markets across Europe, Asia and Africa.

For entrepreneurs, investors and international business owners, the UAE offers a combination that's hard to ignore: tax efficiency, opportunity and a growing global reputation.

2. United States

Despite higher taxes than some countries on this list, the United States remains one of the most popular destinations for wealthy migrants. Why? Because America still offers tremendous opportunities to build wealth.

The U.S. is home to some of the world's largest financial markets, strongest entrepreneurial ecosystems and most innovative companies. For many investors and business owners, the opportunity to create wealth outweighs concerns about taxes.

Many wealthy people aren't just looking for a place to keep their money — they're looking for opportunities to grow it.

3. Italy

Italy might seem an unexpected addition to the list, but it's become increasingly popular among wealthy foreigners.

Part of the appeal comes from tax incentives designed to attract international residents. Lifestyle is also a major factor.

From its historic cities and world-renowned food to its slower pace of life and access to quality healthcare, Italy offers something many people are looking for as they approach retirement or seek a better work-life balance. For some wealthy families, the move is just as much about enjoying the lifestyle they’ve worked hard to create as it is about finances.

4. Switzerland

Switzerland has long been associated with wealth, for good reason. The country is known for political stability, a strong financial sector and a reputation for preserving wealth during uncertain times. Investors often view Switzerland as a safe place to store assets and navigate global volatility.

Add excellent public services, low crime rates and stunning scenery and it's easy to see why it remains a favorite destination for affluent individuals.

It's certainly not the cheapest place to live, but many residents see the stability and quality of life as well worth the cost.

5. Singapore

Singapore has become one of the most attractive destinations for wealthy individuals looking to establish a presence in Asia.

The country offers a business-friendly environment, efficient government services and a strong legal system. Its location also makes it an ideal gateway to many of Asia's fastest-growing markets.

Safety, education and financial infrastructure consistently rank among Singapore's strengths, helping attract investors, executives and entrepreneurs from around the world. For many wealthy newcomers, Singapore offers the rare combination of economic opportunity and day-to-day convenience.

What these countries have in common

While these destinations differ in many ways, they share several characteristics that wealthy individuals tend to value.

They generally offer:

• Predictable tax policies
• Stable governments and economies
• Strong legal protection
• Access to global markets
• High standards of living

What's interesting is that low taxes alone don't explain the trend. In most cases, wealthy individuals look for a complete package that combines financial opportunities with long-term stability and quality of life.

What everyday investors can learn from where the wealthy are moving

Most people aren't going to relocate to Dubai or Switzerland. There are still some useful takeaways from these migration trends.

• Look at the full financial picture: The wealthy often evaluate taxes alongside investment opportunities, business prospects and lifestyle considerations. That's a good reminder that financial decisions rarely come down to one factor.
• Don't overlook cost of living: A lower tax bill doesn't always mean you'll come out ahead if housing, healthcare and other expenses are significantly higher.
• Value stability: One thing many of these countries have in common is predictability. Building a financial plan that can weather economic ups and downs is often more important than chasing short-term advantages.
• Think about more than money in retirement: Healthcare access, housing costs, safety and lifestyle can have just as much impact on retirement satisfaction as investment returns.
• Build your plan around your goals: The wealthy aren't all moving for the same reason. Some want business opportunities, while others prioritize lifestyle or wealth preservation. The lesson is to focus on what matters most to you rather than following someone else's strategy.

It's about more than taxes

It's tempting to assume wealthy people are moving to avoid taxes, but the reality is usually more nuanced.

The countries attracting the most millionaire migrants tend to offer a mix of opportunity, stability, strong legal protections and quality of life. Taxes might help open the door, but they're rarely the only reason people choose to walk through it.

For everyday investors, the bigger lesson is knowing that successful financial planning is about balancing money, lifestyle and long-term goals in a way that works for you.

Use the tool below, powered by Bankrate, to connect with a financial professional who can help you develop a personalized plan to grow your wealth and reach your financial goals:

Related Content:

• Retire Abroad Before 55: Nine Expert Tips on FIRE Abroad
• How To Manage Retirement Savings When Living Abroad
• Why Most Millionaires Don't Feel Wealthy — and What It Really Takes to Feel Financially Secure

Every summer, Americans fall in love, but not with a person — they fall in love with a piece of property and the idea of planting roots in a vacation spot.

The problem with falling in love with vacation property is that even when a vacation home feels like freedom, it can easily turn into a financial anchor.

Before you buy that second home, run the real math instead of the Instagram version that tells everyone they should have a picture-perfect home away from home.

Is that vacation home worth the cost? The answer is different for each individual, but there are some things that everyone should understand before considering a vacation home purchase.

Ownership can cost more than buyers expect

Mortgages for second homes can be considered riskier by lenders, so they typically carry higher interest rates and fees. If you're expecting similar interest rates on a vacation home with what you see advertised for primary home loans, you're likely in for an unpleasant surprise.

Beyond the mortgage, second homes can have property taxes that are higher than the those on your primary home, not just because of location, but because the vacation home doesn't qualify for a potential exemption as a primary residence.

Add increased insurance premiums (especially in coastal states) and the price of upkeep, and the costs can quickly add up.

Buying a vacation home can be right for some people, but it's important to go into the process with a realistic view of the expenses associated with owning a second home.

Rental dreams vs regulation nightmares

If you think the solution to the extra costs of vacation home ownership is to become an Airbnb host, you might want to reconsider. Cities are cracking down on short-term rentals.

Some cities, such as Washington, D.C., have put strict licensing requirements in place for all short-term rentals. Others, such as New York City, generally prohibit short-term rentals unless the host is present.

Why? Short-term rentals can drive up rental prices in neighborhoods as the number of available long-term rentals decrease. It can become more difficult to buy a home as the inventory dwindles.

Some communities have sounded the alarm on short-term rentals when they feel their cozy neighborhood has become infiltrated by short-term renters who aren't invested in the community. It's a shift that makes them uncomfortable and has led communities to urge regulation or outright bans.

Before assuming that you can use your vacation home as a short-term rental to solve the problem of extra fees, research regulations in the area associated with short-term rentals.

The results might surprise you and could sway you from the idea altogether, or they might reveal that renting the home out short-term will be favorable.

Renting gives flexibility (and less risk)

On the other side of the short-term rental issue is the idea of long-term rentals, in which renters sign a lease and reside within the home.

• The upside is the income potential from rent and real estate appreciation
• The downside is that the home is occupied by tenants, so you can no longer treat it as a vacation home that you can visit and stay in on a whim

Timing the leases right can be a solution for long-term rentals. Suppose your plan is to eventually retire to your vacation home; you'll time the lease to expire adjacent to your retirement so you can make the joyful transition to your vacation home as your primary residence.

Long-term rentals typically need less monitoring and maintenance since the residents will likely have more pride in where they live as opposed to a weekend stay.

That's not to say that rental homes need no management whatsoever, but rather that long-term rentals don't need the same rapid-fire maintenance and upkeep as a short-term rental, as when different people are frequently coming and going.

If you buy, buy smart and treat it like a business

If the numbers work, and you decide that being a landlord of either a long-term or short-term rental makes sense for you, structure it wisely.

• Explore liability protection strategies, such as an LLC or umbrella insurance. Much as you would do with a business, don't personally assume the liability risk of renting a home.
• Track every deductible expense. There are tax deductions available to landlords, but only if you properly track your expenses.
• Consult your adviser if you plan to sell later. Your adviser can help you determine if the property will be eligible for depreciation benefits and a 1031 exchange.

A vacation home that becomes an investment property can be lucrative, but it's not something you should do on a whim.

The same due diligence you'd do with any investment to ensure it works with your budget and goals is vital. A vacation home shouldn't be an impulse buy.

Emotional ROI still matters

Return on investment (ROI) isn't only about numbers and tax deductions. It's also about reaching goals and living a life you've dreamed about.

Remember, however, that renting can give you the same sunsets as buying. Be realistic about what you're getting yourself into, and don't romanticize a vacation home as a dream purchase when you might actually be buying a bunch of maintenance obligations.

If owning a vacation home has always appealed, but the idea of managing a rental property doesn't, there's nothing wrong with buying a vacation home simply because it makes you and your family happy.

If the numbers work with your budget and you're realistic about the expenses, a vacation home can certainly bring joy. A conversation with your adviser can help you decide if you're ready for a vacation home and what that might look like for you.

Related Content

• A Vacation Home Sounds Dreamy, But Is It the Right Move for You?
• How to Design a Second Home That Generates Rental Income
• RV Living or Vacation Home? What's Best for Your Retirement?
• To Love, Honor and to Pay: 4 Ways to Keep Wedding Costs from Ruining Wedded Bliss
• 5 Legal 'Loopholes' the IRS Wishes You Didn't Know (Plus, How to Use Them This Tax Season and Beyond)

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

While the market is improving, millennials and Gen-Zers have faced a difficult path to homeownership.

For the first time in modern history, these two generations are among the first to be financially worse off than their parents at the same stage of life. Factors such as record-high home prices, lingering inflation and mounting debt, specifically from student loans and credit cards, have created significant challenges for first-time buyers.

In 2025, nearly 27% of Gen-Zers nationwide owned their homes, according to a report from Axios. That rate nearly doubled for millennials with slightly more than 55% owning their homes. However, both generations are still trailing their parents with nearly 73% of Gen Xers and 80% of baby boomers owning their homes.

As housing affordability continues to be a challenge for many, especially for those who are younger, tapping into a 401(k) retirement plan might seem like a practical option, but there are trade-offs. What needs to be considered before a withdrawal is made?

The hidden cost of limiting compounding growth

Pulling from your retirement account to make a down payment seems logical in theory: You're not retiring for several more years, yet you need a roof over your head today.

However, this thought process doesn't account for the power of compounding growth. When money is withdrawn early, it's not just the principal that disappears. It's also the decades of potential growth that money could have generated by remaining in the account. Assuming a modest average annual return of around 7%, withdrawing around $20,000 from a retirement account at age 30 could mean missing out on more than $130,000 by age 65. That's a significant amount of money that could otherwise be used to supplement medical costs, pay for long-term care or used for additional real estate or traveling.

Once money leaves your retirement account, it no longer has the ability to grow with the rest of your investments.

As a result, retirement savings are often seen as one of the most important "protected" accounts in a portfolio. While the funds can be used to solve a short-term problem, withdrawing them early could create future challenges.

Penalties might be waived, but taxes still apply

Another factor that's easily overlooked is the tax implications of withdrawing retirement funds. Even when early withdrawal penalties are waived, money taken from a 401(k) or IRA will be taxed as part of your income. For the average working American, that tax rate can fall from 18% to 32%. A withdrawal of $20,000 could lead to thousands of dollars owed in taxes.

In addition to a hefty tax bill, money withdrawn from a retirement account loses the benefit of tax-deferred growth, significantly reducing the value of those savings long-term.

Evaluating retirement security vs homeownership

Making the decision to use retirement savings to purchase a home typically comes down to balancing two major financial goals: Retirement security and homeownership.

Becoming a homeowner provides stability and gives you the opportunity to build equity over time. For many Americans, it's also viewed as a significant milestone financially and emotionally.

Simultaneously, retirement savings rely largely on time spent in the market and consistent contributions. As a result of compounding, younger Americans in their 20s and 30s generally benefit the most by starting early and saving consistently.

Using retirement funds prematurely eliminates that chance, which can make it much more difficult to build enough savings long term.

Costs of homeownership extend beyond the mortgage

It's common for first-time homebuyers to focus primarily on saving for a down payment, but homeownership costs much more than the price of the home. Beyond your monthly mortgage payment, you'll also have to pay property taxes, insurance, utilities and maintenance, not to mention any unexpected repairs that are needed such as a new roof, HVAC system or appliance.

Many financial experts recommend running a full financial "stress test." The test calculates the total expected monthly costs, including mortgage payments, taxes, insurance premiums and a maintenance reserve, which allows you to see if homeownership is manageable in your current financial situation.

Other options to consider

Before targeting retirement accounts, first-time buyers should explore other lower-risk alternatives.

One option is to build a dedicated down payment fund by regularly setting aside money from each paycheck. Automating contributions to a separate account can help accelerate the process, while keeping you disciplined. Utilizing tax refunds, bonuses or scaling back discretionary spending can also help grow savings.

Family gifting might also be a possibility. Current tax laws allow a person to give significant amounts each year without triggering gift taxes. This can help supplement any gaps in savings.

Depending on where you live, many states, organizations and housing agencies might offer down-payment assistance through programs such as FHA, VA or USDA. These programs are designed to help buyers break into the housing market without sacrificing long-term savings.

What to consider before making an early retirement-savings withdrawal

For first-time buyers considering pulling retirement funds to help purchase a home, it's worth asking: Does this withdrawal create a gap in my retirement savings that might be difficult to recover from later?

IRAs, 401(k)s and other retirement accounts are specifically designed to grow over decades of time. Once money is taken out, its ability to compound stops.

While buying a home might feel urgent and the benefits can be rewarding, protecting long-term financial security might be the better option.

Most of the time, it's better to borrow for a home instead of taking from your future retirement.

Related Content

• The 401(k) Loan Dilemma: Is It Ever a Good Idea?
• I Am 55 With a $1.5 Million 401(k). Should I Take a 401(k) Loan to Pay for a Home Improvement Project?
• Considering a 401(k) Loan? What You Can Do Instead
• I'm 61 and need $50,000 for home repairs. Should I borrow, given today's rates, or take a withdrawal from my $950,000 401(k)?
• Applying for a Mortgage Loan? Here's What to Expect

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

For anyone navigating the 2026 housing market, the current rate volatility might feel impossible to ignore and even harder to time.

Today, mortgage rates for 30-year fixed loans are hovering around 6.44%. While many analysts, including Fannie Mae, predict rates could drop to 5.9% by year-end, geopolitical instability — specifically, the current conflict in the Middle East — has sent rates on an upward trajectory this month.

Is right now a better time to buy, or should you wait? Buying now allows you to lock in a rate before further volatility spikes. Yet, three tax signals might determine whether you can afford a home in 2026.

Are today's mortgage rates helping me buy a house?

So far, the 2026 housing market is proving more accessible than the previous two years:

• Home prices are flattening. Current forecasts by J.P. Morgan and the National Association of Realtors show a 0% to 4% appreciation, respectively. This is a significant "cool down" from recent years.
• Inventory is increasing. As rates stabilize near 6%, more homeowners are willing to list their properties and trade their low-rate houses for a new move (including retirees looking to downsize).
• Rate volatility. Until recently, rates were around 6%, which was down from last year's high of 7.01%, according to the Federal Reserve Bank of St. Louis. However, the recent tick up to roughly 6.44% is due to the U.S.-Iran conflict.

Mortgage rate increases serve as a reminder that market timing is a gamble. But your personal financial readiness might be the only variable you can control if you want to buy a house in 2026.

Signal 1: The 'tax return threshold'

Although it might seem counterintuitive to focus on the past when looking at a new home, your lender is doing exactly that. Lenders verify your last two years of tax returns to calculate your debt-to-income (DTI) ratio.

Your DTI is calculated by dividing your total monthly debt payments (from your credit report) by your gross monthly income (before taxes).

Example: If you earn $10,000 per month and have $4,000 in total debt (student loans, car payments and your proposed mortgage), your DTI is 40%.

Ideally, you want to sit at 36% or lower, though many conventional lenders accept up to 43%. Calculate what your DTI is before you ask yourself, "Should I lock in a mortgage rate now or later?"

If you need a house today and can afford it at the rate you're for which you're approved, lock it in. You might refinance your home later if the value is higher, but you can't "refinance" a missed opportunity on a home price that was within your DTI limits.

Signal 2: The 'escrow creep' indicator

A common mistake for homebuyers in 2026 is focusing solely on the mortgage principal and interest while ignoring the "escrow creep."

Review all categories of expenses that might go into your escrow account — including home insurance premiums and property taxes.

Your annual property tax bill is a good indicator of cost-of-living increases in your area. If a county has a history of aggressive reassessments, your "affordable" 2026 payment could become a burden later.

Additionally, you should only buy a home in 2026 if you plan to stay for at least five years. This gives you a good chance your home equity will grow enough to cover future closing and agent costs (if you decide to move).

If you aren't sure you'll be in the area for five years, renting might be the better option for your financial situation. (Some recent analyses suggest a 10-year runway for holding onto a home).

Finally, don't forget to factor in insurance volatility. In such states as Florida, some homeowners have seen premiums surge by about 49% in the last several years, per recent LendingTree data. If you don't bake these "hidden" costs into your DTI now, your dream home could quickly become a liability.

Signal 3: The '2026 tax perk' qualifiers

Several federal tax shifts in 2026 have changed the math on home affordability. These shouldn't be viewed as year-end "bonuses," but as part of your monthly cash flow:

• Restored insurance deductions. Starting in 2026, private mortgage insurance (PMI) premiums, FHA/USDA insurance premiums, and Veterans Affairs (VA) funding fees are tax-deductible again for buyers with an adjusted gross income (AGI) below $100,000.
• State and local tax (SALT) tax deduction cap. Under the 2025 Trump tax bill, the SALT deduction limit has increased to $40,400 for tax year 2026 (some homeowners might still be subject to the former $10,000 cap).
• Mortgage interest limits. You can continue to deduct mortgage interest on up to $750,000 of debt. For many, this could lower the "effective" interest rate of a 6.4% loan.

It's important to note that these deductions are only available if you itemize and don't claim the standard deduction.

But if you're eligible, incorporating these homeowner tax breaks alongside your projected property taxes, HOA fees, and insurance premiums, could give you a more realistic view of the "all in" home cost and whether you can truly afford your DTI mortgage rate in 2026.

The bottom line: Is 2026 a good year to buy a house?

For the prepared homebuyer, 2026 might be the best window we've seen in years. Lower rates, higher inventory and moderate price increases mean sellers might finally be ready to negotiate.

However, your first step isn't browsing Zillow — it's reviewing your 2025 tax return. Ensure your income is documented, your DTI is optimized, and you're moving to an area where the property tax and home insurance (or even maintenance repairs) won't cannibalize your savings.

The amount of your down payment and your credit score will affect home affordability in 2026, too.

Consult with a tax professional when necessary. Your personal financial situation ultimately impacts when it's time to move.

Read More

• Eliminating Property Taxes: What Homeowners Gain and Give Up
• Ways to Lower Your Property Taxes in 2026
• Homeowners Face Potential Capital Gains Tax Shift: What to Know Now
• North Carolina’s $15,000 Forgivable Mortgage: How to Qualify in 2026

To help you understand what is going on in the commercial real estate sector and what we expect to happen in the future, our highly experienced Kiplinger Letter team will keep you abreast of the latest developments and forecasts (Get a free issue of The Kiplinger Letter or subscribe). You'll get all the latest news first by subscribing, but we will publish many (but not all) of the forecasts a few days afterward online. Here's the latest…

The Iran war hangs heavily over the housing market, tempering expectations for what many had hoped would be a strong spring selling season. While home buying is likely to improve modestly over the course of the year, sales will still run at a sluggish pace on account of challenging affordability and elevated economic uncertainty that continue to discourage prospective buyers.

Many buyers remain on the sidelines due to elevated mortgage rates, which have surged as Treasury yields climb. The average mortgage rate for a 30-year fixed loan finally dipped below 6% in late February, for the first time since 2022. However, rates quickly rebounded in mid-March to their highest level since September, just a few weeks after the Trump administration's announcement of the U.S.-Israeli attack on Iran.

While mortgage rates currently remain in the low 6% range, the conflict is injecting significant volatility into the market. If the fighting drags on, rates could be pushed even higher. This environment, combined with weakening consumer confidence, is undermining buyer sentiment during the critical spring selling season. While this season is shaping up to be slightly better than last year's — when rates hovered near 7% and trade policy volatility dented confidence — the recovery remains fragile.

Tepid sales and historical lows

Existing-home sales will remain tepid throughout 2026. Data show sales have averaged a 4.0 million-unit pace in the three months ending in January, which is approximately 37% below the peak pace hit in late 2022 and 20% below the 2019 average. While a jump in sales in December offered an encouraging signal, the subsequent slump in January and the minor gain in February confirm that the housing market isn't yet on solid footing.

The market's struggle to maintain momentum is hardly surprising, given how extremely stretched housing affordability has become over the past few years. Mortgage payments for first-time buyers are still near the highest levels since the 1980s (adjusted for inflation). Not surprisingly, the share of first-time home buyers in the housing market fell to a historic low of 21% last year, down from 31% in 2020. Meanwhile, the median age of first-time home buyers rose to an all-time high of 40, up from 33 in 2020.

The "lock-in" effect and pricing

Single-family inventory is increasing at a sluggish pace as many owners feel "locked in" by pandemic-era mortgage rates. These homeowners are often unwilling or unable to sell, as doing so would require taking on a new mortgage at a much higher rate. Currently, about 80% of outstanding mortgages carry rates below 6%, and nearly a third are between 3% and 4%. This issue is most prevalent in pricey coastal markets.

According to Redfin, these conditions are keeping price growth in check. The share of homes sold below asking price last year rose to the highest level since the pandemic, while the average discount was the highest since 2012. In 2025, the number of home sellers exceeded prospective buyers by the largest margin in over a decade.

Headwinds for home builders

The conflict in Iran poses significant challenges to the home building sector. Sustained high oil prices are expected to increase input costs while simultaneously weakening demand through lower consumer confidence and higher mortgage rates. Oil-based products, including asphalt, plastics and vinyl, face immediate price pressures, as well as energy-intensive manufactured products like insulation, drywall and cement.

Builders continue to grapple with excess inventory, prompting pullbacks in single-family permits. Building permits have been flat-to-down over the past three years. In fact, housing starts hit a five-year low in October 2025. Meanwhile, weak new-home sales have pushed inventories higher. Supply stands at 7.6 months at the current sales pace, well above a healthy market of six months. As a result, 37% of builders cut prices in March, up from 29% a year ago.

Policy responses

Policymakers have introduced various remedies, but their effectiveness remains an open question. One strategy involves the president's order to Fannie Mae and Freddie Mac to buy more mortgage-backed securities to increase liquidity. Another proposal focuses on limiting institutional investor purchases to less than 20% of single-family homes. However, critics point out that only about 2% of the market is actually captured by big institutional investors, suggesting such measures may have a limited impact on affordability.

This forecast first appeared in The Kiplinger Letter, which has been running since 1923 and is a collection of concise weekly forecasts on business and economic trends, as well as what to expect from Washington, to help you understand what’s coming up to make the most of your investments and your money. Subscribe to The Kiplinger Letter.

Related Content

• How the Federal Reserve Affects Mortgage Rates and What It Means for Home Buyers in 2026
• 5 Ways to Shop for a Low Mortgage Rate
• Buying a Home: News, Features, Analysis

My husband and I took the plunge last year and bought a house. After more than a dozen years of apartment living in New York City, I was excited by the prospect of having my own four walls and getting to control a thermostat.

But I'd heard enough about energy costs to factor a home's energy systems into the equation while house hunting, and my husband and I are reasonably environmentally conscious, so while we weren't actively looking for a house with solar panels, we considered it a plus that the house we liked had them.

We closed on the house at the start of summer — and immediately came to adore the solar panels as temperatures soared. Here's what I've learned so far about buying a house with solar panels on it.

1. Step 1 is to ask if they're owned or leased

The Department of Energy has a useful guide of what questions to ask if you're buying a house with solar panels. While you're in the house-hunting phase, it's key to ask if the solar panels are leased or owned outright by the sellers.

Typically, if they're leased, that means that either you'll assume the lease — and have one more bill to look out for — or the seller might agree to pay off the balance with the sale. If you're going to assume the lease, that means more steps to transfer it, typically working with the solar finance company or lease provider.

Your mortgage lender might need to review or approve the terms, since it's a long-term financial obligation tied to the home.

In my case, the solar panels were owned outright, which meant they were likely factored into the overall listing price for the house and became mine when I bought it. To me, that was a benefit as the house was within our budget, and I didn't have to do any of the legwork involved with installing or leasing solar panels.

A home with solar, on average, across the U.S. sold for 6.9% more than those without, according to a 2025 analysis of Zillow data by SolarReviews, meaning an additional $29,000 for a median-valued home.

After we closed, the seller got us in touch with her contact at the solar company, so we had a contact ready when anything comes up.

2. You need to check the roof's history

Your solar panels are only as secure as what they're sitting on. While house hunting, you should ask when the solar panels were installed — and when the roof was last repaired or replaced.

Your state might require the seller to disclose how old the roof is and if it has a transferable warranty. That will help you know if you're accidentally signing up for a big repair in your near future or not.

You should also ask for documentation on the solar system itself, including the installation certificate, warranty details and the original installer's information. Having these on hand can make it easier to address repairs or service issues later.

That paperwork matters. Roof warranties and solar panel warranties often have specific terms, and you might need proof of installation or transfer to keep them valid. Without it, you could end up paying out of pocket for repairs you assumed were covered.

Beyond that, after you buy the house, you should keep an eye on the state of the roof and make sure your gutters are properly maintained. This is true in any house, but when you've got expensive technology resting on your roof, this is extra important.

3. Enjoy your energy bills

The AC in our house is powered by the solar panels, and when we got our first ConEd bill over the summer, we were delighted to see it was about $20, which is the official base cost to be maintained on the grid.

Like many households with solar, we're still connected to the grid. It works like this: The solar panels generate electricity that the home uses first. If we need more power than the panels produce, the house then draws from the grid. If we use less power than the panels produce, we earn credits with the utility company that can be applied in future months.

So far, our electric bill has remained about $20 each month, with the exception of February, when we kicked into the grid and were charged. But by the next month, as the snow cleared, it was back down to $20.

While I know we paid more for the house because it has solar panels, these electricity bills make me feel good about that, especially since energy costs rise over time, while I paid a set amount for the house.

4. Consider changes to make more use of your panels

The major appliances in our house, like the stove, were already electric, but if they weren't, I'd consider if it would be worth the cost to replace them. I'll admit that moving from a gas stove in my last apartment to an electric stove here took some adjusting, but you can get the hang of it.

A bigger decision for us is around our heating system. Our house's sellers had recently installed a new AC system, but left the heating to oil-powered baseboards. The baseboards work great, but I can't lie: After months of $20 electric bills, getting that first oil refill bill was a tough pill to swallow, and I cringed throughout the winter. That got much worse this month as the war in the Middle East kicked oil prices even higher.

We've been looking into the option of switching our heating to a heat pump so everything is electric, but it's a bit of a gamble with a high upfront sticker price. We don't know for sure if our solar panels would generate enough power to cover the heat pump through winter, or if we'd just end up stuck with a high electric bill instead of a high oil bill, and installing a heat pump comes with a host of specifics to figure out.

One workaround people do is to install a heat pump, but keep the baseboard heaters and oil as a backup for very cold winter days. In that case, though, we'd soon have to replace our boiler, so would it be worth the cost to replace the boiler and also install a heat pump? These are the kind of unknowns that come up, and it's a decision we're still working out.

5. Do you need more add-ons?

A decision that was easier for us was around getting an electric vehicle. As used EVs are becoming less expensive and gas prices are rising, many people are considering if it's worth making the trade. If you have solar panels that already generate decent energy, this can be a fairly straightforward decision.

To power your EV, you need a charger. There are many different options for how you go about installing a charger, including whether you choose to upgrade your breaker panel and what kind of charger to get.

You should consult with an electrician (or two or three) about this. While the EV tax credit expired last fall, there is a federal EV charger tax credit that accounts for 30% of hardware and installation costs, up to $1,000. It expires June 30, so we're acting fast to get this done.

If you're shopping now, these three top-rated home EV chargers on Amazon are worth a closer look.

But let's say you want to get an EV, but you don't think you produce enough electricity for it. In that case, you might wonder if it's worth it to add more panels, if your home has the room for them. You should discuss this with your solar company.

Keep in mind, though, that adding solar panels to an existing system is not as simple as it sounds. It often involves going through the full permit process and comes with a high cost.

One other add-on to consider is a battery. The Department of Energy suggests you find out if the system has a battery when you buy the house; like a generator, "this setup can help you keep the lights on if the power goes out," the department says. "If the system has a battery, find out how old it is, who installed it, and whether it is under warranty."

If it doesn't, you might consider whether it's worth adding on. This is a pertinent decision if you live in a place with frequent power outages, such as one prone to storms with above-ground power lines. But again, adding a battery comes with high upfront costs, so you should be honest with yourself about how much the peace of mind is worth to you.

Take your time, observe and react appropriately

Every time I've asked about switching to a heat pump or adding a battery, I get the same response: Wait a year and see what happens. You won't know everything about your solar panels and what they get you at the moment you buy a house, but over time, you'll be able to see how it goes.

Solar panels' effectiveness is determined by many factors, from how hot it gets in the summer, to how many people live in the house and how they use appliances, to how snowy a winter is. Even the sellers' experience with the same house won't necessarily mimic how your experience will be.

Many people took advantage of federal and state tax credits to install solar panels. While those federal credits are now expired, the solar panels are still there, so more people are facing the idea of buying a home that comes with solar panels. There are many factors involved, but so far, I've found it a valuable decision.

I'm still learning, so if you have any tips, feel free to reach out.

Related Content

• EV Charger Tax Credit: What You Need to Know for 2025 and 2026
• A Hidden Cost Driving Higher Electric Bills and Shorter Appliance Lifespans
• Heat Pumps vs Solar Panels: Which Saves You More on Energy Bills?

After briefly dipping earlier this year, average 30-year mortgage rates have jumped from roughly 5.99% to around 6.38% in a short window, according to Freddie Mac.

That's not a dramatic spike compared with the highs of 2023, but it's enough to rattle a housing market that was already on edge heading into the spring buying season.

For buyers, sellers and homeowners hoping to refinance, the latest move underscores a frustrating reality: The housing market is not following a smooth recovery path. Instead, it's reacting in real time to inflation concerns, global instability and shifting expectations about where interest rates are headed next.

Mortgage rates are moving higher again

The recent rise in mortgage rates reflects a broader shift in the economic outlook. Rates don't move in isolation. They're closely tied to the 10-year Treasury yield, which has been climbing as investors price in renewed inflation risks.

Those risks have been amplified by rising oil prices, ongoing geopolitical tensions and concerns about supply chain disruptions.

Even a modest move from 6.0% to 6.5% can have an outsize effect on buyer behavior. Housing affordability is already stretched, and many buyers are highly sensitive to changes in monthly payments. When rates move quickly, hesitation tends to follow.

What's pushing mortgage rates higher right now

Several forces are converging at once:

• Inflation expectations are rising again. Energy costs, shipping disruptions and broader supply pressures are feeding concerns that inflation might stay elevated longer than expected.
• Oil price volatility is back in focus. Higher energy costs ripple through the economy, influencing everything from construction materials to transportation.
• Geopolitical instability is adding uncertainty. Global conflicts and trade disruptions are pushing investors toward safer assets and driving bond market volatility that directly impacts mortgage rates.

It’s also important to keep in mind that mortgage interest rates don't move directly with Federal Reserve rate decisions. Instead, they reflect where investors think inflation and economic growth are heading over the long term.

The housing market was already softening before rates jumped

This latest mortgage interest rate increase is landing on a housing market that was already showing signs of strain.

Recent data from Redfin shows that 13.7% of pending home sales fell through in February, the highest cancellation rate since 2017 and up from 12.8% a year earlier. That is a clear signal that buyers were already struggling to follow through on purchases.

Affordability remains the central issue. Even when home prices stabilize or dip slightly, higher borrowing costs can quickly offset any savings. In other words, the math matters more than the listing price.

Buyers are gaining leverage — but it's complicated

There is one notable shift working in buyers' favor: Inventory is rising.

In many markets, there are now more sellers than buyers, creating a near-record gap. That imbalance is giving buyers more negotiating power than they've had in years.

In many markets, this is showing up as:

• More price reductions
• Seller concessions (closing costs, rate buydowns)
• Greater flexibility around inspections and contingencies

Here's the catch: Higher mortgage rates can erase those advantages.

Even if you negotiate a lower purchase price, your monthly payment might still be higher than it would have been a few months ago. That tension is what's keeping many buyers on the sidelines.

What higher rates mean for monthly payments

Small changes in rates can translate into meaningful differences in affordability. For example, on a typical mortgage, moving from 6.0% to 6.5% can increase both your monthly payment and raise total borrowing costs over time.

That roughly $130 monthly difference can translate into about $48,000 more in interest over the life of the loan.

This is why buyer behavior tends to shift quickly when rates move. It's not just psychological; it's also mathematical. When monthly payments cross a certain threshold, deals are more likely to fall apart as budgets get stretched and buyers pause their search.

Refinancing is getting pushed further out of reach

For homeowners, the current rate environment is keeping refinancing activity subdued. Most borrowers locked in mortgage rates below 4% or 5% in recent years. Compared with today's ~6.5% mortgage interest rates, refinancing into a higher rate doesn't make financial sense for most.

That said, there are still a few scenarios where refinancing might be worth considering:

• Cash-out refinancing to consolidate high-interest debt or fund home improvements
• Borrowers who purchased at peak rates (around 7% or higher) who might benefit from even a modest reduction

Still, for the majority of homeowners, refinancing is likely to remain on hold unless rates fall substantially.

What to watch next

Mortgage rates don't move randomly. They respond to broader economic signals, many of which are shifting right now.

Energy markets will be a key factor to watch, particularly oil prices. Rising energy costs can feed into inflation, which tends to push mortgage rates higher. At the same time, inflation reports such as the Consumer Price Index (CPI) and Personal Consumption Expenditures (PCE) will provide important clues about whether price pressures are easing or persisting.

Investors will also be closely tracking movements in the 10-year Treasury yield, which mortgage rates tend to follow. If yields continue to rise, borrowing costs for homebuyers are likely to remain elevated.

Within the housing market itself, trends in inventory, price reductions and buyer behavior (including cancellation rates and time on market) will help signal how much pressure higher rates are putting on demand.

Taken together, these factors suggest that mortgage rates might remain volatile in the near term, rather than settling into a steady downward trend.

What buyers and homeowners can do now

In a market like this, strategy matters more than timing perfection.

For buyers

Instead of trying to perfectly time the market, buyers might benefit from focusing on affordability and flexibility. This means prioritizing a monthly payment that fits comfortably within your budget, even if rates fluctuate.

It's also important to shop around and compare mortgage offers from multiple lenders, as interest rates and fees can vary more than usual in a volatile environment. Buyers might also have more room to negotiate right now, including asking sellers for closing cost assistance or temporary rate buydowns to lower upfront costs.

For homeowners

Homeowners should approach refinancing decisions carefully and avoid rushing into a new loan without a clear financial advantage. In many cases, keeping an existing low-rate mortgage will make more sense than refinancing at today's higher rates.

For those who need access to cash, alternatives such as a home equity line of credit (HELOC) or a structured repayment plan for other debts might be worth exploring instead.

For both

Both buyers and homeowners should be prepared for continued rate volatility and avoid making decisions based solely on short-term market movements.

The most important factor is how a housing decision fits into your broader financial picture, including your income stability, long-term plans and comfort with monthly costs.

If you're curious about today's rates, use the tool below, powered by Bankrate, to explore and compare some of today's top offers:

Related Content:

• 5 Ways to Shop for a Low Mortgage Rate
• The Best Week to Sell Your Home in 2026 Could Boost Your Price
• What to Watch for When Refinancing Your Home Mortgage

Field of Dreams is one of my favorite movies. The 1989 film, based on the novel Shoeless Joe by W.P. Kinsella, tells the story of fictional Iowa farmer Ray Kinsella, who hears a whisper in his cornfield: "If you build it, he will come."

Ray takes a leap of faith. He builds the field. And eventually, he does come.

It's a simple line. But it isn't really about baseball. It's about belief in the power of building — the idea that when you create something tangible in the real economy, people, capital and opportunity follow.

For most of our history, that idea felt deeply American. Today, it's worth asking a harder question: What happens when you can't build it?

Not because there's no demand. Not because there's no capital. But because the regulatory environment makes building so slow, uncertain and expensive, supply can't respond.

When that happens, they don't come. Not the workers. Not the young families. Not the businesses looking to expand. And over time, not the growth.

Nowhere is this more visible than in housing.

Guardrails have become roadblocks

We spend an extraordinary amount of time debating housing through the lens of interest rates, mortgage spreads, investor activity and demographics. Those factors matter, but they're cyclical. The deeper issue is structural: In many of our most productive regions, we simply do not build enough homes.

The U.S. housing market is short of millions of units relative to household formation over the past decade. That gap didn't emerge because Americans stopped wanting homes. It emerged because in many parts of the country, especially where job growth is strongest, adding supply has become a regulatory marathon.

While federal tax policy and financing conditions influence housing demand, land-use rules, zoning decisions and permitting timelines are overwhelmingly controlled at the state and local levels — meaning the binding constraint on national housing supply is often municipal.

Zoning restrictions, multilayered approvals, environmental reviews that stretch for years, litigation risk and discretionary public-comment processes have shifted housing from a construction problem to a permission problem.

Most of these rules began with reasonable goals: Protecting neighborhoods, preserving environmental standards, and ensuring safety and quality. But over time, layers accumulated. What were once guardrails became roadblocks.

The predictable result: Higher prices

In many metro areas, zoning effectively prohibits density near transit and employment centers. Even compliant projects can be delayed or derailed through extended review. The cost of time becomes the cost of capital, and in capital markets, time risk commands a premium. That premium ultimately shows up in the final sale price or rent.

Smaller builders often can't carry multi-year entitlement risk. Larger, better-capitalized developers can, but they must underwrite higher return thresholds to justify the uncertainty. The result is predictable: Less supply, concentrated at the top of the housing market.

Affordability never had a chance against that math.

Over the past 25 years, home prices nationally have far outpaced median household income. Land constraints and financing conditions play a role. But regulatory costs, both direct fees and indirect delays, are now embedded in development pro formas in many high-demand markets.

When entitlement risk stretches timelines, equity demands higher returns, and debt becomes more expensive to service. Prices adjust upward to compensate.

The bigger picture: National growth

Housing is not just shelter. It is economic infrastructure.

When supply is constrained, labor mobility declines. Workers can't easily move to an opportunity. Employers face tighter labor pools and wage pressure unrelated to productivity. Regions that should be engines of upward mobility risk becoming enclaves of incumbency.

We often discuss inequality in abstract terms. In housing, it's concrete. Limiting new supply in areas with the strongest job markets effectively rations access to those markets. Teachers, nurses and early-career professionals aren't being priced out because they lack ambition. They're being priced out because supply cannot respond to demand.

From a macroeconomic perspective, this matters.

Housing shortages contribute to rent inflation, which feeds directly into the Consumer Price Index and Personal Consumption Expenditures. They influence household formation, consumer spending and geographic labor allocation. Capital and opportunity gravitate toward regions where growth is permitted… not perpetually litigated. Over time, restrictive markets risk exporting both talent and investment.

Some cities have recognized this.

Austin, Texas, for example, has leaned into growth rather than resisting it. By allowing more multifamily housing and density, supply responded more quickly to demand. Prices surged during the pandemic migration wave, but subsequent construction helped ease pressure.

It's not perfect, but it demonstrates a fundamental principle: When supply can respond, volatility moderates. When supply is constrained by process, price swings intensify and affordability deteriorates.

This isn't an argument for eliminating standards. Safety codes matter. Environmental protections matter. Infrastructure planning matters. But predictability matters too.

Capital can price risk. What it struggles to price is indefinite delay. A clear two-year permitting timeline is very different from a five-to-seven-year discretionary process vulnerable to shifting political winds. The latter raises hurdle rates, reduces competition and skews projects toward the high end.

Complexity becomes a barrier to entry. And barriers to entry, while often framed as protective, frequently entrench scarcity.

The consequences compound over time. Regions that make building difficult risk slower population growth, weaker labor-force gains and diminished entrepreneurial dynamism. Regions that enable responsible, efficient building tend to attract human capital and long-term investment.

Housing may feel like a local zoning issue. It isn't. It's a national growth issue.

A stark choice

In Field of Dreams, the real risk wasn't building the baseball field. The risk was refusing to act — and watching the farm fail anyway. America faces a similar choice.

We can equate preservation with progress and treat every new project as a threat. Or we can acknowledge that an economy built on opportunity requires physical capacity, homes, infrastructure and the ability to expand where growth occurs.

If you can't build it, they can't come.

Not the workforce. Not the next generation of homeowners. Not the businesses deciding where to deploy capital.

Housing is not speculative tech. It is foundational infrastructure. And infrastructure only works if the rules allow it to be built within a reasonable time frame and at a predictable cost.

The lesson of Field of Dreams wasn't magic. It was courage — the willingness to build in the face of uncertainty.

We don't lack demand. We don't lack capital. In many places, we simply lack permission.

And until that changes, affordability will remain constrained, mobility will remain limited and growth will remain below its potential.

Sometimes the most pro-growth policy isn't complicated. It's clearing the infield.

Related Content

• Americans, Even With Higher Incomes, Are Feeling the Squeeze
• Want to Buy a Home With a Friend? Here's How to Prevent Legal Headaches
• Is the Housing Market's 'Lock-In Effect' Finally Starting to Ease?
• 5 Ways to Shop for a Low Mortgage Rate
• A Lesson From the School of Rock (and a Financial Adviser) as the Markets Go Around and Around

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

Spring often marks the start of the busiest season in the housing market, and many buyers are preparing to make a move this year. At the same time, the Federal Reserve's next policy meeting on March 17–18 has some prospective buyers watching mortgage rates closely.

If rates fall, borrowing could become slightly more affordable. If they hold steady, many buyers may still move forward with their plans anyway. The reality is that mortgage rates do not move in lockstep with the Fed, and trying to perfectly time the market can be frustrating.

Instead, the most productive step buyers can take now is to focus on financial preparation. Taking a few practical steps before the next Fed meeting can put you in a stronger position to qualify for a mortgage and act quickly when the right home appears. If you plan to buy this year, here are three moves worth making now.

1. Get preapproved and start talking to lenders

If you’re planning to buy a home this year, one of the most helpful things you can do early on is talk to lenders and get preapproved for a mortgage.

A mortgage preapproval means a lender reviews your credit, income and financial documents to determine how much you may be able to borrow. It’s more thorough than a prequalification, which is typically just an estimate based on information you provide.

Preapproval can give buyers a clearer sense of what they can realistically afford and what their monthly payment might look like under different interest rate scenarios. It can also strengthen your position when submitting an offer, since sellers often prefer buyers who already have financing lined up.

Starting conversations with lenders early also gives you the chance to compare loan options, fees and interest rates. You may discover programs you did not know existed or find that one lender offers better terms than another.

If mortgage rates move after the Fed meeting, having a lender relationship already in place can make it easier to move quickly or discuss options such as locking in a rate once you are under contract.

Use the tool below, powered by Bankrate, to search and compare some of today's top mortgage offers:

2. Strengthen your credit and reduce debt

Your credit profile plays a big role in determining the mortgage rate you'll qualify for. Even a small improvement in your credit score can make a noticeable difference in your interest rate as well as the total amount you pay over the life of the loan.

Because of this, it is worth strengthening your credit before applying for a mortgage. A few small adjustments can improve your credit profile and help position you for better loan terms.

Some practical steps include:

• Pay down credit card balances to lower your credit utilization
• Make every payment on time to protect your payment history
• Avoid opening new credit accounts before applying for a mortgage
• Hold off on large purchases that could increase your debt levels

Lenders will also look closely at your debt-to-income ratio, which measures how much of your monthly income goes toward paying existing debts such as credit cards, car loans and student loans. A lower ratio generally signals that you have enough income to comfortably take on a mortgage payment.

Because credit score updates and debt reductions can take time to appear on your credit report, it is helpful to start making these improvements well before you begin seriously house hunting.

Taking steps now can put you in a stronger position when you are ready to apply for a mortgage later this year.

3. Prepare your finances for the mortgage process

Buying a home involves more than just the monthly mortgage payment. Buyers should also plan ahead for upfront costs and make sure their finances remain stable throughout the mortgage process.

Most home purchases require both a down payment and closing costs, which typically range from about 2% to 6% of the purchase price. These expenses can include lender fees, appraisals, title services and other costs associated with finalizing the loan.

Down payment requirements vary depending on the type of loan. Some conventional loans allow buyers to put down as little as 3% to 5%, while certain government-backed loans may allow even lower down payments for qualified borrowers.

It is also helpful to have cash reserves set aside after closing. Many lenders prefer to see that buyers still have savings available in case unexpected expenses arise after moving into the home.

During the mortgage process, it is generally best to keep your finances steady. That means avoiding large purchases, opening new credit accounts or making sudden job changes that could affect your income documentation.

Gathering documents like recent pay stubs, tax returns and bank statements ahead of time can also help make the application process smoother once you are ready to move forward.

Preparation matters more than timing

It's natural to watch the Federal Reserve and hope that mortgage rates might move in your favor. But trying to perfectly predict rate changes can be difficult, and the housing market doesn't always wait.

For many buyers, the better strategy is to focus on becoming financially ready. Getting preapproved, improving your credit and organizing your finances now can make the entire homebuying process much smoother. And when the right home appears, whether rates move after the next Fed meeting or not, being prepared could make all the difference.

Related Content:

• Applying for a Mortgage Loan? Here's What to Expect
• Find the Best 30-Year Mortgage Rates Today
• Where is the best place to save for a down payment?

Mortgage rates are still a lot higher than they were just a few years ago, and that’s making both buyers and sellers look for creative ways to make the numbers work. One option getting fresh attention in 2026 is the assumable mortgage.

It’s a little-known feature that could allow a buyer to take over a seller’s existing low-rate home loan instead of applying for a new one. In the right situation, that could mean locking in a mortgage rate closer to 3% when new loans are hovering around 6% or more. That kind of difference can significantly change monthly payments and long-term affordability.

While assumable mortgages aren't common, they're worth understanding, especially if you plan to buy or sell a home this spring and want to be prepared if the topic comes up.

So what exactly is an assumable mortgage?

At its core, an assumable mortgage is pretty simple: instead of getting a brand-new home loan, the buyer takes over the seller's existing mortgage.

That means the buyer assumes whatever is left on the loan like the interest rate, remaining balance, repayment timeline and terms. If the seller locked in a below-market rate a few years ago, the buyer may be able to keep that same rate today.

So rather than starting over with a new 30-year mortgage at current market rates, the buyer essentially steps into the seller's loan. It can feel a bit like inheriting a better deal from a different housing market era, but it still requires lender approval and careful planning.

In practice, finding a home with an assumable mortgage — and a seller willing to offer it — can take extra effort.

Why assumable mortgages matter right now

Assumable mortgages are getting renewed attention because of where interest rates are today.

Many homeowners purchased or refinanced when mortgage rates were between 2% and 4%. In early 2026, mortgage rates nationally are closer to the mid-6% range. That gap can make a noticeable difference in monthly payments.

For example, taking over a loan with a 3% rate instead of getting a new mortgage at 6.5% could save a buyer hundreds of dollars each month. Over time, that could mean tens of thousands in interest savings. One key detail: the loan term doesn't reset, so a mortgage with 25 years left stays a 25-year loan.

In a market where affordability is still tight, even modest payment reductions can help buyers qualify for a home or simply feel more comfortable with the long-term cost.

For sellers, offering a low-rate assumable mortgage can make a listing more attractive in a high-rate market and potentially help it stand out.

Which loans can be assumed?

Not every mortgage can be assumed, so this is where things can get a little more specific.

Most assumable loans are government-backed mortgages, including:

• FHA loans
• VA loans
• USDA loans

These programs typically allow assumptions, though buyers still need to qualify with the lender.

Most conventional mortgages, on the other hand, aren't assumable unless the lender specifically permits it and that's not very common. As a result, assumable mortgages remain more of a niche option than a mainstream financing strategy.

How the assumption process works

While the idea sounds straightforward, the process of assuming a mortgage involves a few extra steps.

Here's the general flow:

1. Buyer and seller agree on the purchase.

Both parties decide to move forward with a mortgage assumption as part of the sale.

2. Buyer applies with the current lender.

The buyer must go through a qualification process similar to applying for a new mortgage.

3. Lender reviews finances.

Credit score, income, debt and employment are evaluated to confirm the buyer can handle the loan.

4. The equity gap gets addressed.

If the home is worth more than what’s left on the mortgage — which is often the case — the buyer must cover the difference, sometimes with a large upfront payment or a second loan at today's higher rates.

5. Closing and transfer.

Once approved, the mortgage transfers to the buyer and the home sale is finalized.

The timeline can vary depending on the lender. Some are set up to handle assumptions smoothly, while others may take longer, so patience can be required. In some cases, assumptions can take longer than a traditional closing, depending on how quickly the lender processes the request.

When an assumable mortgage can make sense

Assumable mortgages tend to shine when a few key factors line up.

They can be especially appealing when:

• There’s a big gap between the existing mortgage rate and today’s rates
• The lower payment helps the buyer qualify more easily
• The buyer plans to stay in the home for many years
• The seller hasn’t built up too much equity yet
• The buyer has enough cash to cover upfront costs
• The loan is FHA or VA, which are commonly assumable

Over time, locking in a much lower rate can lead to meaningful savings. For buyers planning to stay put long term, the math often looks better the longer they hold the loan.

When the numbers don’t work as well

Even with a great interest rate, assumable mortgages aren't always the best move.

Here are a few situations where they may be less appealing:

• The seller has built significant equity, requiring a large upfront payment
• The buyer needs a second mortgage at today's higher rates
• A lot of cash gets tied up in the purchase
• Assumption fees and paperwork slow things down
• Sellers prefer faster offers in competitive markets

Sometimes a traditional mortgage, even with a higher rate, can be simpler or offer more flexibility.

Use the tool below to search for some of today's top mortgage offers, powered by Bankrate:

Watch for the less obvious costs

A low interest rate can be appealing, but buyers still need to look at the full picture.

Some assumable loans come with extra considerations, such as:

• Ongoing mortgage insurance: If the loan is an FHA mortgage, it may come with a mortgage insurance premium (MIP) that lasts for the life of the loan. That monthly cost can increase the total payment and should be weighed against the benefit of the lower interest rate.
• VA entitlement considerations: If a VA loan is assumed by a non-VA buyer, the seller’s VA entitlement may remain tied to the property. That can limit their ability to use a VA loan again until the mortgage is paid off or refinanced. In some cases, this can be avoided if another eligible veteran assumes the loan and substitutes their entitlement.
• Assumption and processing fees: Lenders typically charge administrative and assumption fees to transfer the loan. While often lower than traditional closing costs, they can still total several hundred to a few thousand dollars and should be factored into the overall deal.
• Escrow and servicing differences: Assuming a mortgage means taking over the lender’s existing servicing setup, including escrow requirements for taxes and insurance.
• Second financing costs: If the home's value exceeds the remaining loan balance, buyers may need a second loan or a large cash payment to cover the difference. That additional financing will likely come at today's higher interest rates, reducing some of the assumed loan's savings.
• Potential appraisal or repair requirements: Some lenders may still require a home appraisal or certain property conditions to be met before approving an assumption. Any required repairs or updates could add to the buyer's upfront costs depending on how the contract is negotiated.

These details don't necessarily make an assumable mortgage a bad deal, but they're worth understanding before moving forward.

Compare all your options first

Before committing to an assumable mortgage, it helps to run the numbers side by side with a traditional loan.

Look at:

• Monthly payments under each option
• Total interest paid over five, 10 and 20 years
• Cash needed at closing
• Flexibility to refinance later
• Overall long-term affordability

In some cases, a new 30-year mortgage could still offer lower monthly payments, especially if the assumed loan has a shorter remaining term or high insurance costs.

It’s a niche tool, not a shortcut

Assumable mortgages aren't for everyone, and they're not a magic fix for affordability challenges. But in the right situation, they can be a powerful tool.

They tend to work best for buyers who are financially prepared, planning to stay in the home long term and are comfortable navigating a slightly more complex process. For sellers, having an assumable low-rate mortgage can help a home stand out in a higher-rate market.

Even if you don’t end up using one, understanding how assumable mortgages work can help you ask better questions, or answer them, as the spring housing market gets underway.

Related Content:

• Why a 15-Year Mortgage Could Be the Key to a Larger Nest Egg
• 5 Ways to Shop for a Low Mortgage Rate
• We Retired at 62 With $6.1 Million. My Wife Wants to Make Large Donations, but I Want to Travel and Buy a Lake House.

Rising home prices coupled with the affordability crisis have created a unique need to find alternative solutions for homeownership.

Nearly 15% of Americans have co-purchased a home with a person other than their romantic partner, and an additional 48% would consider it, according to a survey by JW Surety Bonds.

Co-buyers account for 26.7% of all home purchases, and 53 million people live in co-owned homes.

Rising home prices and tight markets have resulted in an increased number of unrelated people acquiring residential real estate. These people may include friends, co-workers or business partners. This group also includes unmarried romantic partners.

According to the survey, nearly 25% of respondents who bought a home with a non-romantic partner said the purchase would have been unaffordable on their own.

What to do to protect yourself: A co-tenancy agreement

While co-buying real estate provides an otherwise unavailable opportunity, it also requires additional planning to protect the buyers from associated legal risks.

Co-ownership of real property, particularly by individuals outside of their immediate family (spouse/parent/child), should be covered by a co-tenancy agreement. This also applies to vacation homes owned by multiple family groups.

The co-tenancy agreement should include, at a minimum, clearly defined ownership percentages, the financial responsibilities of each co-owner, rights of use, the intended use of the property and exit strategies for the property.

The title should clearly define each co-tenant's ownership percentage.

Co-tenancy without an agreement typically would not grant survivorship rights for the surviving co-owner to own the entire property. At death, a co-tenant's interest would pass to the deceased co-tenant's heirs or beneficiaries.

To ensure the survivorship rights of each co-owner, the intent should be reflected on the title and in the joint tenancy agreement.

What to include in a co-tenancy agreement

Here's a closer look at what you should ensure is included in your co-tenancy agreement:

Financial obligations

Each co-owner's share of rental or other income should be detailed, as well as each co-owner's responsibility to pay the mortgage, insurance, utilities, maintenance, capital improvements and property taxes.

Consideration should be given as to what the legal result is if either co-owner fails to satisfy their share of those costs.

Occupancy and usage rights

The agreement should detail who, if anyone, beyond the co-owners may live in or otherwise use the property.

Procedures to identify or select tenants, rental or subletting rights and any restrictions must be clearly identified to prevent disputes later.

Management and decision-making

The co-owners should define how repairs, renovations and major decisions will be made. If the ownership is 50/50 or an even split such that a deadlock might be possible, a tiebreaker, such as a professional on whom both parties agree, should be identified to help prevent formal litigation.

Liability allocation

The agreement should allocate liability between the co-owners as well as identify hold-harmless provisions, lawsuits, creditor claims and other legal responsibilities. The agreement may not protect either co-owner from third-party claims.

However, such an agreement may provide a basis to allocate liability between co-owners and a contractual right to indemnification. These provisions should be clearly stated.

Dispute resolution considerations

Consideration should be given to mandatory prelitigation steps that may be required to prevent formal litigation, such as mediation.

Exit strategies

The agreement should address situations where one co-owner wants out of the relationship. Buyout or right-of-first-refusal provisions are common.

The agreement should detail how the interest of the exiting partner will be valued and whether valuation discounts are appropriate.

Death or incapacity

The agreement should detail how the property will be managed and decisions made in the event of the death or incapacity of either co-owner. This may create a need for estate planning with a limited liability company (LLC) for ownership.

An LLC can help ensure that management continues despite the death or incapacity of either co-owner. An LLC may provide greater asset protection for the co-owners.

Attention to a durable power of attorney and a trust can avoid formal probate or court filings in the event of the death or incapacity of either co-owner.

If an LLC is used, the operating agreement should cover the terms described above for co-tenancy agreements to prevent disputes.

Alternatively, a revocable trust may also be appropriate to avoid probate filings upon the death of either co-owner.

Related Content

• Why More Retirees Are Taking on Tenants
• Don't Regret Buying a Home: An Expert Guide to Navigating Today's Tough Housing Market
• Before Buying Your First Home, Get These Three Ducks in a Row
• Take It From a Tax Attorney: This Is a Magic Multimillion-Dollar Tax-Saving Strategy
• Think a Repeal of the Estate Tax Wouldn't Affect You? Wrong

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

Question: My partner and I plan to buy a home within the next year or two and are saving money for a down payment. Since we want to keep this separate from all other banking, what's the best account to store it in?

Answer: Having a dedicated account for larger savings goals is wise because it accomplishes two things: it provides a clear view of your progress toward the goal, and it reduces the temptation to spend that money impulsively, helping you stay on track.

I'll break down the best savings account to use in this scenario, as well as a viable alternative for those looking to buy a home a little further down the road.

A smart choice to maximize gains with flexibility

Since you plan to buy in the next year or two, liquidity will be vital, especially as you approach your goal. If you're only a month or two off and find a home you fall in love with, you'll want to capitalize. As such, the best high-yield savings accounts are a smart solution.

Why? Many online banks offer higher APYs and minimal fees. It allows you to reach your savings goals faster than brick-and-mortar banks, where lower APYs and higher fees await.

A smart approach is to open a savings account with a bank separate from your checking account. On paydays, set up automatic transfers from checking to savings, and watch as you approach your savings goals.

You can use this Bankrate tool to find and compare top savings accounts for your needs:

The only thing to consider with this approach is that returns could dwindle as the year goes on. The Federal Reserve didn't cut rates at its January meeting, but many economists project at least one or two rate cuts later this year, which could impact earnings. Keep in mind that high-yield savings accounts have variable interest rates, and these are subject to change at any time.

However, I also monitor accounts semiweekly, and I found that rates for some high-yield savings accounts haven't changed much. Newtek Bank continues to offer a higher APY of 4.20%, making it a consistent option to consider.

Meanwhile, what happens if you're just starting and need more time to save? Does a high-yield savings account still make sense?

A long-term alternative that keeps you on course

If you aim to buy a home in the next three to five years, you're less concerned about liquidity and more focused on finding a savings solution that maximizes gains without the risk. In this instance, you could still use a high-yield savings account or consider a certificate of deposit.

A CD is a great option for several reasons:

• Flexible terms
• They offer guaranteed returns
• CDs keep you on course towards achieving your goals, since they have steep early termination fees
• They have fixed interest rates, so once you lock one in, any Fed rate cuts won't affect future earnings

How it works: You deposit money into the account for a term. Terms range from three months to five years. If you need your money before the term expires, you'll pay an early termination fee.

This option works best for midrange savers who want to tuck away some money, forget about it and earn a guaranteed return that coincides with when they need the money to buy a home. Use this Bankrate tool to find the best CD rates for your needs:

Another way to use CDs is by laddering them. With this approach, you open a series of CDs with varying lengths. Start with what you have, targeting a CD term that aligns with when you want to buy. As you continue to save money on top of your initial deposit, you can open other CDs to help you build momentum towards achieving your goals.

Down payment savings dos and don'ts

Here are a few things to consider as you build your savings plan:

On the budgeting end, one app I found that can help you stay on course is Monarch, which lets you set personal goals. After linking your bank accounts, you can see how close you are to achieving your goals.

If you're in a relationship, it allows both partners to be transparent about finances and see if goals remain on course even if you maintain separate bank accounts.

Home ownership is attainable with the right savings solution

Saving for a down payment requires discipline and patience. By using one of these strategies, you can tailor a solution that works for your goals while minimizing risk and maximizing gains. Just remember to include closing costs, moving expenses, utility deposits and any initial repairs into your budget, so you don't have to drain your emergency savings to pay for all costs.

Related content

• I Made Some Mistakes Buying My First Home. Here's How I'm Making Sure It Doesn't Happen Again
• What's the Best Time of the Year to Buy a House?
• Mortgage Calculator: Estimate Your Monthly Payment Easily
• Best No-Fee High-Yield Savings Rates: February 2026

For years, the snowbird lifestyle felt like the ultimate retirement reward: trading icy sidewalks for palm trees, spending winters in the sun and returning north when spring arrived. Many retirees turned that dream into a seasonal routine by purchasing second homes in warm-weather destinations.

But lately, that routine has become more expensive and complicated. Rising insurance premiums, higher property taxes, maintenance costs and travel expenses are forcing many seasonal residents to reconsider whether owning a winter home still makes financial sense.

Snowbirds still want sunshine. Increasingly, though, retirees are prioritizing flexibility, shortening seasonal stays, renting instead of owning or exploring new destinations rather than tying up savings in a property used only part of the year.

What the traditional snowbird lifestyle looked like

For generations, snowbirds, primarily retirees from colder northern states and Canada, migrated south each winter. Many purchased second homes or condos and spent three to six months there each winter.

This pattern created entire seasonal economies. Snowbirds boosted demand for:

• Vacation and retirement housing
• Restaurants and retail
• Healthcare and service industries
• Local tourism and recreation

In states like Florida and Arizona, seasonal residents became an essential part of the housing market and local economies. Condo developments, 55+ communities and RV parks were built around predictable winter demand.

Ownership was often seen as both a lifestyle and a financial decision. Property values in popular retirement destinations rose steadily for decades, reinforcing the idea that a winter home could double as an investment.

That equation is now shifting.

The rising cost of owning a second home

The biggest shift snowbirds are feeling is simple: it’s getting much more expensive to maintain a second property.

Insurance spikes in climate-risk regions

Insurance has quickly become one of the largest and most unpredictable expenses for seasonal homeowners. In many coastal and hurricane-prone areas, home insurance premiums have surged over the past few years as insurers adjust to higher climate risks and costly disasters.

Some homeowners have seen premiums double, or more. Others are facing limited coverage options or being pushed into state-backed insurance plans that often come with higher costs, less protection and stricter terms. For retirees living on fixed incomes, these sudden increases can throw off carefully planned budgets.

HOA, maintenance and property tax increases

Insurance isn’t the only expense climbing. Many snowbirds are also dealing with:

• Rising HOA fees as buildings face higher repair and reserve costs
• Property tax increases tied to pandemic-era home price growth
• Higher maintenance and repair costs due to inflation and labor shortages

Even routine upkeep like landscaping, cleaning, pest control and repairs costs more than it did just a few years ago. What used to be a manageable annual expense can now rival the cost of renting a winter property outright.

Currency and travel pressures

For international snowbirds, especially Canadians, exchange rates and travel costs add another layer of complexity. A strong U.S. dollar can make everything from property taxes to groceries more expensive, while insurance and healthcare requirements for extended stays have also grown more complicated.

Some longtime seasonal residents are responding by selling U.S. properties or spending fewer months there each year.

Why insurance is becoming a tipping point

Of all the rising costs, insurance is increasingly pushing retirees to rethink second-home ownership.

Climate risk is driving pricing

Insurers are relying heavily on detailed risk models that factor in hurricane exposure, flooding, wildfires and other climate-related threats. Properties near coastlines or in higher-risk zones can carry significantly higher premiums, and those costs can rise quickly after major disasters.

For snowbirds who use their homes only part of the year, paying rising insurance costs on a property that often sits empty can be difficult to justify.

Coverage is harder to find

In some regions, the challenge extends beyond cost to availability. Several insurers have reduced or eliminated coverage in high-risk states, leaving homeowners with fewer options.

Seasonal properties can be particularly difficult to insure because extended vacancies increase the likelihood of undetected damage. Policies may require additional monitoring, routine inspections or higher deductibles, adding to the overall cost and complexity of maintaining a second home.

These insurance pressures are beginning to influence where retirees choose to spend winters. Some traditional snowbird hotspots are seeing softer demand from buyers concerned about long-term climate risk and ownership costs.

Retirement geography is shifting

Interest is gradually expanding toward inland or lower-risk destinations, where insurance availability and property expenses may be more predictable.

Several emerging snowbird destinations are attracting retirees looking for a balance between warm weather and more manageable ownership costs. Industry analyses of active-adult communities, including research from 55places, highlight growing interest in affordable 55+ developments across the Sun Belt and secondary retirement markets.

Inland Florida cities such as Ocala and Gainesville are drawing attention because they offer access to traditional retirement hubs while sitting farther from hurricane-prone coastlines.

Parts of central Texas, including San Antonio and surrounding Hill Country communities, are also gaining interest for relatively affordable housing and growing popularity among seasonal residents. Snowbird destination guides note that southern Texas remains a major snowbird region and is often more affordable than other warm-weather destinations.

In Arizona, retirees continue to gravitate toward areas outside Phoenix’s most expensive suburbs, including communities in the Tucson region, where housing and property taxes may be more accessible.

Beyond traditional Sun Belt hotspots, some snowbirds are expanding their search to Southeastern cities like Greenville, South Carolina, and parts of coastal Alabama. According to migration trends from the National Association of REALTORS®, Alabama is among the states experiencing inbound moves, driven in part by affordability and lifestyle factors attractive to retirees.

These secondary and inland markets often provide milder winters and lower ownership costs than beachfront communities while offering many of the same lifestyle amenities retirees seek, including active adult communities, outdoor recreation and social retirement networks.

The real estate ripple effects

As more snowbirds reconsider ownership, local housing markets are starting to feel the impact.

More listings in some seasonal markets

In some retirement communities, there’s been a noticeable uptick in seasonal homes hitting the market. According to Redfin data, the supply of homes for sale in vacation destinations rose 17% year over year, outpacing inventory growth in many non-seasonal markets.

That doesn’t mean demand for warm-weather living has disappeared (far from it). But buyers are becoming more cautious and price-sensitive, especially when factoring in insurance and long-term maintenance expenses.

Rentals and flexible options are gaining popularity

At the same time, renting for the winter is becoming more appealing. Seasonal rentals allow retirees to enjoy warm weather without taking on year-round ownership costs or worrying about surprise repairs and insurance hikes.

Many snowbirds are realizing that renting for three or four months can cost less than maintaining a second home all year, and it offers the freedom to try new destinations without being tied down.

Developers and property managers are responding by offering more furnished seasonal rentals, extended-stay options and flexible lease terms geared toward retirees.

Snowbirds aren’t disappearing — they’re adapting

The desire to escape cold winters hasn’t gone anywhere. If anything, retirees still value the lifestyle and social connections that come with seasonal migration. What’s changing is how they make it work financially.

Renting instead of owning

More retirees are choosing to rent rather than buy. This approach keeps their money accessible for travel, healthcare or everyday living expenses instead of tying it up in a property that may be costly to maintain.

Renting also allows snowbirds to adjust plans year by year, whether that means staying longer, leaving earlier or trying a new location.

Exploring new destinations

Some seasonal residents are expanding their horizons beyond traditional hotspots. Lower-cost domestic destinations, and even some international options, can offer warm weather without the same level of insurance and housing expenses.

Shorter stays and more flexibility

Rather than spending half the year away, some retirees are shortening winter trips to manage costs. A few months in the sun can still provide the lifestyle boost they want without the full financial commitment of long seasonal stays.

Flexibility has become the new priority.

What retirees should consider before buying a snowbird property

For retirees still dreaming of a winter home, careful planning is more important than ever.

• Understand the true cost of ownership: It’s easy to focus on the purchase price, but the ongoing costs matter just as much if not more. Running the numbers honestly can help determine whether buying still makes sense compared with renting.
• Check insurance early: Before committing to a purchase, it’s essential to confirm that adequate insurance is available and affordable. Getting quotes and understanding potential future increases can prevent unpleasant surprises later.
• Have an exit plan: Markets change, and so do personal circumstances. Retirees should think about how easy it would be to sell the property if needed and whether it could generate rental income in the meantime.

Having a clear exit strategy helps preserve financial flexibility.

A new era of snowbird living

The classic image of retirees owning a winter getaway and returning every year isn’t disappearing, but it is evolving.

Rising insurance premiums, higher housing costs and broader economic uncertainty are pushing many to rethink long-standing habits. Instead of automatically buying second homes, today’s snowbirds are weighing flexibility, liquidity and long-term risk more carefully.

Warm winters are still very much part of the retirement dream. The difference is that more retirees are finding new, more adaptable ways to make that dream work.

Has it been a while since you've shopped around for home insurance? Use the tool below to explore and compare some of today's top home insurance offers, powered by Bankrate:

Related Content:

• 5 Benefits of Slow Travel in Retirement
• The True Cost of Owning a Second Home: What to Consider Before You Buy A Vacation Home
• Design Your Second Home to Pay for Itself

For homebuyers struggling with today's higher mortgage rates, new construction communities are suddenly full of tempting offers: 4% mortgage rates when the market is closer to 6% or 7%, tens of thousands of dollars in closing cost credits, or "free" upgrades thrown in at signing.

These incentives aren't necessarily a trick, and they're not all bait and switch. But they're also not free money. Builders are using financial carrots strategically, and buyers who don’t understand how those deals are structured can end up paying more over time.

Here's how builder mortgage incentives work, where the catches tend to be and how to decide whether a deal makes sense for your budget.

Why builders are leaning on incentives instead of price cuts

Many large homebuilders are sitting on completed or near-completed inventory at a time that affordability is stretched and buyers are highly rate-sensitive. Instead of slashing sticker prices, which can upset previous buyers, hurt appraisals and reset neighborhood comps, builders often prefer incentives.

Mortgage rate buydowns and closing cost credits allow builders to advertise lower monthly payments without officially reducing the home's base price. That protects perceived value while helping buyers qualify.

For buyers, this can feel like a win-win. But the structure of those incentives matters more than the headline number.

What builder credits and rate buydowns look like

Builder incentives typically fall into a few common buckets, and they're often bundled together.

Temporary and permanent rate buydowns

A temporary buydown lowers your interest rate for the first one to three years. For example, a 2-1 buydown might reduce your rate by 2% in year one and 1% in year two before reverting to the full rate.

A permanent buydown reduces the rate for the entire life of the loan, usually by paying upfront points (a percentage of the loan amount paid at closing to lower the interest rate).

Closing cost credits

Builders might offer credits to cover lender fees, title insurance, escrow or prepaid taxes. This can significantly reduce the cash you need at closing, especially for first-time buyers.

Free upgrades or appliance packages

Instead of cutting prices, builders might include premium flooring, countertops, landscaping or appliances. These perks can feel valuable, but they don't lower your mortgage payment.

Preferred lender requirements

Most of the best incentives are tied to using the builder's preferred lender. If you bring your own lender, the offer often shrinks or disappears.

Use the tool below, powered by Bankrate, to search some of today's top mortgage offers:

The catch: Where buyers might pay more

Builder incentives usually come with trade-offs, and they're not always obvious upfront. Here are some things to consider.

Higher home prices to offset incentives

In some cases, the cost of the rate buydown or credit is baked into the home price. You might get a lower rate, but you’re financing a higher balance.

Limited lender choice

Preferred lenders can be convenient, but they might not offer the best overall deal. Fees, rate structures and loan terms can differ from outside lenders.

Short-term buydowns that expire

Temporary rate buydowns can lower payments now, but buyers need to be comfortable with the higher payment once the buydown ends.

Less room to negotiate base price

Builders often treat incentives as the negotiation lever, not price. That can limit flexibility if you’d rather reduce the purchase price instead.

When builder incentives can make sense

Despite the trade-offs, builder incentives aren't inherently bad, and in the right situation, they can be helpful. They might work well for buyers planning to refinance if rates fall and who can comfortably afford the long-term payment.

They can also help buyers who are cash-constrained at closing, allowing them to preserve emergency savings instead of draining accounts for upfront costs.

In markets with tight resale inventory, incentives can also make new construction more competitive when existing homes are scarce or overpriced.

When buyers should be cautious

There are also scenarios in which builder deals deserve extra scrutiny.

One of the biggest red flags is a deal that only works if you refinance quickly. Temporary rate buydowns can make payments feel manageable today, but if mortgage rates stay higher longer than expected, buyers could find themselves locked into a payment they didn't fully plan for once the buy down expires.

Another caution sign is pricing that looks out of sync with comparable homes (comps). If a new build is priced significantly higher than similar resale properties in the area, even after incentives, the buyer might be financing perks rather than value. That can matter later when it’s time to refinance, sell or tap home equity.

Buyers should also be wary of inflexible lender requirements. Preferred lenders aren't inherently bad, but they can limit transparency. If rate sheets, fees or annual percentage rate (APR) comparisons are difficult to obtain or if you’re discouraged from shopping around, that’s a signal to slow down and ask more questions.

Finally, pay close attention to how future payments are explained. If a sales pitch emphasizes the initial monthly payment without clearly walking you through the full payment schedule, including taxes, insurance and post-buydown rates, buyers risk underestimating their long-term housing costs.

How to evaluate a builder deal the smart way

The safest way to assess any builder incentive is to zoom out and focus on total cost. Compare the APR, not just the advertised interest rate, to capture fees and buydown costs.

Get several lender quotes, even if you plan to use the preferred lender. This gives you leverage and context. Ask how incentives might affect resale value and appraisals, especially if the home is priced above nearby comps.

Most important, you'll want to run the numbers on your total cost over time, including what your payment looks like after any buydown expires. A deal that looks attractive upfront might not be the most affordable over time, and clarity now can prevent financial strain later.

Making sense of today’s builder incentives

Builder mortgage incentives can be a useful bridge in a high-rate environment, but they’re not a substitute for careful math. These offers are designed to move inventory and protect pricing, not necessarily to minimize your long-term costs.

For buyers willing to slow down, understand the details and compare offers carefully, builder incentives can be easier to navigate and less likely to lead to unexpected costs later.

Related Content:

• Fixed vs. Adjustable-Rate Mortgages: Which Is Better for Buying a Home?
• Mortgage Calculator: Estimate Your Monthly Payment Easily
• How a Home Equity Line of Credit (HELOC) Works

Buying a house is a goal for many Americans, but achieving that goal is becoming increasingly difficult. As housing costs climb faster than paychecks, many buyers wonder how far their money will really go.

As home prices and interest rates rise, the income needed for a house has also increased. The median sale price of homes sold in the United States in March was $408,800, according to the National Association of Realtors.

Buying more house than you can afford is an expensive and stressful mistake, so it’s essential to do some calculations before you start shopping for a home. As the price for even modest homes reaches the $500,000 range, let’s look at just how much income you need to buy a $500,000 home.

What income realistically buys a $500,000 house

The income needed to buy a $500,000 home will depend on many factors, including the cost of your home insurance, the size of your down payment, your interest rate and the length of your mortgage.

The U.S. Department of Housing and Urban Development defines affordable housing as paying no more than 30% of your gross income toward your housing costs, including utilities.

Using that general rule, let’s break down a few different scenarios with the Fannie Mae mortgage calculator.

Buying a $500,000 home with 10% down:

• Home price: $500,000
• Down payment: $50,000 (10%)
• Loan amount: $450,000
• Interest rate: 6.5%
• Mortgage term: 30-year fixed
• Private mortgage insurance (PMI): $165
• Taxes and insurance: $833
• Principal and interest: $2,844
• Total monthly mortgage payment: $3,842

Let’s assume that the home’s utilities average $200 per month, meaning your total home’s monthly payments are $4,042.

In this scenario, you would need to earn $13,473.33 per month, or about $161,680 per year, to afford the home.

If you save up more money for a larger down payment, the figures change, since your loan balance decreases and you won’t need to pay for private mortgage insurance.

Buying a $500,000 home with 20% down:

• Home price: $500,000
• Down payment: $100,000 (20%)
• Loan amount: $400,000
• Interest rate: 6.5%
• Mortgage term: 30-year fixed
• PMI: $0
• Taxes and insurance: $833
• Principal and interest: $2,528
• Total monthly mortgage payment: $3,466

Once we add in $200 for utilities, your monthly payment is $3,666.

To afford this mortgage, your monthly income would need to be $12,220, or you'd need a salary of about $146,640.

Curious about today's mortgage interest rates? Explore and compare some of today's top offers with the tool below:

Why income isn't the whole story: Other factors that affect affordability

In addition to considering your income, you’ll need to weigh how other factors can affect a home’s affordability:

• Debt load: Your existing debts, including student loans, car loans and credit card payments, impact your debt-to-income ratio. If your debt-to-income ratio is high, mortgage lenders assume more risk in lending to you and will often charge you a higher interest rate because of that risk.
• Down payment and savings: Making a larger down payment often helps you qualify for a lower interest rate because you’re less likely to default on your mortgage, reducing the lender’s risk. Saving up a larger down payment will also reduce your mortgage principal, so you’ll ultimately pay less in interest.
• Local property taxes: Local property taxes vary. If you live in an area where property taxes are high, you’ll need a higher income to afford those taxes and your home.
• Homeowners insurance: Your home’s value partially affects your homeowner’s insurance rates, but other factors, such as the home’s location, your policy limits, discounts you qualify for and even your past history of filing homeowners insurance claims will all affect your rates.
• HOA fees: If your home is part of an HOA, you’ll also need to budget for monthly HOA fees, which can vary significantly.
• Maintenance: Homes require ongoing maintenance, and those costs can quickly add up. State Farm recommends setting aside 1% to 4% of your home’s value each year to cover maintenance. Using that general rule, you would need to set aside $5,000 to $20,000 each year for maintenance on a $500,000 house.
• Unexpected expenses: Owning a home comes with many unexpected expenses. Pest infestations or an emergency repair can cost thousands of dollars, so it’s important to have an emergency fund set aside to cover these costs.
• Interest rates and loan type: Even small changes to your interest rates and loan type can significantly affect your monthly payment. If you have a variable interest rate mortgage, your payments could fluctuate as the interest rate changes. A fixed interest rate mortgage provides you with more predictability, but if interest rates drop during your mortgage term, you’ll need to refinance your home to take advantage of those lower rates.  

How to get the clearest affordability picture before you buy

Before you buy a home, it’s essential to make sure you can really afford it. Start by getting pre-approved for a mortgage to make sure that you’re likely to be able to get the loan amount you’ll need.

Just because you’re pre-approved for a mortgage doesn’t mean you can necessarily afford a mortgage of that amount, though. Consider how you’ll pay for future expenses, such as repairs, homeowners' insurance increases and potential changes in your interest rate.

Think about your long-term financial goals, too. For example, if you know you’ll be helping pay for your kids’ college educations in eight or nine years, you’ll want to make sure you don’t buy a home that’s so expensive, you’re not able to save toward that financial goal.

What it takes to afford a $500,000 home

Using the 30% rule as a guide, most buyers would need an annual income from $146,640 to $161,680 to comfortably afford a $500,000 home, depending on their down payments and monthly expenses.

While these figures can serve as a helpful benchmark, your true affordability depends on your debt load, savings, interest rate and long-term financial goals. Taking time to understand the full picture can help you make a confident, sustainable homebuying decision.

Related Content

• Find the Best 30-Year Mortgage Rates Today
• Mortgage Calculator: Estimate Your Monthly Payment Easily
• Should You Refinance Your Mortgage Now That the Fed Just Cut Rates?

Until recently, lenders that sell mortgages to Fannie Mae and Freddie Mac, the government-sponsored enterprises that guarantee about half of U.S. mortgage debt, could review credit scores only from FICO to help determine whether an applicant qualifies for a loan. But now those lenders also have the option of using VantageScore, a competing score owned by the three major credit-reporting companies (Equifax, Experian and TransUnion).

FICO and VantageScore evaluate many of the same criteria to create scores, including an applicant’s record of on-time loan and credit card payments, but their formulas differ.

The version of VantageScore that mortgage lenders may now review, known as VantageScore 4.0, also factors in such alternative data as an applicant’s history of rent payments.

FICO’s newer models, including FICO 10T, integrate more of this nontraditional data, too. (Currently, however, many landlords don’t provide rental-payment info to the credit-reporting companies). Mortgage lenders that extend loans backed by Freddie and Fannie are using older FICO models now, but they will later be able to adopt FICO 10T.

Credit scores that include alternative data could present a more complete picture of an applicant’s credit history and expand the pool of those who get loan approvals, says Keith Gumbinger, vice president of mortgage information website HSH.com.

Curious about today's mortgage interest rates? Explore and compare some of today's top offers with the tool below, powered by Bankrate:

Regardless of which credit score a mortgage lender uses, you can boost your odds of being approved for a loan and capturing a desirable interest rate by following the basic rules to raise your score.

Make all your bill payments on time, and keep the balances on your credit cards low as a percentage of their limits. That’s especially important if you’re getting ready to apply for a mortgage; aim for a credit-utilization ratio in the single digits.

Get your free credit reports from annualcreditreport.com and correct any errors you find that could hurt your score.

Note: This item first appeared in Kiplinger Personal Finance Magazine, a monthly, trustworthy source of advice and guidance. Subscribe to help you make more money and keep more of the money you make here.

Related content

• What It Really Takes to Buy a Home in 2025
• Credit Score vs. Credit Report: What's the Difference?
• Mortgage Calculator: Estimate Your Monthly Payment Easily

While mortgage interest rates for 30-year loans were north of 7% at the start of the year, they’ve been slowly easing down. With interest rates trending lower, you might be wondering if now’s the right time to scoop up a vacation home.

A second home can be more than just a weekend retreat. It can double as an investment property that earns income and appreciates over time. But if you’re not careful, that dream getaway could quickly turn into a financial headache.

Before you start house hunting, it’s important to weigh the benefits and drawbacks. Here’s what to consider before buying a vacation home.

Pros and cons of owning a vacation home

A vacation home comes with a ton of upside, but if you’re careless in your research and spending, you could end up wasting your money. Still, several financial and lifestyle benefits can make a second home a smart move if the numbers work in your favor.

Pros of owning a vacation home

• Personal getaway. You get a place you can always stay, without paying for lodging. You don’t need to get a hotel or book an Airbnb.
• Potential rental income. While you’re not using it, you can make your home work for you. Smart interior design can transform your vacation home into an income-generating rental.
• Long-term appreciation. A well-chosen vacation home can do more than give you a place to relax, it can grow in value over time. When the market’s strong, selling later could mean pocketing more than you paid.
• Potential tax breaks. You might get some savings come tax time with a vacation home. For instance, you can deduct the mortgage insurance you pay on your second home. You may also qualify for state and local tax deductions.

Cons of owning a vacation home

• High upfront costs. Buying a vacation home means you’ll need to come up with a down payment and closing costs. In the second quarter of 2025, the median home sale price was $410,800. Even if you only come up with 10% down, that’s more than $41,000.
• Expensive ongoing costs. You’re on the hook for insurance, property taxes, utilities and HOA fees, if applicable. If you put less than 20% down, you'll pay private mortgage insurance (PMI). This is all on top of the expenses for your primary residence.
• Home maintenance. From routine repairs to unexpected fixes, like a burst pipe or broken appliance, those costs can add up quickly — especially if you’re managing the property from afar.
• Potential depreciating value. Home values in vacation destinations can swing with demand and the economy. A market slowdown could lower your property’s value and cut into your potential return if you decide to sell.

How to decide if a vacation home makes sense for you

Signs you’re ready to own a vacation home

A vacation home isn’t for everyone, but it could make sense if you can manage both the upfront and ongoing costs of ownership. It helps to plan on keeping the property for several years so you can build equity and weather market changes. If you also have a strategy to generate income, such as renting it out when you’re not using it, your second home can serve as both a retreat and a long-term investment.

When a vacation home might not be the right move

A vacation home may not be the best choice if the down payment and closing costs stretch your budget too far. It can also become a financial burden if you’re not prepared for ongoing expenses like maintenance, insurance, and property management.

Real estate experts often recommend holding a property for at least five years to recover transaction costs and ride out market shifts. If you’re unsure how long you’ll keep the home, the short-term costs of buying and selling could outweigh any potential rewards.

Curious about today's mortgage rates? Explore and compare some of today's best offers with the tool below, powered by Bankrate:

How to prepare before buying a vacation home

Before you head to an open house or make an offer, take time to run the numbers and see how much home you can truly afford. Think through what you want from a vacation home — whether it’s a personal getaway, a rental investment, or both — and set a budget that keeps you financially comfortable.

Remember that owning a second property comes with new responsibilities. Your budget should cover not just the purchase price and closing costs, but also ongoing expenses like maintenance, insurance, utilities, and property management.

If you plan wisely, your vacation home can do more than offer a change of scenery. Turning it into a rental property when you’re not using it can help offset costs and improve your long-term return on investment.

A second home can be worth it but only with clear eyes

Buying a vacation home is a big decision that requires more than daydreaming about weekends away. It calls for an honest look at your finances, lifestyle and long-term goals. Take time to consider whether a second home will add comfort and enjoyment to your life or create more responsibility than you want to take on. The best choice is one that aligns with your budget, priorities and peace of mind.

Related content

• Refinance Applications Surge as Mortgage Rates Tumble
• Planning a Major Home Renovation? 3 Smart Ways to Finance It
• How Location Changes the Math on Owning a Vacation Home

Buying a home is an emotional roller coaster. You learn a lot about yourself, your needs, and a whole lot more along the way. So, let's set the scene.

It was the summer of 2021. We were growing tired of renting, so we decided to try buying a home. However, there was a problem: Where we lived in Florida, we couldn't get a shack for under $500k.

Instead, we moved to the Midwest, where our money went quite a bit further. We bought a home built in 1985 that was a capsule in time. Thanks to my in-laws, we were able to revitalize the place, making it look contemporary and upgrading its functionality.

Now, with our baby girl soon to be crawling around our small home, we realized we need more space. As such, we're starting to see some of the oopsies we — and many homebuyers — might make when buying a home. Here are some of the things we learned, and expert tips to help you avoid them.

Lesson 1: Build a buyer's profile

Real estate agent, broker and writer of the newly released The Pursuit of Home: A Real Estate Guide to Achieving the American Dream, Scott Harris says doing your homework should be your first step.

"Buying a home feels like something we should know how to do, but too often, buyers go in half-cocked," he said. "They spend more time planning their vacations than what they want in a home."

Our situation was unique in that we had a retired real estate agent helping us every step of the way. But we also didn't have the hard conversations about wants either. It ended up working well for us, aside from the space issue, but that's a lesson we're definitely adopting moving forward.

The solution: If you're in a relationship, start by having a conversation about each person's values in a home. As Harris puts it, "You want to row together."

And if you're a single buyer, find an encouraging voice to help you. "You want a cheerleader during this process, not someone who's going to bring you down and question every decision you make," Harris remarked.

The goal is to set a table of expectations ahead of time of what you're willing to compromise on and what you're not willing to. This sets the stage for being on the same page when making difficult decisions about locations, budget and more.

Lesson 2: Don't always choose the first real estate agent

Your real estate agent is one of the most important decisions you'll make in the home-buying process. They should take the time to understand your needs, set expectations and negotiate on your behalf.

Choosing the wrong agent can make what should be an exciting process frustrating. Thankfully, we didn't have that issue, as our agent was a family member who knew the area and our needs well. But now that we're going to move away from the area (eventually), we'll need to go through this too.

The solution: You should interview a few agents. This will give you a chance to see who fits your needs best. If you're buying with a spouse, work together to have a few questions prepared to ask each agent.

And if you're buying alone, consult with a trusted friend or loved one about the questions you ask. Making sure you're on the same page with your realtor at the beginning can prevent many problems from arising later.

Similar to agents, make sure to shop around for the best mortgage rates. This Bankrate tool can help you compare options fast:

Lesson 3: Know when to walk away

Buying a home is a stressful process. Even when you do find a home you love, chances are there are at least a dozen others who love it, too.

Before we bought our first home, we placed offers on others. When we received those rejection calls, it started to weigh on us. And desperation kicked in.

That's what you don't want. As Harris said, "Sometimes you need to step back and give yourself some time to feel the feelings. Know that 25% of the time, those making the winning bid walk away."

The solution: As hard as it is, you can't allow emotions to influence your buying decisions.

"If you're looking at listings or going to open houses and you're not wowed by any of them, it's likely your mind's way of protecting you, since you're not emotionally ready yet," Harris said.

It's why you need to have the hard conversations with your spouse, friend or realtor. If it doesn't feel right in your gut, it's OK to walk away. It won't be easy to do so, but there's a reason you feel the way you do.

Harris added, "Keep in mind that 50% overpay for homes. Sometimes you're pushing too hard to get a deal done. "

Ultimately, buying a home should be an exciting time in your life. By doing your homework, having the hard conversations up front and shopping around for the realtor that best fits your needs, you're grounded in your decisions.

As such, you won't allow emotions to dictate your buying decisions. It will make the process much less stressful and give you the clarity you need to have confidence in the decision you make.

Related content

• Practical Strategies for Making Homeownership a Reality
• Can You Afford a Million-Dollar Home on a $250,000 Salary?
• Before Buying Your First Home, Get These Three Ducks in a Row

Owning a vacation home sounds nice in theory, but where you buy matters just as much as what you buy. Your location choice can shape not only your travel experience but also your financial reality.

In fact, the market you choose could determine whether purchasing a second home is even possible. Factors such as home prices, the local cost of living, and rental demand all play a major role in overall affordability.

We’ll explore where vacation homes offer the strongest returns, how costs vary by region, and what to know before you buy. So you can make an informed decision before signing that second mortgage.

Where vacation homes offer the strongest return

It’s not always easy to find desirable, affordable properties — but they do exist. The best places to buy a vacation home tend to share a few key traits:

• Home affordability
• Interest rates
• Available inventory
• Cap rate, or the annual rate of return on your investment

Right now, most of the top vacation-home markets with the strongest returns are beach towns along the coast, according to Vacasa’s Vacation Rental Report.

When evaluating these markets, it’s crucial to look beyond postcard views. Key indicators such as cap rate, available inventory and location stability can reveal whether a property is likely to generate consistent income or drain your budget.

The cap rate helps you compare how much income a property could produce relative to its price. Meanwhile, low inventory can drive up competition and home prices, while location affects everything from seasonal demand to maintenance costs.

Keeping these factors in mind can help identify where the numbers truly add up. Here are five vacation-home markets currently offering some of the strongest returns.

1. North Myrtle Beach, SC

The median home price is $360,747 — almost $300,000 less than the second spot. The gross cap rate for North Myrtle Beach is 8.10%. With an average annual rental revenue of about $27,600 per property.

Curious about today's rates? Explore and compare some of today's best mortgage offers with the tool below, powered by Bankrate:

2. Dauphin Island, AL

The median home price is $645,330, which is higher than the national average. However, with average annual rental revenue of $53,293 and a gross cap rate of 8%, buyers have a solid opportunity to recoup part of their investment through vacation rental income.

3. Okaloosa Island, FL

The median home price on the Gulf is $654,494, with average annual rental revenue exceeding $50,000 and a gross cap rate of 7.7%. The area attracts about 5 million visitors each year, most of whom stay four nights or longer — creating strong demand and more consistent income opportunities for vacation homeowners.

4. Hatteras Island, NC

The median home price in Hatteras Island, North Carolina, is $805,585 — nearly double the national median. While it’s a larger upfront investment than many other markets, the area’s average annual rental revenue of $58,862 and gross cap rate of 7.3% help balance the higher cost.

Hatteras also benefits from strong visitor loyalty, with more than half of bookings lasting seven nights or longer, providing steady rental income potential.

5. Girdwood, AK

Just 45 minutes outside of Anchorage, Girdwood, Alaska, offers a mountain-town escape surrounded by stunning alpine scenery. The median home price is $485,429, with average annual rental revenue of $34,797 and a gross cap rate of 7.2%.

Many visitors come for short getaways, with 61% of bookings lasting just two to three nights. Girdwood’s biggest draw is its dramatic, ice-capped peaks and proximity to the upscale Alyeska Resort.

High-cost markets with prestige — and premiums

While you’re paying for prestige, it often comes with a much higher upfront cost. Many of the most desirable vacation-home markets have median sale prices well above the $410,800 national median.

What you get in return, however, is a view-worthy property in a high-demand area — and the potential to have your home work for you. Because most vacation homes are located in popular tourist destinations, there’s typically steady demand for short-term rentals. If you plan to rent out your property, you can often charge a premium during peak travel seasons.

Still, it’s important to consider the broader community you’re buying into. You might fall in love with the scenery, but if the area doesn’t attract enough visitors to sustain demand, that dream vacation home could quickly turn into a costly liability.

Hidden costs that vary by location

Second homes are already more expensive than primary residences. You may be on the hook for putting down a larger down payment, paying a higher interest rate and getting fewer tax breaks compared to your first home.

But what you pay also varies by your vacation home’s location. For instance, Florida has 1 million second homes — 15% of the nation’s total. Florida relies heavily on tourism all over the state, from theme parks in the central part of the state to beaches that literally surround it.

Seasonal housing can play a part in how much you pay for your vacation home. Out of season, home prices can go down 5% to 10% compared to home sales during the season. But if you can secure a vacation home during off-peak times, you can reap the rewards of a potentially high rental income. And when it comes time to sell, you can list it during peak season.

The cost of owning a second home isn’t the same for everyone, since the availability of vacation homes is widely different across the country. Other factors that could impact home prices include:

• Easy access to amenities, like beaches, mountains and other nature-focused attractions.
• Vicinity to urban areas.
• Established infrastructure that’s proven it can carry tourism.

Not all second homes are in locations that have a strong community that supports tourism for out-of-towners, residents and vacation homeowners.

What it all means for prospective buyers

When exploring second home options, location matters in multiple settings. Rather than snatch up your dream home, crunch the numbers to figure out if you can afford it in the first place.

It’s also crucial to figure out the long-term financial impacts of your home, including how much you’ll spend on it during ownership and your return on investment. Look at the purchase price, ongoing costs, and how much you expect to earn, if anything at all. Making your home work for you can lessen your out-of-pocket expenses, but if you buy a home that isn’t in a prime location, you could lose out on even more.

Related Content

• The True Cost of Owning a Second Home: What to Consider Before You Buy A Vacation Home
• Design Your Second Home to Pay for Itself
• 13 Home Features Today's Buyers Want Most

If you live in a neighborhood that is governed by homeowners association (HOA) rules, or are considering buying into such a neighborhood, then I've got a book recommendation for you.

The recently published Bad HOA: The Homeowner's Guide to Going to War and Reclaiming Your Power by Southern California-based attorney Luke Carlson can keep you from pulling your hair out (and the resulting premature baldness) if you wind up with a bad HOA board.

Carlson said he wrote Bad HOA "to provide homeowners the tools to deal with often frustrating and costly situations. Still, I believe in the HOA concept and have had many highly positive interactions with boards that work to benefit all of their homeowners."

Kiplinger's Adviser Intel, formerly known as Building Wealth, is a curated network of trusted financial professionals who share expert insights on wealth building and preservation. Contributors, including fiduciary financial planners, wealth managers, CEOs and attorneys, provide actionable advice about retirement planning, estate planning, tax strategies and more. Experts are invited to contribute and do not pay to be included, so you can trust their advice is honest and valuable.

Who should consider buying in an HOA?

Carlson described the people for whom living in an HOA would be a good fit:

They prioritize property values and neighborhood stability, which are not always reliable characteristics of traditional homes/neighborhoods.

They want a group — almost like a government agency — that acts as an enforcement arm of the governing agreement all homeowners in the neighborhood sign. If homeowners have a problem, they can go to the board.

They appreciate having a safety net that is able to prevent/resolve conflicts, such as the neighbor who parks junk cars on their lawn, allows their home to fall apart or refuses to safely maintain vegetation — such as trees at risk of falling, creating risk of personal injury or property damage — that are common in traditional neighborhoods.

They want uniform rules about home colors and property modifications to prevent changes that could adversely impact neighbors or their property values. When everyone is required to have nicely maintained homes and yards, Carlson notes, the community is enhanced.

Who would not be well-suited to live in an HOA?

Carlson said he has found that residing in an HOA community is not appropriate for everyone. He described people who might not appreciate the restrictions:

They don't want constraints on what they can paint the exterior of their home.

They intend to run a business out of their house. That's permissible in non-HOA neighborhoods, but many associations have restrictions on operating a commercial venture from homes.

They see an HOA board as Big Brother, rather than a safety net. They don't want anyone having a say over what they can do with their house.

"You've got to know yourself," Carlson said. "Be honest and ask, 'Can I be happy with these restrictions?'"

What do bad (and good) HOA board members do?

Bad HOA lets readers know what bad HOA board members look like:

• They disregard state laws governing a board member's activity and the HOA's governing documents.
• They attempt to personally benefit from their decisions.
• They ignore their fiduciary obligations and set rules that amplify their power in the community or benefit them financially.

Carlson also lists the attributes of a great HOA board member:

• They take their obligations to the community seriously.
• They understand and follow governing documents.
• They acquire a good grasp or their state's HOA laws, and when in doubt, they consult the association's lawyer for help.

When things go wrong, keep emotions out of it

If you encounter a conflict with your HOA board, Carlson offers the same advice that most lawyers hear in law school about biting your tongue: "If issues wind up becoming litigated, HOA attorneys just love it when they can present a judge or arbitrator a homeowner's letter that screams anger and profanity.

"Always remember that whatever you put in writing to the HOA board will be read by others. So, address the issues in a logical, reasonable manner, being mindful of your emotions. Keep it clinical, factual and on point. This will serve you well."

Homeowners have power

Bad HOA shines a spotlight on the nightmares that often occur with poorly run HOAs and offers suggestions on how to deal with them.

Looking for expert tips to grow and preserve your wealth? Sign up for Adviser Intel (formerly known as Building Wealth), our free, twice-weekly newsletter.

"There has been so much media coverage about HOAs that have gone really bad," he said. "I wanted to help homeowners and potential buyers realize that if this happens, you are not condemned to being a victim of that reality. You have tremendous power."

Bad HOA, which is accessible and so well written, is the only resource I have found that offers step-by-step instructions that empower frustrated homeowners who may have thought, "I've got no power at all."

On the contrary, they do not have to tolerate the actions of a bad board or board member. They can push back against unfairness, and Bad HOA outlines how to do that successfully.

We need more attorneys like Carlson. You won't see him in television commercials, boasting about how much money he has gotten for victims of auto accidents.

Instead, he and his team devote their education and experience to helping, a goal that many of us had when entering law school, before dollar signs got in the way.

Dennis Beaver practices law in Bakersfield, Calif., and welcomes comments and questions from readers, which may be faxed to (661) 323-7993, or e-mailed to Lagombeaver1@gmail.com. And be sure to visit dennisbeaver.com.

Related Content

• Think Selling Your Home 'As Is' Means You'll Have No Worries? Think Again
• The Truth About the Dark Side of Rooftop Solar Panels
• From Dream Apartment to Nightmare: When Your Landlord Evicts You Through No Fault of Your Own
• A Cautionary Tale: Why Older Adults Should Think Twice About Being Landlords
• Should I Sell or Rent My House When I Relocate for Retirement?

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

Buying a million-dollar home on a $250,000 salary might sound like a reasonable goal. With a six-figure income, many assume they can comfortably manage the mortgage.

But the reality looks different once you add in taxes, insurance and other costs.

As mortgage interest rates edge lower, buyers might feel encouraged to shop for bigger or more expensive homes. Before you stretch your budget, it’s worth running the numbers to see what a $1 million home really costs each month and in the long term.

From steep closing costs to jumbo loan requirements, the expenses quickly add up. Here’s a closer look at what it takes to afford a million-dollar home on a $250,000 salary.

Crunching the numbers on a $1 million home

Let’s take a look at the average costs of buying a $1 million home. If you make a 20% down payment of $200,000, you’ll have an $800,000 mortgage. The current interest rate for a 30-year fixed mortgage is 6.35%, according to Freddie Mac.

Assuming you have strong credit and are a low-risk borrower who gets that 6.35% interest rate, your monthly mortgage payment, including interest, would be $4,978.

That mortgage payment excludes additional expenses such as property taxes and homeowner’s insurance, both of which will vary depending on where you live.

For example, Hawaii has the lowest property tax in 2025, with a rate of just 0.32%, but rates can be 2% or higher. For this example, let’s use Oxford County, Maine’s 1.192% tax rate, which is about in the middle of tax rates in the United States.

With a 1.192% tax rate, you'd pay $11,920 each year in property taxes on your $1 million home, which comes out to $993.34 per month. If your home’s assessed value increases in the future, or if your state or county tax rate increases, your taxes will rise, too.

You’ll also need to budget for insurance. Insurance.com estimates that the national cost of homeowners insurance for a million-dollar home is $7,412 per year, but many factors will affect your insurance premiums, including your home’s location, its age and even your history of making claims. The coverage you choose will also impact your rates.

Using these sample figures, if you wrapped your taxes and insurance into the mortgage, your monthly mortgage payment would be $6,558.

You’ll face additional costs when you close on your home, too. Closing costs for buyers can range from 2% to 5% of your home’s purchase price, according to Zillow, so you could pay up to $50,000.

Additionally, thanks to a real estate commission settlement, sellers might choose not to cover your agent’s fee, so you might be responsible for paying your real estate agent a commission of approximately 3% of your home’s sale price, or about $30,000.

Let's sum it up:

• Down payment: $200,000
• Closing costs: Approximately $50,000
• Real estate agent's fee: Potentially $30,000
• Annual property taxes: $11,920
• Annual homeowner's insurance: $7,412
• Monthly mortgage excluding taxes and insurance: $4,947
• Monthly mortgage including property taxes and insurance: $6,558

Debt-to-income and lenders’ rules

Lenders want to see that you’re financially stable and a low risk to issue you a mortgage and to give you a lower interest rate. In addition to considering factors such as your income, lenders review your debt-to-income ratio, which compares your recurring monthly debt payments to your monthly income.

According to Wells Fargo, mortgage lenders often prefer a debt-to-income ratio below 35% or 36%. If you’re making $250,000 per year and are bringing home $13,500 after taxes and retirement contributions, your existing debts can’t be higher than $4,860 per month.

For example, your car payments, student loans and credit card debts can’t add up to more than $4,860 per month.

Your debt-to-income ratio also affects your credit score, which can impact the mortgage rate you qualify for. A lower debt-to-income ratio can help to increase your credit score. Mortgage lenders see a higher credit score as indicative that you’re a lower-risk borrower, so you’ll be more likely to get a lower interest rate on your mortgage.

Jumbo loans and additional costs

Depending on the size of your down payment, you might need to take out a jumbo loan to buy your home. Jumbo loans are required for single-family mortgages of more than $806,500, which is the current loan-servicing limit set by Fannie Mae and Freddie Mac.

Jumbo loans often have higher interest rates and stricter underwriting rules than a traditional mortgage, but they're available as fixed-rate and adjustable-rate loans.

Since jumbo loans are riskier for lenders, you’ll usually need a higher credit score to qualify for them. According to Capital Bank MD, you’ll usually need a credit score of at least 680 for a $1 million loan. You’ll need a debt-to-income ratio under 43% to qualify, and lenders also like to see that you have significant cash savings to ensure you can make your mortgage payments.

Explore and compare some of today's best mortgage offers with the tool below, powered by Bankrate:

Variations by market: Expensive vs affordable metros

Your home’s location not only affects your property tax and insurance rates, but it also affects overall home affordability. Certain areas simply cost more to live in than others. Metropolitan areas with strong economies, such as New York City, San Francisco and Boston have higher costs of living.

To buy a house in one of these more expensive markets, you’ll need to budget more for expenses such as food, utilities and transportation.

If you’re willing to move to a more rural area, like West Virginia, Oklahoma or Mississippi, your costs of living will be lower. You can save on everything from home repair costs to taxes, and chances are, you’ll be able to get more house for your money, too.

Finding your comfort zone with mortgage costs

Dave Ramsey recommends homebuyers follow the 25% rule, in which your monthly house-related expenses, such as your mortgage, insurance and property taxes, add up to no more than 25% of your monthly take-home pay. This rule can help ensure you’re able to comfortably afford your mortgage.

In the above example, you'd take home $13,500 per month, and your mortgage payments, including taxes and insurance, would be $6,558. That’s nearly half your take-home income, indicating that in this situation, you can’t afford a million-dollar home on a $250,000-per-year income.

There are ways to change that, though. Saving up a larger down payment will lower your mortgage payments, and you might be able to afford a home with a lower mortgage.

You might also consider moving to an area where taxes and insurance are cheaper to keep costs down.

Ultimately, shopping for a more affordable home might be the best solution so that you can comfortably afford your mortgage.

Related Content

• States With the Lowest Property Tax Bills
• Why a Landmark Real Estate Commission Settlement Hasn’t Lowered Costs for Homebuyers
• New ‘Taylor Swift Tax’ on Vacation and Second Homes: Is Your Home Next? | Kiplinger

When buying a home, securing the lowest interest rate available means you won’t have to pay more than necessary on top of your principal balance. But interest rates change constantly — sometimes multiple times a day.

These changes could mean the rate you secure today may not be the lowest rate on the market before you close on your new home.

Before signing any paperwork with a lender, whether you're getting preapproved or finalizing your loan, it's important to understand how interest rates work. Knowing the difference between locking in an interest rate and letting it float can help you make a more informed decision and avoid paying more than necessary over the life of your mortgage.

What does it mean to lock in an interest rate?

Mortgage interest rates can change often, so what you see today isn’t necessarily what you will pay by the time you close on your home.

When applying for a home loan preapproval, some lenders allow you to either lock in your interest rate or let it float.

Locking in an interest rate means securing a rate from the time you complete your preapproval application through closing, as long as you meet certain conditions from your mortgage lender. These might include closing within a set time frame, such as 30 or 60 days, and ensuring the home's appraised value remains consistent.

Pros and cons of locking in an interest rate

Locking in your rate can offer stability, but it may also limit your flexibility if market conditions change. Here are some key advantages and potential drawbacks to consider.

Pros

• Get the lowest interest rate available right now.
• Some lenders lock your rate for free.
• You can estimate your monthly payments to find home listings in your price range.

Cons

• There’s a chance interest rates could drop before you close on your home and you don’t get the lowest interest rate available anymore.
• Terms could change if you don’t meet borrower obligations, like closing before the deadline or your credit score changes.
• Unable to buy points to lower the interest rate if it is locked.

Curious about today's rates? Explore and compare some of today's best mortgage options with the tool below, powered by Bankrate:

What is a floating interest rate?

Rather than locking in an interest rate, you can let it float. Floating an interest rate means you get the lowest rate available at closing time, even if it’s different from what you saw during the preapproval process.

Pros

• Your estimated interest rate could drop by the time closing comes around.
• Allows you to buy mortgage points to lower the rate - pay to reduce the interest rate through discount points in exchange for upfront lump-sum cash.
• You aren’t tied to the rate lock deadline when home shopping.

Cons

• You could end up with a higher interest rate than your original quote.
• A higher interest rate at closing means you could pay more per month and over the life of your loan.
• Higher monthly expenses could cut into other financial necessities, including other bills or emergency savings.

When should you lock in an interest rate vs. letting it float?

Locking in an interest rate is a safe and secure way of keeping your rate at an expected level when buying a home. But there might be some instances where you decide to get a floating interest rate instead.

You should lock in an interest rate if:

• You’ve been following mortgage rates and they’ve been trending upward.
• You have the lowest interest rate available.
• You expect to close on a home within the set time frame.
• You don’t plan on making any big purchases before buying a home that would change the rate.

You should float an interest rate if:

• The trend shows mortgage rates are dropping and you expect to get a lower rate by the time closing comes around.
• You aren’t sure if you’ll close on a home within the set time frame.
• Your credit score might change, impacting the interest rate you got during the preapproval process.
• You could get a lower interest rate by buying mortgage points.

When you’re unsure if a floating interest rate is right for you

If you’re uncertain whether to float your interest rate, talk to your lender or mortgage broker about your options. They can help you evaluate your financial goals and determine what makes the most sense for your situation.

If a floating rate could benefit you, they should explain why. If a rate lock is the better choice, make sure you understand the reasoning. In some cases you might qualify for a float-down option, which lets you take advantage of a lower rate if it drops before closing.

If you’re unsure about the deal you’re getting or want to explore other options, don’t hesitate to consult with other mortgage professionals. Buying a home is one of the biggest financial decisions you’ll make and it can be stressful. Surround yourself with a team that supports your goals.

Relate Content

• How the Federal Reserve Affects Mortgage Rates — and What It Means for Homebuyers in 2025
• Find the Best 30-Year Mortgage Rates Today
• My Mortgage Rate is 6.5%. Should I Refinance If Rates Fall By Half a Point

When you’re buying a home, one of the biggest financial decisions you’ll make is figuring out how much mortgage you can truly afford.

Mortgage affordability is about how much you can borrow and repay without straining your budget, and the 28% rule offers a simple guideline to help ensure your mortgage stays within reach.

But given the climbing real estate prices and high interest rates in today's housing market, is the 28% rule still relevant?

What is the 28% rule?

The 28% rule is a common mortgage guideline used to gauge affordability. It offers a straightforward way to set a housing budget and avoid becoming overwhelmed by payments that outpace your income.

The rule comes from lending data showing that borrowers who keep housing costs at or below 28% of their gross income are more likely to stay on track with their mortgages.

Under the 28% rule, your monthly mortgage payment — including principal, interest, taxes and insurance — should'nt exceed 28% of your gross monthly income, which is your income before taxes or other deductions.

For example, if you earn $8,000 a month, your total housing costs should be no more than $2,240.

Does the 28% rule still work?

In today’s housing market, rising costs make the 28% rule harder to follow.

In the second quarter of 2025, the median U.S. home price was $410,800, up from $317,100 in the same quarter of 2020, according to the Federal Reserve Bank of St. Louis. Mortgage rates are elevated, too — the average 30-year fixed rate stood at 6.58% as of August 21, 2025.

Homeowners' insurance has also climbed as property values rise and natural disasters become more frequent. The Hartford reports the average premium now costs $2,397 per year, or about $200 per month.

All these factors can push housing expenses beyond 28% of gross income, but aiming to stay near that threshold is still wise. Over time, property taxes and insurance are likely to increase, and if your mortgage already exceeds the 28% mark, keeping up with future costs could become difficult — especially if your income doesn’t rise at the same pace.

What to consider when deciding how much mortgage you can afford

The 28% rule might feel restrictive when shopping for a home, but several factors can improve affordability. Your credit score directly affects your mortgage rate, so building strong credit — by paying bills on time and keeping balances low — can help you secure better terms.

A larger down payment also makes a difference. Putting more down reduces your loan balance, lowers interest costs over time and strengthens your offer in a competitive market.

It also pays to shop around for homeowners' insurance. Premiums vary widely by company, so compare quotes while making sure coverage limits and deductibles fit your needs. Choosing a higher deductible can lower your monthly cost, but be sure you have that amount set aside in savings if you ever need to file a claim.

Why the 28% rule still matters when buying a home

Buying a home you can truly afford isn’t easy, but the 28% rule offers a safeguard against taking on more than your budget can handle.

Overspending on a mortgage can create years of financial strain and leave little room for unexpected repairs or other expenses. As you plan your purchase, keeping the 28% rule in mind can help ensure your home is a source of stability — not stress.

Quickly compare some of today's best home insurance rates with the tool below, powered by Bankrate:

Related Content

• Seven Financial Considerations When Downsizing for Retirement
• Protect Your Retirement From Extreme Weather Events
• The 15 Most Expensive Housing Markets in the US: Real Estate with the Highest Average Home Prices

Homeownership has often been viewed as a milestone, part of the American dream.

Times are changing. A recent Bankrate survey found about 45% of homeowners have regrets about their homes.

With a tough housing market, inflation, high interest rates and record amounts of debt, a majority of Americans' wallets are being pushed to the brink.

When you're making one of the biggest purchases of your life, you want to be certain. Knowing how to measure the home's affordability, assessing your needs and proper planning are key.

The Kiplinger Building Wealth program handpicks financial advisers and business owners from around the world to share retirement, estate planning and tax strategies to preserve and grow your wealth. These experts, who never pay for inclusion on the site, include professional wealth managers, fiduciary financial planners, CPAs and lawyers. Most of them have certifications including CFP®, ChFC®, IAR, AIF®, CDFA® and more, and their stellar records can be checked through the SEC or FINRA.

Two big challenges when buying a home

The two biggest challenges all homebuyers will face, especially first-time buyers, are low inventory and affordability. In many areas, there's such a shortage of homes that when one hits the market, multiple offers are often submitted within the first couple of days.

As a result, prospective buyers face bidding wars, causing home prices to skyrocket. This, coupled with high mortgage rates, has made it challenging to afford a home or even qualify for a loan.

If you're planning to buy a home in the next couple of years, you need to focus on your savings.

The most frequent source of buyer's remorse tends to be underestimating the full cost of homeownership.

Many buyers focus solely on their monthly mortgage payment and overlook recurring expenses such as property taxes, insurance, HOA fees, maintenance and repairs, even the cost of moving.

Annual homeowning expenses can be a shock

According to Bankrate, the average homeowner spends more than $18,000 a year on expenses outside their mortgage. When those costs hit all at once, it can come as quite a shock.

Historically, experts advised that monthly housing expenses should be about 28% to 32% of your income. Today, a more realistic approach is to allocate about 40% to 45% of your gross monthly income toward total housing costs.

In today's market, it's more likely that somewhere from 35% to 40% of your gross income will go strictly toward the actual home payment. Depending on the age of the home, an additional 1% to 5% should be dedicated to maintenance and repairs.

When it comes to affordability, one of the best ways homebuyers can protect themselves and their budgets is to build an emergency fund. A good general rule is to have three to six months' worth of expenses saved in case of an emergency.

A mistake to avoid

One mistake people often make is using the entirety of their savings as a down payment, leaving them with nothing when something unexpected happens.

In most cases, homebuyers are better off putting a lesser amount down on the home — keeping their savings for what might come up in the future.

Once you get comfortable with your budget and have at least three to six months of emergency expenses saved, you can start paying extra on the mortgage if your goal is to pay it off before retirement.

As for the actual purchase and affordability of the home, one of the clearest signs that a buyer may be overextending is when their total housing costs exceed 45% to 50% of their gross monthly income.

Other warning signs

Dipping into emergency savings to cover closing costs, postponing retirement contributions or using credit cards for routine expenses post-purchase are other warning signs.

For most homeowners, refinancing their mortgage is one way to lower monthly payments, but be cautious. Not knowing exactly how much your payment might decrease or when you'll be able to refinance can make it hard to plan, save and budget.

If you're relying on future refinancing, income increases or bonus pay to make ends meet, you're crossing into the dangerous territory of living outside your means.

Being honest about your monthly cash flow and long-term goals is another key to preventing buyer's remorse.

Looking for expert tips to grow and preserve your wealth? Sign up for Building Wealth, our free, twice-weekly newsletter.

Another common regret homeowners face stems from rushing the process or compromising too much.

In competitive markets, buyers might waive inspections, stretch their budgets or settle for a home that doesn't truly fit their needs just to "win" a bid.

Failing to plan for future life changes, such as growing families, job relocations or aging parents, can also lead to regret.

These situations can quickly make a home feel too small, too far away or no longer the right fit.

How to reduce the risk

Buying with foresight reduces the risk of having to sell prematurely or take on costly renovations. While it's impossible to predict the future, the more you align your home choice with future plans, the more confident and stable your investment becomes.

Whether you're a first-time buyer, are looking to upsize or downsize or need to move closer to work, it's critical to stay within your budget and always have a plan for emergencies and future expenses.

Who you hire to help you matters

Equip yourself with the best team possible and hire full-time professionals as your real estate agent and loan officer.

Before deciding who to hire, do your research. Having a well-known and respected Realtor or loan officer can sometimes help your offer jump to the front of the line.

They'll also ensure you are taking advantage of the best programs available to you while coaching you on ways to secure the best terms possible.

Homeownership has proven to be one of the most effective paths to long-term financial success. Treating your home like an investment can significantly minimize any risks or regrets.

Related Content

• Before Buying Your First Home, Get These Three Ducks in a Row
• What It Really Takes to Buy a Home in 2025: Affordability, Income and Market Challenges
• Best Time of Year to Buy a House
• How to Choose a Mortgage Lender in Five Steps
• What to Know About Mortgage Escrow Accounts

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

Editor's note: This is the first of a two-part series. Part two is Seven Financial Considerations When Downsizing for Retirement.

During COVID, I had two clients sell their Washington, D.C.-area homes to move to Florida. Within 12 months, they had sold their Florida homes to re-buy in D.C.

It turned out the place they vacationed wasn't quite the same when you don't get to eat out every meal and you must endure a Florida summer.

The cost? Capital gains taxes, transfer taxes and agent commissions ate into about 20% of the home equity each client had built.

The Kiplinger Building Wealth program handpicks financial advisers and business owners from around the world to share retirement, estate planning and tax strategies to preserve and grow your wealth. These experts, who never pay for inclusion on the site, include professional wealth managers, fiduciary financial planners, CPAs and lawyers. Most of them have certifications including CFP®, ChFC®, IAR, AIF®, CDFA® and more, and their stellar records can be checked through the SEC or FINRA.

Research, including The Harvard Study of Adult Development and the University of Michigan Health and Retirement Study, dives into the drivers of happiness in retirement. Most studies find physical and emotional health, social relationships and financial security to be highly correlated with retiree contentment.

When thinking about possibly downsizing or moving, it's helpful to use these three components of happiness in retirement as the basis for your decision framework. Let's break the thought process down.

1. Health factors to consider in a move

About two years after my clients' ill-conceived moves, a good family friend relocated from Maryland to Texas. Our friend had some pre-existing health conditions, and it turned out to be harder than expected to replace their network of doctors in Maryland.

I don't know if this would have caused them to change their decision, but frequent trips back to the Old Line State for care proved to be costly and stressful.

Physical and mental health are often considered to be the No. 1 driver of retirement happiness. But this is not just about where your doctors are. It's being in a place that allows you to maintain your health and age well.

Are there good places to walk (to maintain mobility)? Is there easy access to public transportation and ride-sharing apps?

2. Social relationships: Will they be better or worse?

Grandkids top all when it comes to a retirement relocation. As a parent of three young kids with local grandparents, I am very thankful for this.

However, you need to also consider where your friends are, especially those who are in a similar life stage, and whether you can make new friends easily.

The trouble with evaluating a relocation based purely on kids and grandkids is that they are probably in their busiest stage … just as you are entering your least busy stage.

Once- or twice-a-week meet-ups are great, but they won't fill your schedule. Unless, of course, you are providing daycare.

Continuing care retirement communities (CCRCs) tend to be easy places to find friends as there is a large cohort of folks living and playing bridge together. Think college, but 60 years later.

There are also what are often referred to as naturally occurring retirement communities (NORCs), which are exactly what they sound like. These condo buildings don't have age restrictions but have naturally become majority retirees.

3. Cost: Try not to make it your top deciding factor

Imagine joining a pool that's half the cost of the one down the street. The problem with the cheaper pool is that you don't have any friends there and it's too deep for you to stand.

If you can afford the more expensive pool with the shallow side and friends, it probably makes sense to pay up.

I often advise clients not to move primarily based on cost unless it's necessary. Said differently, I believe health and social relationships matter more.

Looking for expert tips to grow and preserve your wealth? Sign up for Building Wealth, our free, twice-weekly newsletter.

Of course, once you do decide to move, you will want to take cost into consideration. At that point you should know that cost is not just cost of housing, although that's the big one.

You also need to consider state income taxes, property taxes, taxation of retirement distributions and estate taxes.

We tend to rely on financial planning software to get an idea of how much more you can spend per month if you move to a lower-cost area. If you're interested, you can access a free version of that software.

Our tax planning software allows us to change the state return and see how much more or less your state income taxes would be if you moved. Unfortunately, there's no free version of that one.

In part two (link in the Editor's Note above), I dig deeper into how to evaluate the most important cost considerations. Hold your breath.

Related Content

• How to Have a Happy Retirement
• How Much Does It Cost to Sell a House? Don't Overlook These Common Fees
• Will Retiring Early Make You Happier? It's Complicated
• Age in Place or Move? How to Decide Where to Live in Retirement
• 10 Things You Should Know About Selling Your Home to Downsize in Retirement

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

There’s no one-size-fits-all formula when it comes to getting approved for a mortgage. Whether it's for your first home or your dream cabin getaway, each lender sets its own eligibility criteria, interest rates and loan options, which means the right lender for one borrower might not be the best fit for another.

As a homebuyer, it’s important to understand your financial situation and loan preferences early on. This will help you find a lender that aligns with your needs, increasing your chances of approval and favorable rates.

To help you navigate the process, we'll go over five steps to choosing the right mortgage lender and

Where mortgage interest rates and policy stand now

Last year, the Federal Reserve cut interest rates three times. While mortgage rates don’t move in step with the federal funds rate, they often trend in the same direction over time, and that’s starting to show up in borrowing costs.

The average 30-year fixed mortgage rate is 6.11%, and the average 15-year fixed rate is around 5.50%, according to Freddie Mac. That’s a noticeable improvement from a year ago, when the average 30-year rate was closer to 7.04%.

Even modest rate shifts can affect how much you qualify to borrow and which lenders offer the best terms. Comparing interest rates, lender fees and loan types side by side can help you lock in the best rate before the next policy move.

1. Figure out your home loan preferences

Your first step in homebuying is figuring out what you can afford. Your monthly mortgage payment will include principal and interest amounts, taxes and insurance. Once you have an idea of what you can afford, think about your mortgage type, as this will impact your payments:

• A 15-year loan vs. a 30-year loan: Most people opt for a 30-year mortgage loan since it means smaller monthly payments over a 30-year repayment term. But if you want to pay off your loan sooner and pay less in interest over the life of your loan, look into a 15-year loan.
• Fixed interest vs. adjustable rate: A fixed interest rate stays the same for the life of the loan, giving you predictable monthly payments. An adjustable-rate mortgage (ARM), on the other hand, typically starts with a lower introductory rate. After a set period, however, the rate adjusts based on market conditions, which means your payments could go up or down. Over time, you might end up paying more than someone with a fixed-rate mortgage.
• Conventional vs. FHA/VA/USDA loans: Conventional loans are the most popular type of loan. They aren’t backed by any government agency, and most banks, credit unions and online lenders offer them. FHA, VA and USDA loans are government-backed mortgages based on specific needs. For instance, if you’re a veteran, you could qualify for a VA loan.

Your preferences and financial situation play a big role in narrowing down the right mortgage lenders. For example, if you're looking for a government-backed loan like an FHA or USDA mortgage, you'll want to focus on lenders who specialize in or are approved to offer those specific programs. These options may not be available through lenders that primarily deal with conventional loans.

Understanding what type of loan you qualify for — and what fits your needs — can help you avoid wasting time on lenders that aren’t a good match.

2. Check your eligibility

Once you’ve eliminated mortgage lenders that don’t fit within your preferences, you can start to review the ones that do. Many banks, credit unions and online lenders offer pre-qualification tools to help you see if you’re likely to qualify for a mortgage.

Pre-qualification is different from preapproval — it doesn’t require a hard credit check and won’t affect your credit score. Instead, you enter basic information such as your estimated credit score, income and assets to get a sense of your eligibility.

Checking your eligibility helps determine which lenders are more likely to give you a mortgage based on your creditworthiness, income and where you want to buy a home. You’ll narrow your list even further by getting rid of lenders that may have eligibility requirements you don’t meet.

Try to explore different lenders beyond large financial institutions. You might be able to find offers at local credit unions, regional banks or online mortgage companies. You might be eligible for offers at places you may not have considered.

Take a look at what your current bank offers. Some have deals for existing customers with other accounts. You may qualify for special savings.

3. Compare lenders

Once you’ve narrowed down your list of potential lenders, it’s time to compare the ones most likely to approve your mortgage. Compare lenders based on interest rates, preferred loan terms, down payment requirements and any extra fees. Those fees could include underwriting, loan origination fees and closing costs.

As you shop around, consider getting preapproved by multiple lenders. While each preapproval involves a hard credit inquiry, credit bureaus recognize that you're rate shopping for a mortgage.

If these inquiries occur within a short window — typically 14 to 45 days — they’re grouped as a single inquiry for scoring purposes. This allows you to explore your options without significantly harming your credit score.

4. Review preapprovals and choose a lender

After receiving a few preapprovals, review which lender offers the highest loan amount. Keep in mind, you’re not obligated to spend up to that limit — but having a higher preapproval can give you more flexibility as you explore different homes and price ranges.

It’s also worth evaluating each lender’s communication style and how they’re compensated. Some lenders work as mortgage brokers, meaning they help match you with a loan and may earn a commission at closing.

Ask each lender if they have any special offers or conditions to lower the overall cost. Find out how much potential monthly payments will be for each lender, including your principal mortgage payment, interest, insurance, taxes, and any other costs — that way, you know what to expect before committing.

Many lenders offer a rate lock option, so it’s important to confirm the details with each one. A rate lock lets you secure the current interest rate for a set period — typically 30 or 60 days — while your loan is finalized. This protects you from potential rate increases between the time you’re approved and the day you close on your home.

5. Complete your loan application

Once you’ve chosen a lender and received your preapproval letter, you’ll be ready to start touring homes. After finding the right property, you’ll complete a formal loan application. This step is similar to preapproval, but it initiates the full underwriting process for your actual mortgage.

This is the loan you’ll carry through the life of your home purchase. If you’ve locked in your interest rate, your monthly payments should align with the estimates you received during preapproval, giving you a clear idea of what to expect financially.

The right lender can help you secure competitive rates and make the homebuying process smoother and less stressful. Take your time, ask questions and don’t be afraid to explore multiple options before committing.

Use the tool below, powered by Bankrate, to explore and compare some of today's top mortgage offers:

Related Content

• Mortgage Calculator: Estimate Your Monthly Payment Easily
• Find the Best 30-Year Mortgage Rates Today
• Property Tax 101: What Homeowners Need to Know

When you finance your home with a mortgage, your lender will likely require you to maintain an escrow account. With this setup, a portion of your monthly mortgage payment is set aside to cover your annual property taxes and home insurance premiums.

Lenders want to protect their financial investment when they loan you money; an escrow account acts as a forced savings account to ensure those property expenses are paid on time and in full, says Ed Santiago, a branch manager with Fairway Independent Mortgage in Wayne, Pa.

Lenders hold back one-twelfth of the estimated annual expenses each month to pay your taxes and insurance. Some lenders require an additional cushion of up to two months' worth of expenses to avoid potential escrow shortages. If you end up with an overage because you get a cheaper insurance policy or your property taxes decrease, your lender will send you a refund check.

Because property-tax assessments and insurance rates tend to rise over time, the amount collected for escrow can fluctuate. So while your principal and interest payments remain the same for the life of a fixed-rate mortgage, your total monthly payment may change from year to year.

Homeowners felt the sting of both higher property-tax bills and soaring home insurance premiums in 2024. According to data from Intercontinental Exchange, home insurance premiums rose by an average 14% from the previous year, and 2024 property-tax bills jumped 2.7%.

Escrow rules

Government-backed mortgages — Federal Housing Administration (FHA), Department of Veterans Affairs (VA) and U.S. Department of Agriculture (USDA) loans — require escrow accounts regardless of the down payment amount.

For conventional loans, most lenders require an escrow account if you put down less than 20% on the home purchase. In some cases, though, you can get an escrow waiver with a loan-to-value ratio of 95% or less, a good credit score, and no recent mortgage payment delinquencies or defaults on past escrow waivers. However, you’ll pay 0.25% of the loan amount for an escrow waiver.

A waiver makes sense only if you have sufficient disposable income to cover larger (but less frequent) tax and insurance payments and the financial discipline to keep up with them independently, Santiago says. Check how often your locality collects property taxes — some collect only once or twice a year, leading to bigger bills, while others collect quarterly.

If you get an escrow waiver, you could put money to pay your insurance and tax bills in a high-yield savings account, earning interest on the funds. (But for this to be worthwhile, your interest earnings would need to be greater than the fee to waive escrow.)

Additionally, if you switch home insurance providers or successfully appeal your home's assessed value for property taxes, you may not face as much hassle and paperwork. But most loan servicers offer online account management, so updating your account isn't as cumbersome as it used to be, Santiago says.

And the flexibility of managing escrow expenses on your own isn't without some risk. Failing to pay your property taxes could result in your county filing a tax lien against your home, potentially leading to foreclosure.

Likewise, if you don't pay your homeowners insurance premiums and let the coverage lapse, you're breaching your agreement to maintain home insurance as a condition of taking out a mortgage. In that event, your loan servicer can require force-placed homeowners insurance, which is usually costlier and less comprehensive, Santiago says.

Note: This item first appeared in Kiplinger Personal Finance Magazine, a monthly, trustworthy source of advice and guidance. Subscribe to help you make more money and keep more of the money you make here.

Related Content

• Things You Can Negotiate When Buying a Home
• What Home Equity Is and Why It's a Valuable Long-Term Investment
• Applying for a Mortgage Loan? Here's What to Expect

Manny Varas takes his wine seriously — so seriously that he built a wine cellar at home to house his 900-bottle collection.

The contemporary space features a domed ceiling, insulated glass and club seating for tastings. Forgoing the classic wooden cellar look, Varas opted for stone walls and metal display racks.

"I have about 150 bottles displayed and 800 hidden away. It just shows a difference in style where a lot of our clients and I are trying to do 'less is more,' " says Varas, founder of construction company MV Group USA in Miami. "It's there, but we don't have to have everything exposed like the old traditional wine cellars."

As wine cellars become more popular in higher-end homes, some homeowners might wonder if the investment is worth it — for their wine collection or their wallet.

Passive wine cellars, for the casual enthusiast

Before assessing the value, it helps to understand the two types of wine cellars — passive and active.

A passive wine cellar isn't refrigerated and typically has less storage. "A passive wine cellar can still be in a separate room with a door. A lot of times we'll do the frame of glass — though the cellar is for storage, it's mainly for looks," says Audrey Frances Doty, founder of Audrey Frances Design in Atlanta.

Passive wine cellars are often installed in cool, dark places (such as finished basements) and can start at around $5,000. "Usually, the person is not a serious wine collector," says Doty. "They're into it, they love drinking it, but don't have an extensive collection."

Leveling up and keeping cool with active wine cellars

For serious collectors, active wine cellars offer more control of refrigeration and humidity — and have the price tag to match.

Instead of drywall, active wine cellars use mold-resistant blue board and spray foam insulation to protect the room from heat. Varas says a 300-foot wine cellar usually starts around $60,000.

Some people install wine fridges within their cellars so they can store different types of wines — such as Champagne, which is kept at a cooler temperature than Merlot — in the same space.

Do wine cellars add resale value to a house?

It depends.

"It's hard to put a dollar amount on it, but what we see, especially in homes above $5 million, is you need a hook," says Harvin Greene, a real estate agent with Dorsey Alston Realtors in Atlanta. "You need something that pulls people in and is unique."

Luxury cellars add a unique element that can set a house apart, and at that price level, a wine cellar is almost expected, even if they’re not always used for wine.

"We're starting to see people use them a lot for bourbons, tequilas and also cigars," says Greene. In homes under $2 million, she finds that cellars aren't as appreciated because space is more limited, and owners aren’t storing high volumes of wine.

In these homes, wine cellars won't raise the appraised value, but a thoughtfully integrated wine feature, such as a wine fridge or a small-scale cellar, stands out. "That's a nice feature that doesn't take up a lot of square footage and doesn't require a massive amount of wine to fill it," says Greene.

Who really 'needs' a wine cellar in their home?

Wine cellars make the most sense for wine enthusiasts investing in their collections, which often means buying in bulk and tracking maturation dates.

"I like to be able to understand when a wine is going to be at its maturity and peak," says Varas. "It's a fun investment strategy where you buy a bottle that you're not able to drink for several years and you’re getting it at a discounted rate."

For example, you might buy a 2021 bottle of Château Lafite Rothschild that doesn’t mature until 2029. "That bottle you could purchase today at $200 and a fully matured one that's ready to drink, it's $1,500," he says. "But you're able to buy it at an 80% discount because of the wait."

Apps such as InVintory help track when bottles are ready.

Wine cellars don't have to be luxurious to be functional. In Napa, Stevie Stacionis, a wine strategist and restaurateur, recently built a wine cellar in her garage for about $2,200 with the help of her handy husband. Industrial Metro rack shelving lines the 72-square-foot room, the wine bottles reside in stackable cardboard tubes, and thick rubber mats cover the concrete floors (in case of earthquakes). The cellar stays at a cool 57 degrees with controlled humidity to keep the corks plump.

Protecting the wine’s integrity was paramount; the aesthetics, not so much.

"About 90% of the wine in our cellar, I'm going to drink it very soon," says Stacionis. "However, I do care about how intact it stays, and I know that I don't keep my house at a proper temperature."

Stacionis mostly buys wines made with minimal intervention, so they're more sensitive to temperature fluctuations. "You want to protect the wine from heat, light and oxygen," she says.

The bottom line on home wine cellars

Ultimately, a full-fledged wine cellar isn't for everyone, especially if you're not buying wine by the case or trying to design a showpiece. It's not all or nothing, however. For those who don't want to invest in a wine cellar, a wine cooler is a step in between.

Stacionis suggests a EuroCave wine cooler, which mimics a wine cellar's temperature and humidity settings without taking up too much space.

"If you're buying wine and your house is never going to be more than 70 degrees, and you think you're going to drink the wine within the next few months, just keep it in the fridge," says Stacionis. "If you're really looking to save it for longer than a year, it just needs to be at a proper temperature in a wine fridge."

Whether you’re growing a Burgundy collection or stocking up on enough Sauvignon Blanc to last through summer, properly stored wine is a luxury itself — club seating optional.

Related content

• The Most Reliable Luxury Cars of the Last Decade
• Houses for Sale in Napa, California for Wine Lovers
• Home Upgrades That Pay Off
• Is a Backyard Pool Worth It? 10 Things to Know Before You Buy a House With a Pool
• Struggling with How to Plan a Trip? These Companies Will Help

The Kentucky Derby takes place this weekend, kicking off the race for the Triple Crown. For equestrian enthusiasts, it's the best time of year. But imagine you could live your best equestrian life every day of the year, buying an estate with horse-equipped facilities. You could take your horse out of boarding and give them a real home with your family.

In this edition of Kiplinger's "Listed," where we take a look at real estate listings around the world following a certain theme, we highlight equestrian estates for sale across the United States. The homes range from cowboy living out West to a modern compound outside Manhattan.

This edition is special to me: I grew up around stables in the Midwest and some of my fondest childhood memories were made riding the show horses at my classmate's barn. Imagine you could give your children or grandchildren that idyllic experience growing up with joy and responsibility.

1. Start your own equestrian center in Washington

This 158-acre site in Washington has huge business potential. Horse riding can take place in the indoor arena, while a separate house provides guest accommodation away from the main property. And if you want to make hay, quite literally, 143 acres are leased for hay production (with subdivision potential).

Address: 5500 Weaver Road, Ellensburg, Washington (listed by Tayna Lorella, Compass)
Price: $2,495,000 | Specs: 4 beds / 3 baths; 4,543 sq. ft. / 158 acres

Home highlights:

• Secluded main house with update primary suite
• Two-bedroom, one-bath guest house
• Indoor and outdoor riding areas, tack room
• Commercial barn (600-ton capacity), a hay barn and a 3-bay garage

2. Down on the farm in North Carolina

With its classic red barn and stone farmhouse, this North Carolina property ticks all the boxes if you want traditional American style with a side of luxury. The four-bedroom home is immaculate, and horses will be very well catered for in their barn, with five stalls, a tack room and a heated wash stall. Outside there are 12 acres of land, fenced pastures, a large, lighted riding area and plenty of practical outbuildings.

Address: 3417 Pea Ridge Road, New Hill, North Carolina (listed by Linda Trevor, Linda Trevor & Co, Compass)
Price: $1,500,000 | Specs: 4 beds / 3 baths; 2,715 sq. ft. / 12.34 acres

Home highlights:

• Pristine interiors, cathedral ceilings and hardwood floors
• Stone family-room fireplace
• Chef's kitchen with stainless steel appliances, granite countertops
• Owner's suite with two walk-in closets and spa-style en-suite bath
• 5-bay tractor shed, chicken coop and heated workshop
• Secure gated entrance

3. Mountain air in Wyoming

One of my favorite horse-riding experiences was a trail ride outside Jackson Hole, and this home in Alta gives you the opportunity to live that dream. The property includes a recently remodeled main home that's over 3,000 square feet as well as a log cabin and a barn with an apartment.

Address: 1905 Beaver Drive, Alta, Wyoming (listed by Fall Line Realty at Compass)
Price: $2,950,000 | Specs: 5 beds / 4 baths; 3,896 sq. ft. / 3.62 acres

Home highlights:

• Views of the Tetons, Grand Targhee and Big Hole Mountains
• 12-foot swim spa in dedicated room
• Whole home generator
• Firepit, fenced pastures, stocked spring-fed pond

4. Grand ranch near Houston

Located outside Houston, this property gives you the best of both worlds with a modern luxury ranch to live in and a six-stall horse barn with tack room and wash bay, as well as a horse arena.

Address: 1980 County Road 220, Angleton, Texas (listed by Mark Miller & Marc Zachrau at Compass)
Price: $2,999,999 | Specs: 4 beds / 4 baths; 4,800 sq. ft. / 30 acres

Home highlights:

• Saltwater pool and hot tub
• Stocked pond, gun range, workshop and horse barn
• Separate 2,246 square-foot office on property
• Gourmet kitchen

5. Texas Hill Country estate

This property literally on "Lone Rider Trail" offers plenty of space for a crowd. The main home was recently renovated with two primary suites and the home is amid an equestrian community with trail paths.

Address: 13824 Lone Rider Trail, Austin, Texas (listed by Asher Flynn at Compass)
Price: $5,995,000 | Specs: 7 beds / 8 baths; 7,097 sq. ft. / 7 acres

Home highlights:

• Part of Meadowfox Estates, 30 minutes from downtown Austin, fronting Little Barton Creek
• Pool and screened-in porch
• In-line generator and Tesla charger
• Room for three horses

6. Immaculate estate in Tennessee

Fifty-six acres to call your own in a fully renovated home south of Nashville in Franklin. This property has a full equestrian facility with a professional riding arena. No expense was spared in the renovation, from a spa room with an infrared sauna and cold plunge to EQ-80 footing for the riding arena.

Address: 426 Cotton Lane, Franklin, Tennessee (listed by Megan Jernigan at Compass)
Price: $11,90,000 | Specs: 6 beds / 5 baths; 7,397 sq. ft. / 56 acres

Home highlights:

• European oak hardwood floring and Cle Zellige Moroccan sea salt shower in primary suite
• Home theater, private gym, spa room with infrafred sauna and cold plunge
• Pastures, pond and more grounds

7. Mid-century modern in Sleepy Hollow

The historic Winterburn Farm is located in Westchester's Pocantico Hills, just north of New York City. The home was designed for Rodman Rockefeller by Richard P. Donahue and includes a 14-stall stable with indoor and outdoor riding arenas.

Address: 48 Raafenberg Road, Sleepy Hollow, New York (listed by David Turner at Compass)
Price: $12,00,000 | Specs: 5 beds / 6 baths; 7,538 sq. ft. / 42 acres

Highlights:

• 42-acre compound with main residence, stable, manager's house, greenhouse, carriage barn and equipment garage
• Direct access to 55-mile carriage trail network of Rockefeller State Park
• Great room in main home with 20-foot ceilings and walls of glass with views of the Hudson River

This is part of Kiplinger's series "Listed." Be aware that due to the nature of real estate, property statuses may have changed by the time you read this.

Is there a particular home feature or location you want to see listings for? Email the author at alexandra.svokos@futurenet.com.

Get More Listed

• 5 Historic Philadelphia Homes for Sale Now
• Fired Up By the Masters and RBC Heritage? See These Homes for Sale By Golf Courses
• Luxury Waterfront Homes for Sale Around the US
• Houses for Sale in Napa, California for Wine Lovers
• Homes for Sale With Basketball Courts

If you’re 65 with $3 million saved, then yes, you can buy a vacation home: congratulations! But you should only purchase that second home under certain circumstances — or you may get a double dose of regret when you turn 66.

The good news is that you are ahead of your peers on a broad level. The average net worth of someone your age is about $1,794,600, and the more accurate (i.e., less skewed by wealthy outliers) mean net worth is only $409,900. Remember, that's net worth, which includes all of your assets, not just savings, so you're lucky indeed.

Of course, your decision to buy a vacation home will hinge mainly on the cost of that home and your priorities. But there are a few factors to consider when making your choice.

Buy a vacation home only if you can handle opportunity cost

A $3 million nest egg at age 65 puts you in a strong position to cover your retirement expenses, provided they’re reasonable. If you apply the famous 4% rule to your nest egg, $3 million gives you the leeway to grant yourself a $120,000 annual salary. And that’s not counting income from Social Security.

Qualifying for a mortgage in retirement can be challenging, since you don't have job-related income. But if you’re buying a vacation home mortgage-free, your $3 million is going to be whittled down. How much? That depends on the cost of your vacation home.

Even if you don’t buy that vacation property outright, or you get it for a steal, there are ongoing expenses you’ll need to contend with. All homes need to be insured and maintained. There are also property taxes and utilities to cover.

You’ll need to add up the total expense of owning that home and figure out what other aspects, if any, of your lifestyle you’ll need to give up. You may find that a vacation home takes the place of international travel, for example. And that may be just fine. But understand what you’re losing as well as what you’re gaining.

And if you dip into your savings to finance the second home, your money will no longer earn investment income as it would likely do in a diversified portfolio. While you may be lucky and get a good return on investment from your vacation home if you need to sell, there's no guarantee you will. In many cases, the appreciation of your vacation home value is offset by the costs of owning and maintaining the property. Moreover, your vacation home investment isn't liquid, so easy cash is out of reach in case of an emergency.

The work involved when you own a vacation home

It’s no secret that owning a vacation home is expensive. But there’s also the time you’ll need to put in to keep it in good shape that you must think about.

If you’re 65 and retired, you may have time on your hands to fix up a vacation property and perform regular maintenance tasks on top of tending to your primary home. If you’re still working, or working part-time, your hours may be more limited, at least initially.

You’ll also need to ask yourself whether it’s work you want to do. If joint achiness or arthritis is starting to creep in, you may not relish the idea of having more bushes to trim, more countertops to scrub, more bathroom tiles to re-grout and more leaky faucets to battle. But if you love DIY projects, fixing up your home might be a great hobby in retirement.

Will you actually use your vacation home?

You may be picturing a vacation home you escape to regularly for peace and quiet or a change of scenery. But before you start making offers, think about how often you’ll actually use that property.

A Pacaso survey found that 59% of existing and expectant second-home owners visit or intend to visit more than four times a year. But that means a good chunk of vacation property owners may not be getting great use out of their second homes.

Location, of course, will be a big part of that. A vacation home that’s two hours away by car is one you might use more often than one requiring a three-hour flight.

But think about whether your expected usage is worth the cost and effort. You may find that it’s less expensive — and less of a hassle — to rent a home in your favorite vacation spot a few times a year rather than own one yourself.

That said, if you only expect to use your vacation home sporadically but like the idea of having it available as an option, you could consider renting it out on a short-term basis during periods when you won’t need it. If the home is generating some rental income, you can offset your ownership costs — perhaps so much so that you can justify the expense of a property manager. Just be aware that renting out your vacation home comes with specific tax rules you should know before making a purchase.

A property manager might give you the best of both worlds — your own private vacation escape without having to do the maintenance yourself. But work closely with a real estate agent who knows the area and make sure rental laws or HOA rules, if applicable, won’t get in the way of those plans.

Even if nothing is barring you from renting out your vacation home on a partial basis, there could be backlash from neighbors to consider. And nothing makes a vacation home less peaceful for the times you do want to use it than scowling neighbors.

Do your research

The U.S. economy and housing market are in a state of flux, to put it mildly. Most Americans say it's a bad time to buy a home, given high mortgage rates and economic uncertainty. So, before you buy, do rigorous research. Consider how tastes are changing, as fewer people want to retire to Florida, for example, compared to the past. Also, investigate the risk of flooding or wildfires near your new home, keeping in mind that these problems are predicted to worsen. You should also check if your dream home is in a zip code where home insurance rates and claims have skyrocketed.

If you do your homework and find a great location that makes sense for your retirement security and happiness, then go for it! Life expectancies may be longer these days, but the adage that "life is short" still seems to apply. Don't be so averse to spending your retirement savings that you miss out on making some sweet memories.

Read More

• 10 Things for Retirees to Know About Buying a Second Home
• 5 Great Places to Buy a Vacation Home
• Vacation Rental in Retirement: Should You Airbnb or VRBO Your Home for Extra Cash?
• The True Cost of Owning a Second Home
• Should You Buy a Vacation Home?

Many components contribute to the cost of your home. Along with price, the interest rate on your mortgage is an important consideration.

Currently, mortgage rates are rising, driven by geopolitical tensions, inflation and other factors. The average rate on a 30-year mortgage is 6.36%, according to Freddie Mac.

Following its May meeting, the Federal Reserve held rates steady, a move that is likely to keep borrowing costs elevated in the near term. While the Federal Reserve’s decisions can influence savings accounts and short-term lending rates, mortgage rates tend to follow the 10-year Treasury yield more closely.

What's the 10-year Treasury yield?

The 10-year Treasury yield is the government's borrowing cost for a decade. As such, the Treasury rate influences everything from corporate bonds to mortgage rates.

You can see the correlation between mortgage rates and the 10-year Treasury bond in the chart below:

Why are mortgage rates tied to the 10-year Treasury yield? Since mortgages last longer than shorter-term lending options tied to the federal funds rate, they require a benchmark, where the duration reflects the average mortgage.

This is why the 10-year Treasury yield comes in, because it lasts about as long as the average homeowner has a mortgage.

If you're in the market for a mortgage, use the tool below, powered by Bankrate, to compare some of today's top mortgage rates:

How does the Treasury yield impact mortgage rates?

Recently, the 10-year Treasury yield increased to 4.591, its highest level in 15 months. And when this yield rises, so can borrowing costs, specifically with mortgage interest rates.

With this in mind, who influences the Treasury yield? It's investors' expectations on short-term interest rates. When investors buy mortgage-backed securities, they're pledging money for a longer term than, say, a one-year Treasury bill since they're investing in a package of mortgage loans.

As such, elevated risk comes with longer-term investments.

It's why investors want a term premium to ensure they're earning a return on their investments. This premium influences the interest rate you'll pay on mortgages.

They use the following economic factors to guide their expectations:

• Monetary policies: When the Federal Reserve sets the federal funds rate, it's a benchmark for short-term rates. While it doesn't directly impact mortgage rates lenders assess, it can give investors an idea of future monetary policy, which they can use to influence investing decisions. And if investors lose confidence in the Fed, they might require higher returns, which could raise mortgage rates.
• Economic growth: When the economy does well, investors seek more promising opportunities such as equities. Meanwhile, when there's economic uncertainty, as there is now, with more tariffs being implemented, slower job growth and the war in Iran driving up everyday costs, investors look for safer investments, which Treasury bonds offer.
• Inflation: When inflation becomes higher, investors seek higher interest rates. The latest CPI report showed the Consumer Price Index rose 3.8% in the past year, indicating that the costs of everyday goods, particularly energy and gas prices, are driving prices higher.

What's the mortgage spread?

On top of this, there's a mortgage spread. It's the difference between your mortgage rate and the 10-year Treasury yield. Traditionally, it's been from 0.71 points to 1.4 points, according to Fannie Mae.

The spread consists of two parts: The primary-secondary spread and the secondary spread. The primary-secondary spread factors in mortgage origination fees, other lender costs and profits.

Meanwhile, the secondary mortgage spread is the difference between the mortgage-backed security (MBS), which investors purchase, and the 10-year Treasury rate.

The secondary spread covers some risks investors might face. To illustrate, an increased risk of prepayment can cause the spread to rise as investors won't maximize returns if the mortgage ends prematurely.

This can happen when homeowners shop around and find a lower interest rate; they might be inclined to take advantage of it through refinancing.

Why the 10-year Treasury yield matters for your mortgage rate

The 10-year Treasury yield plays a major role in determining mortgage rates, so when it rises, as it has recently, borrowing often becomes more expensive.

If you're considering buying or refinancing, keep an eye on the Treasury yield, but also compare lenders to find the best deal for your specific situation.

Related content

• Find the Best 30-Year Mortgage Rates
• Why the 10-Year Treasury Yield is so Important Right Now
• My Mortgage Rate is 6.5%. Should I Refinance If Rates Fall By Half a Point

Picture this: You're sitting at your desk, with an intricately patterned window looking out onto the streets of Philadelphia. As you think of the next line to write in your novel, you're inspired thinking of all the luminaries who passed by and may have even come in for tea.

A life imbued with history and charm could be yours in a historic home. Philadelphia is renowned for its history, and these homes hold it proudly in their bones, which have withstood generations and demonstrate cleverness in their architecture. Over the years, they've had renovations, too, making them ideal for a modern life built on the shoulders of giants.

For this week's "Listed," I sourced these breathtaking historic homes from top real estate companies. There are some real gems in here, including a jaw-dropping home on Rittenhouse Square, each featuring exquisite details and charming features pointing to its past.

1. Lavish renovation, Delancey Street

Who wants the hassle of renovating a historic home? All the work has been done for you in this vast 1863 residence on one of the best blocks in the city — and no expense has been spared. That means exquisite interiors, bespoke finishes and ingenious touches throughout, such as a glazed butler's pantry, a secret office and motorized drapery.

Address: 2041 Delancey St, Philadelphia (listed by Lavinia Smerconish, Compass)
Price: $8,400,000 | Specs: 4 beds / 6 baths; 7,500 sq. ft.

Home highlights:

• Featured on the Philadelphia Register of Historic Places
• State-of-the-art kitchen appliances including a La Cornue range cooker
• Huge primary bedroom suite with dressing room and spa bathroom
• Modern practicalities including laundry room, mudroom and elevator
• Fenced courtyard and off-street parking for one vehicle

2. The Cadwalader Mansion, Spruce Street

For a home steeped in local history, it's hard to beat this five-story mansion built as a wedding gift for a prominent Philadelphia family. Every inch of the house has been respectfully preserved, from its unique limestone front façade to the original moldings, Tiffany chandeliers and marble fireplaces. As you'd expect from the price, it's also been fitted with 21st-century luxuries.

Address: 2102 Spruce St, Philadelphia (listed by Mary Genovese Colvin and Margaux Pelegrin, Compass)
Price: $4,325,000 | Specs: 5 beds / 8 baths; 5,752 sq. ft.

Home highlights:

• Unique historic features, including marble entryway, original safe and elevator
• Five bedrooms, each with an en suite
• Modern living space on fourth floor with a kitchen and media room
• Multiple laundry rooms, wine cellar, catering kitchen and bar
• Landscaped garden, sundeck and a two-car garage

3. Industrial architecture, Longshore Avenue, Tacony

To find a more affordable property, head to the Tacony Disston District. This epic red-brick building once housed the Tacony Saving Fund And Trust Company. It's now a cool loft-style home, with plenty of cosy nooks inside the vast living spaces across three floors, not to mention a full recording studio and musician's quarters.

Address: 4900 Longshore Avenue, Philadelphia (listed by Kristin McFeely, Compass)
Price: $1,070,000 | Specs: 3 beds / 3 baths; 9,300 sq. ft.

Home highlights:

• Loft-like open spaces with turn-of-the-century industrial features
• Patinaed hardwood floors, tin ceilings, original vault and freight elevator
• Statement arched windows
• Side garden and on-street parking

4. Luxury meets functionality, Delancey Place

Back on Philadelphia's most coveted block, this townhouse has been sympathetically restored after an earlier renovation stripped out its original features. Aside from the elegant interiors, that means new kitchens and bathrooms, multi-zone heating and cooling, dimmable lighting, integrated speakers, an elevator and a three-car garage.

Address: 1808 Delancey Place, Philadelphia (listed by Mary Genovese Colvin and Margaux Pelegrin, Compass)
Price: $4,180,000 | Specs: 4 beds / 6 baths; 5,034 sq. ft.

Home highlights:

• Historically accurate renovation with all mod-cons
• Custom cabinetry in kitchen and bathrooms
• Family room with surround sound system and motorized shades
• Self-contained guest suite with kitchenette on fourth floor
• Two decks, panoramic views of Philadelphia’s skyline

5. The best address in Philadelphia, Rittenhouse Square

And finally, your chance to own an iconic home on Rittenhouse Square itself. This palatial property covers the entire third floor of a magnificent beaux-arts building and can be separated into two separate units. It has to be seen to be believed, but highlights include floor-to-ceiling arched windows, park views, a former ballroom, and a walk-in closet even Carrie Bradshaw would move to Philadelphia for.

Address: Unit 3AB, 1830 Rittenhouse Square, Philadelphia (listed by Alon Seltzer, Compass)
Price: $6,780,000 | Specs: 4 beds / 5 baths; 5,650 sq. ft.

Home highlights:

• Full-service luxury condominium
• Two-bed main residence, with a den, library and great room
• Juliet balconies overlooking Rittenhouse Square
• Boutique-inspired closet, with doors crafted from antique windows
• Two-bed, two-bath back residence
• Private foyer and internal hallway that can combine the two units

This is part of Kiplinger's series "Listed." Be aware that due to the nature of real estate, property statuses may have changed by the time you read this.

Is there a particular home feature or location you want to see listings for? Email the author at alexandra.svokos@futurenet.com.

Get More Listed

• 5 Homes for Sale By Golf Courses
• Luxury Waterfront Homes for Sale Around the US
• Houses for Sale in Napa, California for Wine Lovers
• Homes for Sale With Basketball Courts
• Listed: Homes to Buy in Hawaii

Homebuying season is here — which means you're not alone if you’re on the hunt for a new home. You and many others are shopping around. But according to a recent study, you’ll need to earn at least six figures to land a typical home in the U.S.

According to a Bankrate study, 30 states and the District of Columbia are more demanding of homebuyers, requiring them to earn nearly $117,000 if they want to buy a home in these areas. This is up 50% from five years ago, when the typical income was almost $78,000.

Prices aren’t the only thing that’s changed. The typical homebuyer today is older, wealthier and less likely to be purchasing their first home.

According to data from the National Association of Realtors (NAR), first-time buyers now make up just 24% of the market, down from 32% last year — and the lowest share since NAR began tracking the data in 1981.

The median age of first-time buyers rose to 38, while repeat buyers are even older, typically 61 years old, up from 58 the year before. These stats point to just how challenging affordability has become, especially for younger buyers trying to break into the market for the first time.

What’s causing the increase?

Home prices have been climbing for the last five years. Homebuying demand soared when interest rates hit rock bottom during the COVID-19 pandemic in 2020 and 2021, causing prices to skyrocket.

But inventory didn’t keep up with demand. Homes that went on the market sold within a couple of days or weeks — sometimes without home inspections or appraisals — and in some cases, buyers bought homes sight unseen.

Today, inventory still hasn’t kept up with the demand. While there’s an increase in home listings, there are many more prospective homebuyers than home sellers. Because of that, sellers can list their homes for a premium price, knowing there are more people who are looking to buy them, even if homes have stayed on the market longer than a few years ago.

While home prices are going up, mortgage rates are climbing with it. The national average for a 30-year mortgage is 6.90%. In December of 2024, it was 6.87%.In January 2022, it was 3.50%. We may never see the same rock-bottom mortgage rates we did during the early pandemic years, but with the increase in mortgage rates and home prices, it’s getting even more difficult to afford to buy a home.

Home prices are at an all-time high and wages haven’t increased at the same rate. The median sale price of homes sold in January 2025 was $419,200. The federal minimum wage is $7.25 an hour and has not changed since 2009.

Use the tool below, in partnership with Bankrate, to compare offers and rates from different mortgage lenders.

States with the highest and lowest income requirements

How much money you make impacts where you can live. While nationwide market trends can help paint a picture of how the housing market is doing across the country, there are many different housing markets. And in some markets, you’ll need to earn a lot more to afford an average home in those areas.

According to the Bankrate study, the states where you need to earn the most are:

1. District of Columbia: $240,009
2. Hawaii: $235,638
3. California: $213,447
4. Massachusetts: $174,392
5. Colorado: $168,643

On the other end of the list, the states where you can earn the least are:

1. West Virginia: $64,179
2. Iowa: $70,437
3. Ohio: $71,080
4. Mississippi: $72,072
5. Indiana: $72,342

Utah saw the biggest increase. In January 2020, the median home sale price was $433,546 (adjusting for inflation). As of January 2025, it’s now $605,400 — an 89.4% jump, or $151,956. Montana saw the second-biggest, at $151,956.

Can you buy a home in 2025?

Even though home inventory is growing ever-so-slightly right now, it’s harder than ever to buy a home in 2025. Home prices may go down in some housing markets while others will see it go up. It depends on the area, the community, the economy and other factors.

Along with your specific homebuying checklist, you’ll also need to consider a few other things.

1. How much home can you afford? Think beyond just the principal and interest when estimating your monthly mortgage payment. You’ll also need to account for property taxes, homeowners insurance, and, in many cases, private mortgage insurance (PMI).

Even with a fixed interest rate, your monthly payment can increase over time due to changes in taxes and insurance costs. That’s why it’s smart to build in a little wiggle room when calculating what you can comfortably afford.

2. Explore what homebuying programs you might qualify for. Whether it’s your first home or your fifth. Many cities, counties and states offer programs that can help with down payments, closing costs, or favorable loan terms.

Every location is different, so take time to research what’s available where you live — or where you plan to move. These programs can vary widely, and a little digging could save you thousands.

3. Shop around for everything. Don’t settle for the first lender you come across. Mortgage rates and loan terms can vary widely, so it pays to compare offers. Start by getting prequalified and then preapproved to show sellers you’re a serious buyer when touring open houses.

And don’t stop at your mortgage. It’s just as important to shop around for homeowners insurance. An insurance agent can help you find the best coverage and rate based on your location, property and specific needs.

The bottom line

Buying a home in 2025 isn’t impossible, but it does require more planning, patience, and persistence than in years past.

Rising prices and higher mortgage rates have made affordability a challenge, but with the right strategy — and a clear understanding of your budget and options — you can still make smart moves in today’s competitive market.

Related Content

• How a Home Equity Line of Credit (HELOC) Works
• How Much Does It Cost to Sell a House? Don’t Overlook These Common Fees
• Is a Backyard Pool Worth It? 10 Things to Know Before You Buy a House With a Pool

Editor’s note: This is the third article of a series about wealth planning for different generations. Part one is Talkin' 'Bout My Generational Wealth: Baby Boomers, and part two is Come as You Are: Wealth Management for Gen X. Part four will address financial planning for Generation Z.

Just as a great club DJ crafts a mix that transitions smoothly between tracks, effective wealth management for Millennials involves navigating a landscape marked by a mix of modern challenges and rebounds.

For a primer on how to craft a great music playlist, I recommend watching the movie High Fidelity.

The Millennial generation, also known as Gen Y, was born from 1981 to 1996. They are now 29 to 44 years old and find themselves in the midst of the wealth accumulation phase of life.

This article, the third in a series drawing inspiration from iconic songs, moves from the grunge of Nirvana to the digital beat that has defined a generation shaped by early economic upheaval.

Using the sounds of our time, I have a few recommendations to keep the music hopping and make this time of life an important period of wealth creation.

'Rolling in the Deep': A dark economic backdrop

The first song of a playlist is important, and this playlist’s first song is pretty dark.

This generation’s entry into adulthood accompanied the 2008 financial crisis, which echoed the somber tones of Adele’s "Rolling in the Deep" — where opportunities for growth and prosperity seemed deep in the abyss.

Just as this age group was graduating from college and entering the workforce, the market downturn of the financial crisis disrupted early career trajectories, which in turn delayed wealth building and stability.

Despite technological advancements and economic recoveries, real wage growth has not kept pace with inflation, widening the gap between financial expectations for adulthood and reality.

The relative wage stagnation has forced many to face the grim music of financial instability, delaying this generation from advancing from saving to investing.

'Can’t Hold Us': Strategic financial beats

Despite a slower start and continual economic uncertainties, the second song on Millennials’ playlist, by hip-hop duo Macklemore & Ryan Lewis, will help improve the mood a little.

Using the high-energy song “Can’t Hold Us” as motivation, sound financial planning can help this generation push forward.

Foundations of financial planning. Effective financial planning for Millennials involves a comprehensive understanding of both income and expenses. It's crucial to create a budget that accommodates longer-term savings goals, while still managing day-to-day expenses.

This generation also needs to consider how they can use financial planning tools and technology to better track their progress and adjust their plans in real-time.

Navigating homeownership. The impact of past economic instability has left many Millennials cautious about buying that first home. Post-Financial Crisis, higher housing prices, coupled with more stringent lending standards and heightened mortgage interest rates, have meant that many in this generation may delay or forgo home purchase.

For those opting out of immediate homeownership, investments in real estate investment trusts (or REITs) may provide a less burdensome way to benefit from real estate appreciation and income without the direct challenges of a significant down payment and mortgage payment.

Emergency funds. Creating an emergency fund is essential for mitigating risks associated with sudden job loss or unexpected financial expenses. This fund acts as a financial buffer that can help maintain stability during economic downturns or personal crises.

For Millennials, who value security but may face more frequent career transitions, having an emergency fund of at least six months is a critical component of a sound financial plan.

Debt and cash management. With student loans being a significant burden, understanding how to manage and prioritize different types of debt is essential for financial health. Millennials should focus on paying down high-interest debts first, as these are costlier over time.

Knowing how to leverage debt effectively — such as choosing when to refinance or consolidate — can also lead to significant savings and better credit scores.

Some debts are also better than others when taking into consideration the possibility of potential tax deductions, which could enhance your bottom line.

Remember: Money is fungible, so be smart about which debt to pay down first.

Education savings. For those with young children, it’s never too soon to start saving for the next generation.College Maximizing tax-preferred savings vehicles like 529 plans can greatly reduce the future burden of education expenses.

By starting early, Millennials can take advantage of tax-free, compounded growth, making it easier to manage higher-education costs for their children.

Retirement savings. Given this generation is expected to not only live longer, but also work longer to enjoy a well-funded retirement, Millennials need to be strategic about their retirement planning.

This involves not only saving but also investing wisely to ensure that their retirement funds can withstand longer periods of inflation and potential market fluctuations.

A diverse portfolio that includes a mix of equities, bonds and other investments can help achieve the growth needed to support a longer retirement.

'Count on Me': Young families require estate planning

Last up for this playlist: Can it be anyone but Bruno Mars?

In addition to securing one’s financial future with a sound estate plan, this generation also needs to start thinking about their families’ future — and recognize that there are others who are counting on them for support — financial, emotional and otherwise.

Many Millennials have started families and have small children. While their assets level may not be at the point where significant and complex tax planning is necessary, please keep in mind the following “musts” for families with young kids:

Guardianships. At this stage in life, the most critical part of an estate plan is arguably naming a guardian for your minor children. Without a properly executed will in place naming a guardian, this decision would be determined by the courts.

In most cases, interested parties, including family members or friends, will likely step in and petition the court to be appointed as guardian — but this would cause unnecessary delays and uncertainty at a time when stability for young children is most needed.

This is such an important decision and provision in the will that I often advise clients to name at least two layers of successors should your first and second choice not be able to serve.

Risk mitigation. From a risk mitigation perspective, life insurance is a critical component. If a parent were to pass away and his/her income is cut off, would there be enough of a reserve to take care of the family going forward?

Here is where a simple term insurance policy may be helpful. The premiums are relatively inexpensive when the insured is young and healthy. I often get asked, how much insurance coverage do I need? That depends on what problem you’re trying to solve.

One recommendation is to identify a financial need, consider its associated time horizon, and then back into the number.

For example, if you’re looking to have enough insurance coverage to pay off your mortgage and/or college tuition, what is the amount you need today, assuming a reasonable rate of return, that would cover your mortgage and your children’s future college expenses?

Once you have the amount in today’s dollars, then you can price out how much those premiums would be and adjust from there to fit your budget.

Millennials and Gen Ys got off to a challenging start. But with proper planning, the future can be as bright as Beyonce’s catchy “Break My Soul,” which talks about finding a new drive, fresh motivation and a new foundation.

Many Millennials have navigated successfully the choppy waters of a post-financial crisis world and moved into the wealth accumulation phase.

No reason that the last song in this generation’s playlist can’t be a great one!

Up next: We move to Billie Eilish and continue with the financial journey of Gen Z, born from 1997 to 2012.

Wilmington Trust is not authorized to and does not provide legal or tax advice. Our advice and recommendations provided to you is illustrative only and subject to the opinions and advice of your own attorney, tax advisor or other professional advisor.

Related Content

• 6 Retirement Wealth Strategies to Start Young, Finish Strong
• What Are the Hidden Costs of Homeownership?
• 10 Things You Should Know About Estate Planning
• How to Shop for Life Insurance in 3 Easy Steps
• Seven of the Best Budgeting Apps for 2025

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

Your jaw dropped in shocked silence when Rory McIlroy's putt slithered past the hole, sending him into a sudden-death playoff against Justin Rose. You stood, too nervy to stay seated, as the men played it out, dripping in tension. And then: The elated release as McIlroy did what he came to Augusta to do and took home the green jacket. As he cried into the green in joy, you at last let out that shout you were holding in.

Now, what if you could step outside your house and see that beautiful game any day of the week?

As part of Kiplinger's "Listed" series, I gathered several gorgeous homes for sale now that are all right by a golf course. Just imagine watching the Heritage Classic from your backyard pool knowing you can walk over and get in a round any time you want.

1. Austin home by Falconhead Golf Club

This imposing five-bed home backs onto the rolling greens of Falconhead Golf Club, in Texas Hill Country. Although the course is public, the house sits within a private gated area. That means plenty of quiet outside of tee times. It also has its own putting green in the backyard.

Address: 4008 Sugarloaf Drive, Austin, Texas (listed by Sarah McAloon, Compass)
Price: $1,625,000 | Specs: 5 beds / 4 baths; 5,149 sq. ft.

Home highlights:

• Impressive outdoor space with multi-level pool, spa, outdoor fireplace and grilling area
• Study with its own exterior entrance — ideal for a home office
• Games room and a media room with wet bar
• Three-car garage

2. Boulder Country Club home in Colorado

There's nothing quaint about this ranch-style home backing onto the exclusive Boulder Country Club and its 18-hole championship golf course. Inside is all clean minimalism and luxury finishes. Tall windows and doors let in huge amounts of natural light and make the most of views across the green to Colorado's Front Range.

Address: 7323 Old Post Road, Boulder, Colorado (listed by Kristin Kalush, Compass)
Price: $3,395,000 | Specs: 3 beds / 4 baths; 3,143 sq. ft.

Home highlights:

• Plank oak floors and custom cabinetry throughout
• Primary bedroom with walk-in closet and marble spa bathroom
• Top-of-the range kitchen with Thermador wine cooler
• Additional outdoor kitchen with a built-in grill, sink and bar fridge
• Central courtyard with lounging spaces and mature Japanese maple tree

3. Trophy of a home in the Dallas area

Back in Texas for a golf enthusiast's dream house. The outdoor space, overlooking the championship Whitworth Course at Trophy Club, has its own custom putting green. And when you're done practicing, you can fire up the outdoor grill and green egg barbecue, or relax in the spa and the self-cleaning pool.

Address: 425 Ramsey Trail, Trophy Club, Texas (listed by Tommy Pistana, Compass)
Price: $1,560,000 | Specs: 5 beds / 6 baths; 4,978 sq. ft.

Home highlights:

• Heated patio with electric sliding screens
• A large primary suite and four other bedrooms each with an en-suite
• An upstairs games room and media room/gym
• A new Generac generator for the entire home

4. Live like royalty in Houston

You'd be forgiven for mistaking this lavish home for a hotel, thanks to its chandeliers, marble and sweeping staircases. It's also designed to make the most of its position on the signature (16th) hole of the Royal Oaks golf course — there are sensational views from every angle, including the vast primary suite on the first floor and the wrap-around balcony upstairs.

Address: 11907 Louvre Court, Houston, Texas (listed by Laura Sweeney and Marc Zachrau, Compass)
Price: $2,200,000 | Specs: 5 beds / 7 baths; 6,168 sq. ft.

Home highlights:

• Stained-glass entryway with high ceilings
• Open concept living/dining room and kitchen on first floor
• Four bedrooms and bathrooms on the second floor
• A theatre/media room (with a hidden room behind a bookshelf), plus a wet bar
• A pool/hot tub, and a three-car garage

Bonus: California estate for sale by golf course

And finally, if you'd like to unleash your competitive spirit, you should snap up the Bella Diablo Vista gated estate in California. This extraordinary, Tuscan-inspired villa has indoor and outdoor kitchens, olive and fruit trees, a vineyard — and state-of-the-art security systems. Meanwhile, a spouse with time on their hands will appreciate the nearby Blackhawk Country Club and its two 18-hole golf courses.

Address: 940 Eagle Ridge Drive, Danville, California (listed by Joujou Chawla, Compass)
Price: $12,300,000 | Specs: 6 beds / 8 baths; 10,521 sq. ft.

Home highlights:

• Custom craftsmanship throughout, including Venetian plaster walls, quarried travertine floors, coffered ceilings and ironwork
• State-of-the-art movie theater and an executive office
• Climate controlled 1200-bottle wine room, dog-washing room
• Detached guesthouse in the grounds, plus infinity-edged pool and spa
• Two staircases, an elevator and a five-car garage

This is part of Kiplinger's series "Listed." Be aware that due to the nature of real estate, property statuses may have changed by the time you read this.

Is there a particular home feature or location you want to see listings for? Email the author at alexandra.svokos@futurenet.com.

Get More Listed

• Luxury Waterfront Homes for Sale Around the US
• Houses for Sale in Napa, California for Wine Lovers
• Homes for Sale With Basketball Courts
• Listed: Homes to Buy in Hawaii

Picture this: It's the fourth of July and you're on your terrace with family and friends. The sun's just going down over the lake, the barbecue's still glowing and soon fireworks will light up the night sky, while glittering reflections play on the water. There may be a few sore heads tomorrow morning, but a dip in the pool will chase those away.

Waterfront properties like the ones in this week's "Listed" are in a league of their own when it comes to entertaining. They all have amazing outdoor spaces for hosting — one even has a grand total of six guest accommodations. But the great thing about living close to water is the peace and tranquility it affords (when the crowds have departed).

With that in mind, we asked top real estate companies to share some of the best waterfront properties they have for sale around the country now. Here are their top picks close to lakes, bayous and beyond.

1. Stunning new construction on Lake Norman, North Carolina

Be the first to own this stylish new build, tucked away in a private 1.45-acre haven on the banks of Lake Norman, 30 minutes north of Charlotte. Floor-to-ceiling windows in every room make the most of the stunning views from inside, while outside you have your own dock and infinity pool (with swim-up bar) for recreation and entertaining.

Address: 2536 Brawley School Road, Mooresville, North Carolina (listed by Heather Gibbs and Josh Tucker at Corcoran)
Price: $9,250,000 | Specs: 4 beds / 7 baths; 6,859 sq. ft.

Home highlights:

• Luxurious primary suite with flex office, plus three guest suites
• Gym and theater with private powder room
• Open floor plan with 10" white oak hardwood flooring throughout
• Chef’s kitchen with an oversized Taj Mahal quartzite island
• Infinity pool and swim-up bar with 100-inch TV
• Dual-gated entrance with garage for three cars

2. Outdoor living in Lake County, California

This lakeside home near Lucerne, California, is perfect for those who love the outdoor life. Its recently refurbished dock includes a boat lift and jet ski lifts. And the house sits within a gated community with its own pickleball court. There are plenty of hiking trails locally — and acres of vineyards, of course. Perfect for stocking up on wine to enjoy on your balcony after a day in the sun.

Address: 8403 Paradise Lagoon Drive, Lucerne, California (listed by Craig Burnett and Stephanie Conner, Corcoran)
Price: $1,375,000 | Specs: 3 beds / 4 baths; 3,180 sq. ft.

Home highlights:

• Updated kitchen with brand new appliances and a large walk-in pantry
• Open family room with lake views, fireplace and bar
• Three bedrooms, each with an en-suite bathroom
• Patio and pergola, with lawned area and outside kitchen
• Community facilities include tennis and pickleball courts, a park and a separate boat launch ramp

3. A modern sanctuary, Radnor Lake Nature Preserve, Tennessee

Dip into modern luxury amid the tranquility of the Radnor Lake Nature Preserve. This coolly designed home has a lot to offer, with beauty both inside and outside.

Address: 5308 Lancelot Road, Brentwood, Tennessee (listed with Aaron Joyce of Corcoran Reverie)
Price: $2,850,000 | Specs: 7 beds / 6.5 baths; 8,870 sq. ft.

Home highlights:

• Smartly designed by architect Michael Goorevich with tons of exquisite details
• Glass walls to open up to the nature outside
• Gas fireplace and cathedral ceilings
• Private elevator and two laundry rooms

4. Southern charm and freshwater views in Florida

This enormous Southern-style home is perched on its very own peninsula, surrounded by freshwater River Pond. Inside there's ample space for entertaining family and friends, and the wrap-around porches on all levels ensure everyone gets to enjoy the private waterside views.

Address: 15702 FL-77, Southport, Florida (listed by Carly Sostheim, Corcoran Reverie)
Price: $2,000,000 | Specs: 5 beds / 7 baths; 7,200 sq. ft.

Home highlights:

• Private 32-acre estate
• Luxury chef's kitchen plus screened-in summer kitchen and home theater
• Self-contained mother-in-law suite
• Vast basement and heated/cooled storage
• Full-size elevator giving access to all floors

5. An artist's paradise, Louisiana

It's the first time on the market for this artist's home on the edge of Bayou Bonfoucal. Glass walls flood the home with light and afford inspirational views across water and gardens full of magnolia and lilies, while two additional dwellings within the grounds can be used as art studios or guest houses.

Address: 350 Faciane Lane, Slidell, Louisiana (listed by Alice McNeely and Mat S. Berenson, Latter & Blum | Compass)
Price: $2,850,000 | Specs: 2 beds / 3 baths; 2,183 sq. ft.

Home highlights:

• Tall ceilings and windows maximize views and light
• Main residence has two bedroom suites, living room, kitchen and wet bar
• Two additional dwellings, one with a kitchenette and a loft-style bed and bath
• Stunning terrace with vanishing edge pool
• Mature gardens with native cypress, wild irises, lilies, magnolias and oaks

Bonus: Colorado dream house

And finally, if you've ever dreamed of being lord or lady of the manor, now's your chance. The historic Greystone Estate estate above Upper Bear Creek in the Rockies comprises a manor house, six additional residences and 54 acres of alpine land. It can be yours for a cool $16.75 million.

Address: 222 Greystone Rd, Evergreen, Colorado (listed by Jessica Northrop, Compass)
Price: $16,750,000 | Specs: 7 beds / 8 baths; 12,086 sq. ft.

Home highlights:

• 25-room manor house, including a library, wine cellar, bar and gym
• Six other properties on the estate: the Guest House, the Carriage House, the Historic Log Cabin, the Stone Cottage, the Pool House and the Pavilion
• Tennis courts, outdoor pool and spa/hot tub
• Within an hour of Colorado's ski resorts

This is part of Kiplinger's series "Listed." Be aware that due to the nature of real estate, property statuses may have changed by the time you read this.

Is there a particular home feature or location you want to see listings for? Email the author at alexandra.svokos@futurenet.com.

Get More Listed

• Houses for Sale in Napa, California for Wine Lovers
• Homes for Sale With Basketball Courts
• Listed: Homes to Buy in Hawaii
• Fabulous Homes to Retire in Portugal

Let’s cut to the chase: what puts Florida on the global map, the tourism map, and the retirement map is its 825 miles of sandy beaches. That topographical blessing, coupled with the state’s tropical and subtropical climates (it’s a big state), has always been its indelible draw as one of the best places to live.

Florida has also served as a haven for tax refugees: according to TurboTax, it has the fifth-lowest overall tax burden in the nation, owing, in large part, to the absence of a state income tax. (Read our Florida State Tax Guide).

During the COVID-19 pandemic, those realities were just some of the reasons for the so-called Great Migration, when hundreds of thousands of people — including a posse of ultra-high-net-worth individuals — headed south from colder, higher-tax states, and marquee businesses relocated or expanded their operations in the Sunshine State.

Florida’s burst of growth and activity has made it even more enticing to retirees, whether you crave the Atlantic or the Gulf Coast, an urban lifestyle or a chill vibe.

1. Miami Beach, best for sand, sea, and sightseeing

• Population: 82,890 [Census]
• Cost of living: 50% higher than the U.S. average [ERI]
• Average single-family home price: $513,208 [Zillow]
• Average rent: $3,350 [Zillow]

There is a common misconception that Miami Beach is a neighborhood within the city of Miami proper, but this coastal resort icon is actually a city in itself, located on one main barrier island — and some small, highly exclusive manmade isles that dot Biscayne Bay.

Miami Beach’s shoreline inarguably counts as one of the world’s finest urban beaches, with miles of powdery white sands; clear, turquoise waters, a winding biking and walking path, and numerous outdoor workout stations.

The most famous and picturesque part of Miami Beach is South Beach, which is human-scale and home to one of the highest concentrations of art deco and midcentury buildings on the planet. The so-called Art Deco District was the first 20th-century neighborhood to be recognized by the National Register of Historic Places. Miami Beach teems with nightlife and dining options.

2. Coral Gables, best for an affluent environment with top-tier shopping and recreation

• Population: 49,248 [Census]
• Cost of living: 53% higher than the U.S. average [ERI]
• Average single-family home price: $1,491,894 [Zillow]
• Average rent: $3,600 [Zillow]

Miami-Dade County’s expertly planned community, known for its ubiquitous Mediterranean Revival architecture and some of the nation’s wealthiest zip codes, is home to several significant landmarks, including the highly rated University of Miami; the century-old Biltmore Hotel, which features an 18-hole golf course and one of the country’s biggest swimming pools; and the quirky Venetian Pool, a whimsical marvel filled with grottos and waterfalls.

But Coral Gables is more than a residential enclave; it is rapidly diversifying and drawing businesses to its lush streets. Miracle Mile functions as the city’s main drag, replete with dining, entertainment, and shopping, while the Shops at Merrick Park boasts such luxury brands as Gucci, Neiman Marcus, and David Yurman. Several condo-hotels, such as Cassia Residences and The Avenue, are in progress and within walking distance of this chic indoor-outdoor mall.

3. Naples, best for showing off your Ferrari, hitting the links, and retiring in style

• Population: 19,704 [Census]
• Cost of living: 34% higher than the U.S. average [ERI]
• Average single-family home price: $576,169 [Zillow]
• Average rent: $5,900 [Zillow]

For those drawn to Florida’s Gulf Coast, Naples is synonymous with wealth and the good life, and with an ample population of retirees. Parks, golf courses, and pickleball courts abound, not to mention the enduring attraction of its beaches, with their soft sands, calm waters, and spectacular sunsets.

As evidenced by its annual Cars on 5^th Concours, which is sponsored by the Naples Chapter of the Ferrari Club of America, the city is an epicenter for luxury auto enthusiasts. But when the Ferraris, Lamborghinis, and Porsches roar away, Fifth Avenue — which counts as the city’s main street — returns to walkable normalcy, and is rife with cafes, bars, and more than a dozen art galleries.

4. Palm Beach, best for hobnobbing with the rich and famous

• Population: 9,258 [Census]
• Cost of living: 434.4% higher than the U.S. average [Bestplaces]
• Average single-family home price: $2,127,973 [Zillow]
• Average rent: $13,000 [Zillow]

Known as one of the most exclusive resort destinations in the world, Palm Beach, located on a barrier island across from West Palm Beach, is anchored by the Breakers Palm Beach. The owners insist upon the full name — The Breakers Palm Beach — because the brand is more than a historic hotel featuring four swimming pools and a half-dozen dining venues: the company has also invested mightily in adjacent real estate, spreading the wealth to revitalize Royal Poinciana Way, with its charming boutiques and eateries.

The locals who drink and dine at Buccan, La Goulue, and Sant Ambroeus (a popular offshoot of the New York-based chain) live in pricey condos — or mansions valued in the tens of millions, whether they front the Atlantic Ocean or the Intracoastal Waterway.

The most well-heeled homeowners and visitors stay for the cooler months of “the season,” then flee the summer humidity for the Hamptons or to make jaunts to Europe.

5. Key West, a laidback island that encourages creativity and eccentricity

• Population: 25,103 [Census]
• Cost of living: 80% higher than the U.S. average [ERI]
• Average single-family home price: $1,061,463 [Zillow]
• Average rent: $5,000 [Zillow]

After conquering the Overseas Highway, a roughly four-hour drive from Miami (five, if you stop for steamers at Lazy Days), you’ve arrived at an end-of-the-world kind of place, with its own eccentric customs and rituals. The nation’s southernmost city proved a draw for Ernest Hemingway (his former home is a museum and National Historic Landmark that bears his name), Tennessee Williams (who also inspired an eponymous museum), and President Harry S. Truman, who maintained a winter White House here that you can also visit.

Most of the island’s business happens on the 1.25-mile-long Duval Street, which is packed with seafood eateries and shops. The strand passes near the vibrant waterfront setting of Mallory Square, with its outdoor entertainers, sunset views, trolley tours, and cruise ship docking.

People visit and settle down in Key West for its Caribbean flavor and its arty, come-as-you-are vibe — and it remains one of Florida’s most distinctive places to retire.

6. St. Petersburg, best for a thriving arts scene as well as a suntan

• Population: 263,553 [Census]
• Cost of living: 17% higher than the U.S. average [ERI]
• Average single-family home price: $360,584 [Zillow]
• Average rent: $2,200 [Zillow]

Located in the Tampa Bay area and known for its sunny weather and namesake pier (which is full of attractions), St. Pete’s is also a heavy hitter in terms of culture. The city is home to one of the world’s few museums devoted to surrealist artist Salvador Dalí, in addition to the encyclopedic Museum of Fine Arts, the Palladium Theater (which features concerts, dance, and Broadway-style shows), and the Morean Arts Center (offering exhibits and classes), which boasts a permanent collection of the work of glass artist Dale Chihuly. If the pieces by Chihuly leave you wanting more, the Imagine Museum is devoted to glass art from around the world.

Unlike some other Florida cities, St. Pete’s boasts an acclaimed downtown. Colorful Central Ave. is loaded with boutiques, vintage shops, restaurants, and bars, so if you want access to all that downtown offers, note that some of the city’s loveliest homes (including historic houses) dot nearby Beach Drive, which extends in a northeasterly diagonal past a series of waterfront parks.

Related content

• Florida Tax Guide
• Why Do People Retire in Florida? 9 Things You Must Know
• 10 Reasons You Don't Want to Retire in Florida

People who are thinking of retiring to Wyoming are a self-selecting bunch.

They already know that the state is lightly populated, with fewer than 600,000 people who call it home. But that number doesn’t mean much unless you consider density, and indeed, Wyoming is the least densely populated state in the continental U.S. In a state-by-state contest, you’d have to go to Alaska to be more alone.

Wyoming is called the Equality State because it was the first state to extend women the right to vote, hold public office and serve on juries, but not many women — or men — live amid its spectacular natural beauty or enjoy its low taxes.

Wyoming carries the second-lowest tax burden in the country (there is no state income tax). In this case, too, it’s second only to snowy Alaska. (See our Wyoming Tax Guide).

Wyoming boasts scenery so impressive — in many ways, it’s incomparable among the 50 states — that many Americans have skied, hiked, and simply marveled in this rather remote, landlocked state, despite its tiny population.

Grand Teton National Park, Yellowstone National Park, and the enigmatic Devils Tower National Monument (made famous by its repeated mystical appearances in the sci-fi classic Close Encounters of the Third Kind) are all here. Top-notch skiing draws the winter crowds, and come July, Wyoming is a premier summer resort destination.

If you want the closest thing to a big city, try Cheyenne

• Population: 65,132 [Census]
• Cost of living: 4% lower than the U.S. average [RentCafe]
• Average single-family home price: $367,236 [Zillow]
• Average rent: $1,375 [Zillow]

With around 65,000 people, Wyoming’s state capital contains a population comparable with that of Santa Cruz, Calif., Daytona Beach, Fla., and Alpharetta, Ga. — so you’re unlikely to die of loneliness.

Cheyenne's downtown includes a 7-block-long historic district anchored by the Depot Museum and Plaza, which functions as a kind of town square and cultural hub. The museum displays the history of the city, and the plaza is the site of free summer concerts every Friday, an annual brewers’ festival and educational tours.

Pubs, cafes, coffee shops, and restaurants are all within walking distance of downtown, but most homes are at least a few miles away. Three- and four-bedroom houses are older and typically cost from $400,000 to $500,000, but keep your eyes peeled for newly constructed or renovated townhouses and condos.

Outdoor enthusiasts can take advantage of the convenient hiking and biking trails, picnic spots, and fishing holes, from Lions Park in the center of the city to Curt Gowdy State Park, a 30-minute drive from Depot Plaza.

If you want a world-class resort destination, try Jackson Hole

• Population: 10,639 [Census]
• Cost of living: 39% higher than the U.S. average [Economic Research Institute (ERI)]
• Average single-family home price: $1,968,484 [Zillow]
• Average rent: $6,125 [Zillow]

If you’ve ever visited Wyoming, chances are you’ve been to Jackson, which is why the recorded population of this resort town — 10,000-plus — feels quite low.

With its famous town square featuring entrances made of elk antlers fashioned into arches, the eminently walkable Jackson is filled with bars, cafes, galleries, boutiques, and a century-old playhouse. Breakfasts are especially indulgent events (check out the Bunnery and Persephone).

Friendly and charming as the cowboy town is, Jackson’s real calling card is its access to some of the nation’s most iconic scenery, wildlife viewing, and recreational offerings. Teton Village, which surrounds Jackson Hole Mountain Resort, is 12 miles to the north and is a hub of activity for its winter sports and luxury hotels; the Four Seasons chain planted its flag here in 2003.

Keep driving to reach Grand Teton National Park and Old Faithful in Yellowstone National Park; on the way, the road in the shadow of the mountains (the “hole” refers to the valley of Jackson Hole) is dotted with lodges, alpine lakes, and chuckwagon dinner spots.

Unsurprisingly, as one of the country’s most elite resort enclaves, Jackson Hole has more than its share of multimillion-dollar houses, condos, and townhomes.

If you want the flavor of the Old West, try Cody

• Population: 10,028 [Census]
• Cost of living: 16% lower than the U.S. average [ERI]
• Average single-family home price: $493,473 [Zillow]
• Average rent: $1,825 [Zillow]

As the crow flies, Cody doesn’t seem far from Jackson, just due northeast, but given that the mountainous terrain requires a roundabout route, it can take four hours or more to reach this town near the Montana border. It takes almost as long to drive from Cody to Yellowstone.

Founded by Old West legend Buffalo Bill Cody, the town — the county seat of Park County — has its own attractions.

Surrounded by mountain ranges, Cody is picturesque, epitomizing the Old West, complete with a seasonally open ghost town called Old Trail Town, which features preserved frontier buildings from the 1890s.

Peak season begins in May and brings with it rodeos, horseback rides, and ATV tours. For chow, there’s barbecue, wood-fired pizza, even Thai — and lots of establishments with “saloon” in their name.

Homes for Cody’s approximately 10,000 residents tend toward ranch-style, mountain-modern houses, wooden cabins, and a scattering of Victorians with gingerbread trim.

If you want a college town, try Laramie

• Population: 31,407 [Census]
• Cost of living: 8% lower than the U.S. average [RentCafe]
• Average single-family home price: $366,299 [Zillow]
• Average rent: $1,125 [Zillow]

Located about 50 miles northwest of Cheyenne, in the southern part of the state, Laramie enjoys a robust population of more than 30,000, as the city is home to the University of Wyoming. The university’s enrollment of more than 12,000 students guarantees that Laramie will remain a vibrant, stimulating place to live.

The university’s art museum is a hotbed of intellectual and cultural activity — from exhibits and art tours to lectures and galas. The school’s Geological Museum is also highly regarded.

The local dining scene prides itself on its eclecticism, going beyond steakhouses and bakeries to quaint storefronts offering craft cheeses and craft chocolate, plus gastropubs and vegetarian joints.

It takes only a few minutes to drive from the campus to LaBonte Park, with its lovely pond and community garden; a fair share of the homes that come to market in Laramie are just north of the park.

If you want to see rodeos, try Sheridan

• Population: 18,737 [Census]
• Cost of living: 11% lower than the U.S. average [ERI]
• Average single-family home price: $412,763 [Zillow]
• Average rent: $1,699 [Zillow]

Renowned for its physical beauty, Sheridan is on the cusp of the Bighorn Mountains and Bighorn National Forest.

Hunting, fishing, camping and visiting dude ranches are the quintessential pastimes in the area, but if you want to stick around town, there’s a fine sense of community between the festivals and live music on Main Street and the tennis courts and swimming pool at Kendrick Park.

With a population of under 20,000, Sheridan might hit the sweet spot for retirees and others. The town gets lively in the summer when the Sheridan WYO Rodeo kicks off, ushering in Old West showmanship, prize-winning stock, carnivals, Native American pageants, and athletic contests.

Related content

• Wyoming Tax Guide
• 11 of the Best Places to Live in California
• Happiest Places to Live in America 2025: How Does Your Town Rank?

Picture this: You drive down the road from your new favorite vineyard, a case of wine that you picked up after gabbing with the owner happily jingling in the backseat. Inside your house, you open the large fridge and see that great cut of meat and fresh vegetables. It's decided, you'll have a barbecue tonight, that wine will pair perfectly, celebrating nothing other than being alive.

Imagine if your time in Napa didn't have to end when vacation did? If you so enjoyed staying in the VRBO, why not buy a house in the famed valley and enjoy your years there?

This could be your life with a house in Napa, California. I sourced some dream listings of houses for sale now from top real estate companies. See where you could be living.

1. Chef's kitchen and vegetable garden in Napa

This home is situated in a neighborhood surrounded by nature and vineyards. It's a classic California-style home complete with a pool and exquisite landscaping, as well as a chef's kitchen and vegetable garden.

Address: 3489 Westminster Way, Napa (listed by Terry Wunderlich and Chris Wunderlich, Corcoran Icon Properties)
Price: $1,679,000 | Specs: 4 beds / 2.5 baths; 2,254 sq. ft.

Highlights:

• Great room with fireplace
• Excellently designed patio, pool and organic vegetable garden
• Primary suite bathroom includes heated floor, sunken soak tub and double sinks
• 3-car garage and RV access

2. Glorious Santa Rosa retreat

This Wikiup home in Santa Rosa offers a stately, lush retreat with plenty of character and amenities.

Address: 1447 Wikiup Drive, Santa Rosa (listed by Heidi Would, Corcoran Icon Properties)
Price: $1,749,000 | Specs: 5 beds / 5.5 baths; 5,500 sq. ft.

Highlights:

• Sweetly landscaped home with a large deck
• Gigantic kitchen space with huge countertops and island sitting spaces
• Apartment with its own entrance, including a kitchen

3. Newer build in Riebli Valley

This Santa Rosa home was built in 2020 with an eye for lush details and amenities. It includes vaulted ceilings with Douglas Fir beam details and Lutron lightning systems.

Address: 4200 Old Vineyard Lane, Santa Rosa (listed by Lauren Thompson, Corcoran Icon Properties)
Price: $3,300,000 | Specs: 4 beds / 3.5 baths; 3,854 sq. ft.

Highlights:

• Wide plank white oak limestone flooring
• Main level includes primary ensuite, two guest bedrooms, living room, laundry, kitchen and dining
• Lower level could be an in-law unit
• Huge backyard with bocce court, fire pit and garden area
• 3-car garage

This is part of Kiplinger's series "Listed." Be aware that due to the nature of real estate, property statuses may have changed by the time you read this.

Is there a particular home feature or location you want to see listings for? Email the author at alexandra.svokos@futurenet.com.

Get More Listed

• Gorgeous Lake Houses for Sale Around the US
• Homes for Sale With Basketball Courts
• Three Homes to Buy in Hawaii

Whether it’s a cozy cabin in the mountains, a beachfront condo or a lakeside retreat, owning a second property gives families the freedom to escape the hustle and bustle of everyday life and create lasting memories in a space that’s all their own.

Approximately 6.5 million homes in the U.S. serve as second homes, accounting for 4.6% of the total housing stock, according to the National Association of Home Builders (NAHB). They’re often used for vacations, weekend getaways or future retirement, and some owners rent them out to generate passive income.

Whether you're a pre-retiree looking for a quiet retreat, a frequent traveler wanting a home base in a favorite destination or someone hoping to build home equity through a vacation home, there are plenty of benefits to owning a second property. However, before you start browsing listings or planning your next vacation, it's important to understand the full financial picture.

From larger down payments to ongoing maintenance and insurance, the cost of owning a second home can be higher than many buyers expect. Take a look at the most common costs associated with second homes so you can make an informed decision before taking the plunge.

Second home loans often require a larger down payment

Primary residences have fewer qualification restrictions compared to owning a second home. For primary homes, you can qualify for some mortgages with as little as no down payment or upfront costs. For second homes, you’ll need to prove financial security, and that might come with a larger down payment.

Repeat buyers tend to put down significantly more than first-time buyers, according to the National Association of Realtors (NAR). The average down payment for first-time buyers was 9% in 2024, while repeat buyers put down an average of 23%. In fact, about one-third of repeat buyers skipped financing altogether and purchased their second homes with all cash.

This trend reflects both the financial resources often required to own a second home and the importance of having equity or liquidity to support the purchase.

Be prepared to manage two mortgage payments

In addition to your current mortgage, buying a second home means taking on another monthly mortgage payment if you're not purchasing with all cash. This can be a significant financial commitment, especially if you’re still paying off your primary residence.

Housing costs accounted for nearly one-third of total monthly expenses in 2023, according to the Bureau of Labor Statistics. These costs can vary widely depending on factors like income level, household size and location. If your second home is in an area with a high cost-of-living, your monthly expenses may be even higher due to increased property taxes, insurance rates and utility costs.

Unless you’re planning to pay cash for the second property or have already paid off your primary home, you’ll need to budget carefully to ensure you can comfortably handle two mortgage payments at once. Lenders will also evaluate your debt-to-income ratio to determine whether you can realistically afford another loan, so having a strong financial profile is essential.

Factor in higher homeowners insurance costs

Before you can close on a second home, most mortgage lenders will require you to have homeowners insurance in place. Even if you only use the property occasionally, you’ll need to maintain coverage year-round to protect your investment.

Insurance premiums vary based on several factors, including the home’s location, condition and how you plan to use it. For example, if your second home is located in a high-risk area — such as a coastal region prone to hurricanes or an area vulnerable to earthquakes — you may need additional coverage like earthquake or flood insurance. These aren’t typically included in standard homeowners' policies and can significantly increase your annual insurance costs.

How you use the home also matters. If you plan to rent out your vacation property, a standard homeowners policy may not offer sufficient protection. In that case, you’ll likely need landlord insurance or a short-term rental policy, both of which come with higher premiums but offer more comprehensive coverage for tenants and rental-related risks.

Not sure what type of coverage you need? Explore home insurance options using the tool below:

Understand the tax implications of a second home

No matter how often you use your vacation home, you’ll still be responsible for paying property taxes. In some cases, you may also owe income taxes depending on how you use the home throughout the year.

If your second home is strictly for personal use, you can typically deduct mortgage interest, just like with a primary residence under current IRS rules. However, if you plan to rent out your vacation home, the tax situation becomes more complex.

The IRS uses a specific formula based on how many days the property is rented versus how many days you use it personally. This can affect whether your home is considered a rental property or a personal residence for tax purposes — and what deductions you qualify for.

In addition to federal taxes, state and local property taxes will apply. Some states or municipalities offer tax breaks or exemptions, particularly for homes used as primary residences or part-time retirement dwellings, but these often don’t extend to second homes.

It's a good idea to consult a tax professional or a financial adviser to understand how your vacation home will impact your tax liability and which deductions or benefits might apply.

The cost of utilities and upkeep for a second home

Whether you’re regularly in it or not, you’ll need to maintain your vacation home. The amount you pay varies depending on the home’s purpose, but other costs include:

• Utilities like water, sewage, electricity and gas
• Homeowners Association (HOA) fees
• Repairs and replacements
• Lawn care
• Pool maintenance, if applicable
• Home furnishings and appliances
• Property management and household cleaning services, if applicable

For those who plan on renting out their vacation homes, you might need to pay for other services, like a property manager or someone who stays near your second home to help run it while you’re away.

For instance, you may not want to hire a cleaning service if you visit your vacation home regularly and can manage those tasks on your own. But you may want to hire a service if you’re renting out the home when you’re not using it to maintain it.

The bottom line

Owning a second home can be a great investment for retirees, pre-retirees or anyone who wants a personal getaway without the hassle of booking lodging for every trip. It offers convenience, comfort and the potential for long-term value.

However, vacation homes come with added responsibilities — both financial and practical. Beyond the purchase price, you’ll need to budget for ongoing expenses like insurance, taxes, and utilities, as well as upkeep and maintenance, even when you're not there. From hiring property managers to handling repairs, owning a second home requires time, planning, and resources. Before making the leap, consider all aspects of ownership to ensure it fits your lifestyle, budget, and long-term goals.

Use the tool below to compare some of today’s best mortgage rates and see if a second home is in your future:

Related Content

• Tax Tips for Renting Out Your Vacation Home
• Should You Buy a Vacation Home?
• How a Home Equity Line of Credit (HELOC) Works
• Tap Your Home's Equity for Retirement Income

Picture this: You wake up in the primary suite as the sun rises over the lake outside. It's looking like another stunning day on your tranquil oasis. Shall you get the kayaks out, rev up the boat or set up the beach chairs? You smile, considering the possibilities and knowing your next step is to sit on the porch with a steaming mug of coffee and let the day play out.

This can be your life if you own a house on a lake. Whether you want it for a primary or vacation home, this is sure to be a place to make lifelong memories.

I asked top real estate companies to show me some of the fabulous lake houses up for sale now around the country. Take a look at what's on the market now.

1. Renovated mid-century with a double-decker dock on Lake Sammamish, Washington

Just east of Seattle, you'll find Lake Sammamish, a freshwater lake ideal for boating and fishing. This 4,000-square-foot house is right on the water and features its own double-decker dock, useable both for getting into the water and for dining outside with your friends and family.

Address: 650 Lake Sammamish Ln NE, Bellevue, Washington (listed by Margo Allan at Compass)
Price: $5,478,000 | Specs: 5 beds / 5 baths; 3,997 sq. ft.

Home highlights:

• In addition to the deck, there's a sandy beach and Basta boat lift
• Listing includes a 4-bed/3-bath main residence and a 1-bed/1-bath beach cottage, great for hosting or as an au pair or in-law suite
• Stylish main entrance with architectural details
• Plenty of windows to see the views
• Built-in outdoor grill

2. Cedar Creek Lake estate outside Dallas

Pacific Northwest not your speed? Try the Dallas-Fort Worth area deep in the heart of Texas. This estate sits in the 505 Ranch Club at Cedar Creek Lake, a gated community that offers tons of outdoor activities including fishing and sailing on the water, as well as ATV trails, a skeet range and an equestrian center.

Address: 455 Sun Valley, Mabank, Texas (listed by Suzanne Warner at Compass)
Price: $5,395,000 | Specs: 5 beds / 6 baths; 5,898 sq. ft.

Home highlights:

• Wonderfully updated kitchen including a spacious stovetop with griddle
• High ceilings in community-focused rooms
• Plenty of windows to take in the lake views
• Infinity pool overlooking the lake
• Built-in bunk beds for hosting

3. Modernist home in Chapel Hill by University Lake

Five minutes from UNC, find this unique modern home tucked into the woods by University Lake.

Address: 721 Jones Ferry Road, Chapel Hill, North Carolina (listed by Peggy Jennings & Shenandoah Nieuwsma at Compass)
Price: $2,500,000 | Specs: 3 beds / 4 baths; 3,413 sq. ft.

Home highlights:

• Modern home designed by local architect Philip Szostak
• Ribbon windows to be connected to nature outdoors
• Fun quirks like hidden pantries, bookcase doors and secret drawers
• Induction cooktop, wine fridge and tankless water heater

4. Nantucket style in Lake Geneva, Wisconsin

Since the late 19th century, Lake Geneva has been a popular hideaway for Chicago's finest. Why not partake in tradition with a Newport-style home in the Newport of the West?

Address: N2301 Knollwood Drive, Lake Geneva, Wisconsin (listed by Janis Hartley at Compass)
Price: $8,695,000 | Specs: 5 beds / 5 baths; 5,358 sq. ft.

Home highlights:

• Full renovation done in 2017-2019
• Heated screen porch
• Three en suite bedrooms
• Plenty of porches and windows to enjoy the lake view
• Massive double-use bathroom with makeup chair space and a huge walk-in closet
• Outdoor firepit and pergola

5. Hill country living over Lake Austin

Get the best of Texas hill country at this gated estate in Austin, overlooking Lake Austin.

Address: 3601 Cloudy Ridge Road, Austin, Texas (listed by Matt Holm & Crystal Ogle at Compass)
Price: $6,950,000 | Specs: 7 beds / 7 baths; 9,674 sq. ft.

Home highlights:

• Separate 700-square-foot cabana with kitchen and half bath
• High ceilings and comfortable community spaces
• Fully finished garage apartment with full kitchen, bath and two bedrooms
• Freshly renovated, improved and/or installed roof and gutters, pool, painting, garage floor and sprinkler system
• Plenty of windows and doors to get outside and see the lake
• Primary suite includes private deck and steam shower

This is part of Kiplinger's series "Listed." Be aware that due to the nature of real estate, property statuses may have changed by the time you read this.

Is there a particular home feature or location you want to see listings for? Email the author at alexandra.svokos@futurenet.com.

Get More Listed

• Homes for Sale With Basketball Courts
• Listed: Homes to Buy in Hawaii
• Fabulous Homes to Retire in Portugal

Buying a home has long been a cornerstone of the American dream, but homeownership isn’t the right financial move for everyone — even for millionaires who can easily afford it.

From 2010 to 2015, the number of millionaire renters tripled, according to RentCafe, signaling a shift in how wealthy individuals approach housing. This trend continued, with data analyzed by The Wall Street Journal revealing that between 2018 and 2022, the percentage of households earning $750,000 or more that chose to rent increased to a record high of 10.5%.

While many assume that financial success automatically leads to homeownership, an increasing number of high-net-worth individuals are opting to rent instead. For many, the decision comes down to four key factors: high housing costs, better investment opportunities, lifestyle flexibility and uncertain market conditions.

1. High home prices and mortgage rates make buying less appealing

Being a millionaire doesn’t mean folks are willing to make bad money moves. Right now, mortgage rates are between 6% and 7% for a 30-year fixed-rate home loan. Even though rates are slowly dropping, that’s still impactful on monthly payments.

For a millionaire buyer looking at a $1.5 million home, putting down 20% — or $300,000 — would still cost them almost $9,000 a month in principal, interest, taxes and insurance payments. And that’s not including utilities or other moving and living expenses.

While we may never see the 3% mortgage rates of 2021, interest rates still matter.

2. Renting offers flexibility, convenience and luxury

As return-to-office mandates increase and high-paying roles demand on-site work, some employees — millionaires included — may not want to be tied down to a single location. Renting provides the flexibility to relocate for career opportunities without the challenges of selling a home, a process that can take months. According to HomeLight, homes for sale spend an average of 66 days on the market, and that doesn’t include the time required for closing and moving.

Many luxury rentals offer more than a place to live, they provide a lifestyle. Upscale rental communities often feature concierge services, state-of-the-art fitness centers and resort-style amenities, making renting an attractive alternative to homeownership.

For example, The Residences at Book Tower in Detroit offers tenants high-end conveniences like coworking and meeting spaces, on-site restaurants and personalized concierge services. For frequent travelers or professionals who value convenience, these all-inclusive rental experiences eliminate the hassle of home maintenance while providing access to premium amenities that homeowners might have to build or manage themselves.

For many high-net-worth individuals, the combination of flexibility, convenience and luxury makes renting a more appealing option than committing to homeownership.

3. Renting frees up capital for better investments

Buying a home is often seen as a solid investment, but for many millionaires, it’s not necessarily the best use of their capital. Rather than tying up millions in real estate — along with property taxes, maintenance costs and market fluctuations — many wealthy individuals prefer to keep their money liquid or invest in higher-yield opportunities.

Diversification is key. Some millionaires choose to invest in stocks, bonds and private equity, while others channel their wealth into business ventures or commercial real estate that can generate passive income.

The S&P 500, for example, has delivered an average annual return of around 10% over the past decade, but in 2023, it soared by 26%, followed by more than 24% growth in 2024. With returns like these, many high-net-worth individuals see greater financial upside in the markets compared to homeownership, which typically appreciates at a much slower rate.

Additionally, real estate requires significant upfront costs, from down payments to closing fees, which could be deployed elsewhere for potentially higher returns. For some, the ability to quickly access capital for business opportunities, investments or even philanthropic endeavors outweighs the long-term commitment of owning a home.

Ultimately, for millionaires who view their wealth as a tool for financial growth rather than stability, renting allows them to remain agile with their investments while avoiding the liquidity constraints that homeownership can impose.

4. Limited supply

Homebuyers at every budget point have ideas of what they want in a home. Millionaires may have more cash to buy a house, but those available homes may not meet their preferences. At the end of 2024, Freddie Mac reported a 3.7 million-unit housing shortage, even as the economy was on the upswing.

Even though mortgage rates are dipping, homes aren’t selling at the same rate they were a couple of years ago. With a limited supply of available homes, many millionaires would prefer to rent until they can find a home that meets all their requirements. In some cases, the type of home they want simply doesn’t exist on the market, meaning they may need to build from the ground up.

Custom construction can be a lengthy and expensive process, requiring time for land acquisition, permitting and design before construction even begins. Once building starts, incorporating all of the features a buyer wants, luxury materials and smart-home integrations can extend the timeline, sometimes taking years to complete.

Faced with these challenges, some wealthy buyers opt to rent indefinitely, avoiding the hassle of construction while maintaining flexibility in an uncertain market. Others may even decide that homeownership isn’t worth the effort and instead choose long-term luxury rentals, where they can enjoy premium amenities without the commitment of building or renovating a home.

5. Other priorities

Not everyone sees homeownership as the best financial move. While they may have the means to buy, many prefer to rent, choosing to allocate their wealth toward other priorities. Some may want to launch a new business and need liquidity to fund their startup. Others might prioritize savings goals like early retirement and international travel.

Owning a home isn’t the right choice for everyone, regardless of income. For some, renting offers greater flexibility and financial freedom, allowing them to wait for the perfect home rather than settling for something that doesn’t fully meet their needs.

Wondering what mortgage rates look like today? Use the Bankrate tool below to find out.

related content

• Elements of a Financial Snapshot for High-Net-Worth Individuals
• Are You Rich? U.S. Net Worth Percentiles Can Provide Answers
• Being Rich vs Being Wealthy: What’s the Difference?

In some ways, now is a challenging time to take the plunge and buy your dream home. Many homeowners who locked in ultra-low mortgage rates a few years ago continue to stay put — limiting the supply of homes for sale — and it remains to be seen how the new presidential administration’s policy decisions will affect the housing market.

But the general consensus among some of the country’s most respected housing economists is this: If you need to buy, then buy. And if you do decide to buy, make an informed decision.

“Trying to time the housing market is a fool’s errand,” says Joel Berner, a senior economist at Realtor.com. “The right time to move is the right time to move for you, as long as you can find a place that meets your budget and fulfills your needs.”

Some people have no choice but to move. Perhaps they have a new job and are relocating to a new city. Maybe they have a new baby and need more space, or they got divorced and need less.

Others opt to move to improve their lifestyle — to be closer to work, for example, or to have a backyard for the kids to play in.

In early February, Nhu Vien Nguyen and her fiancé, Brian Timko, were on track to close on the purchase of a two-bedroom, two-bath condominium in Cambridge, Mass., after “watching and waiting” for months for a unit to hit the market in a building they love.

The commute is just 15 minutes to Timko’s job, and even though the couple are paying $845,000 for the unit and will be responsible for a monthly condo association fee of $693 in addition to their mortgage payment, the numbers work in their favor.

Nguyen says she previously paid $3,900 a month in rent, plus a $110 pet fee for her dog, Kevin. Now, the couple’s mortgage payment and association fee total $5,079, saving Nguyen $1,470 a month on her $2,540 share of the monthly expenses.

“We weren’t so concerned about interest rates because we can always refinance,” says Nguyen, 40, an insurance-industry client advocate. “But the inventory in that building in Cambridge is limited, and two-bedroom units don’t open up frequently.”

Housing market fundamentals

Supply and demand are the primary drivers of the housing market. When supply — the inventory of homes available for sale — is down, prices tend to go up. Conversely, when there is a glut of inventory on the market, buyers have many choices, and sales prices often drop as sellers compete.

Other factors that play into the outlook include the state of the job market, consumer sentiment, fiscal policy, interest rates and inflation.

While most economists agree that the U.S. economy is strong, the housing market faces headwinds. Some buyers are hesitant to commit to a long-term mortgage when rates are hovering around the 7% mark, so they’re postponing a purchase in the hope that rates will drop later this year or next year. That reduces the demand for homes.

Those who either purchased or refinanced during the peak of the COVID-19 pandemic — back in 2020, when mortgage rates averaged 3.11%, or 2021, when they were 2.96%, according to LendingTree — are reluctant to sell and give up their low rates.

According to Redfin, homeowners are staying in their homes nearly twice as long as they did in 2005, a trend that’s driven largely by older adults planning to age in place.

And according to a Redfin survey released in January 2025, more than one-third of U.S. homeowners said they will never sell their home — further evidence of the constraints on the inventory of existing homes available for sale, and a factor that is likely to increase home prices further. Realtor.com forecasts that home sale prices will increase by 3.7% this year.

Despite the challenges, some positive signs are emerging. A Realtor.com monthly housing report released in January showed a promising change in seller activity, as the number of newly listed homes increased 37.5% month over month.

And Morgan Franklin, a real estate agent with Coldwell Banker Realty in Boston, says that the buyers he represents are now putting in offers after being on the fence for months.

“All of a sudden, people are starting to pull the trigger,” he says. “I think it’s because they are learning that they can’t wait for interest rates to come down.”

Realtor.com forecasts that the inventory of available homes for sale will grow both for existing homes (with an expected growth rate of 11.7%) and for newly built homes (expected to increase 13.8%) in 2025.

That would help create the first balanced market in nine years, meaning that neither buyers nor sellers would have a competitive advantage, according to Realtor.com.

Of course, all real estate is local, so expect to see differences depending on where you live. Limited inventory in a particular market may keep prices high, with buyers vying for available properties. A glut of new homes for sale could have the opposite effect.

Mortgage rates outlook

Mortgage rates are a key factor that drive demand for housing. If buyers perceive rates to be too high, they’ll stay on the sidelines. But mortgage rates may never return to the levels buyers enjoyed in 2020 and 2021, experts say.

“There is a lot of uncertainty in the debt markets right now, driven mostly by the potential for higher inflation from tariffs and tax cuts that could significantly increase the nation’s debt,” says Ken Johnson, a housing economist and the Christie Kirkland Walker chair of real estate at the University of Mississippi School of Business Administration.

“That uncertainty should result in a bumpy road for mortgage rates in the next six months to a year, so my advice to home buyers is this: If you see a rate that you are happy with, you might want to lock it in now.”

Depending on which new policies the Trump administration implements — tax cuts, blanket tariffs or mass deportations — mortgages may trend well above 7% later in 2025, according to a LendingTree outlook.

Sam Khater, chief economist for Freddie Mac, notes that mortgage rates have averaged between 6% and 7.5% for most of the past two years. He predicts that the average rate for a 30-year, fixed-rate mortgage will drift down closer to 6.5% by the end of 2025.

“That’s predicated on slower economic growth,” he says. “We expect inflation to moderate some, but not much. So I think there is some room for rates to come down, but I don’t think they’re going to drop to the low sixes — at least not this year.”

While potential buyers may balk at a rate of 7%, rates have been much higher in the past. Fixed rates on 30-year mortgages peaked at more than 18% in the 1980s, and over the past 45 years, they’ve averaged 7.48%, according to Freddie Mac.

So a 7% rate is on par with the historical average since 1980.

Use the tool below, from Bankrate, to explore and compare interest rates:

Paying for your house

The best move you can make to keep your home purchase affordable is to save up as much as possible for a down payment. That will reduce the amount you have to finance, as well as your monthly housing expense.

Thanks to the economy’s strength and the rapid rise in home values since the end of the Great Recession in 2009 — the median sales price of a home increased from $222,900 in the first quarter of 2010 to $419,200 in the fourth quarter of 2024, according to the Federal Reserve Bank of St. Louis — many existing homeowners are sitting on a substantial amount of home equity that will be freed when they sell their current homes.

These funds can be applied to the down payment on their next home. According to Intercontinental Exchange (ICE), a technology and data provider, at the end of the third quarter of 2024, the average homeowner with a mortgage had $319,000 of equity.

If you need a mortgage, get quotes from different lenders. According to a Freddie Mac analysis, buyers can potentially save $600 to $1,200 annually by applying for mortgages from multiple lenders.

Laine Edathikunnel, 35, a communications manager at a construction company in Kansas City, and her husband, Tom, are searching for a home in the $500,000 to $600,000 range.

After renting in New York City for many years, the couple — who now have a 3-year-old son and 1-year-old daughter — relocated to Kansas City, where Laine grew up.

Although they were initially preapproved for a mortgage that would allow them to buy a much pricier home, Laine became concerned when she realized how an interest rate of about 7% would affect their monthly mortgage payment.

The couple are now looking at smaller and older homes than they did at first to keep their monthly housing expense at a more comfortable level.

“We don’t need a 4,000-square-foot home, which was the size we could get with our initial price point,” Laine says. “Just going from a 1,500-square-foot apartment to a 2,200-square-foot home will still feel like a huge upgrade to us.”

The National Association of Realtors just ranked Kansas City among its top 10 hot spots for the 2025 housing market, so the Edathikunnels are aware they’re trying to buy in a highly competitive market.

“I don’t want to delay,” Laine says. “We can always refinance, so I think it’s not worth renting for one more year to wait for the interest rates to change.”

Tips for buyers and sellers

Buyers should purchase a home when the time is right for them — if they find a home they love at a price they can afford. Don’t overextend your budget, which can put you at risk if you lose your job or have some other change in your financial status.

Before you start shopping for a home, get preapproved for a mortgage so you know how much you can afford.

Berner, the Realtor.com economist, advises buyers to evaluate the climate risks associated with a property as well. When you look up a home on Realtor.com, you can see data on the risk of flooding, fires, high temperatures and more.

If you find that a home is in an area prone to flooding or wildfires, think twice about owning it. Plus, in certain parts of the country, it may be too expensive or even impossible to secure homeowners insurance because of high environmental risks.

Those interested in buying a newly constructed home will find that many builders are offering buyers incentives, such as mortgage-rate buydowns or free options or upgrades.

“New homes also feature modern materials and systems, requiring less maintenance,” says Odeta Kushi, deputy chief economist for First American Financial Corp. “Buyers can customize their homes, and new homes often come with warranties and modern amenities.”

A January 2025 report from Realtor.com states that list prices for newly built homes in the fourth quarter of 2024 were down year over year, while new-construction inventory levels continued to improve, making new homes an attractive option, particularly in markets where the inventory of existing homes for sale is low.

But new homes, which incorporate building products such as lumber from Canada and gypsum (used for drywall) from Mexico, are likely to get more expensive if the U.S. imposes tariffs on imports from those countries for a prolonged period.

And if mass deportations take place, that would reduce the number of construction workers available to build homes. So if you’re planning to buy a new home, it might be prudent to sign a contract and lock in a price sooner rather than later.

If you own a home and are thinking about selling it, the advice is similar to that for buyers: If you have to sell — say, because of a change in your job or family situation — then sell.

If the sale is discretionary, however, give it some thought. Find out what your house is worth and consider the expenses that come with selling, including commissions paid to real estate agents, any capital gains taxes due on the proceeds, closing costs and moving expenses. You might just find that it makes more financial sense to stay than to move.

“Do some investigative work,” says Maria O’Dell, a real estate agent with Real Broker in Overland Park, Kan. “Can you envision yourself aging in the home? Consider tapping some of your equity and remodeling your house so you can stay there long term.”

Note: This item first appeared in Kiplinger Personal Finance Magazine, a monthly, trustworthy source of advice and guidance. Subscribe to help you make more money and keep more of the money you make here.

Related content

• 5 Ways to Shop for a Low Mortgage Rate
• Applying for a Mortgage Loan? Here's What to Expect
• 10 Things For Retirees To Know About Buying A Second Home

The cheapest small towns to live in might not be for everyone. True, small-town living has plenty of perks: light traffic, a strong sense of community and a slower pace of life.

Perhaps best of all, the cost of living is typically cheaper in small towns than in expensive big cities.

To get a sense of what inexpensive small-town living really costs, we compiled a list of the 10 cheapest small towns to live in America, with small towns defined as places with populations of approximately 10,000 to 50,000 people.

We compiled our rankings based on the Council for Community and Economic Research's (C2ER) calculations of living expenses in 265 urban areas.

C2ER's Cost of Living Index measures prices for housing, groceries, utilities, transportation, health care, and miscellaneous goods and services, such as going to a movie or getting your hair done at a salon.

The data, which sorts through thousands of prices in hundreds of cities, allowed us to pinpoint the small towns with the absolute lowest living costs. (For larger urban areas, read our list of the 15 Cheapest Places to Live: U.S. Cities Edition).

You should weigh the pros and cons before you pack up and relocate to one of the 15 cheapest small towns in America. While a low cost of living is attractive, it can be offset by issues such as scarce jobs, small paychecks or a lack of things to do in the area.

Plan an extended visit to ensure the small town fits your lifestyle. In a tight real estate market, consider all your options, even buying a foreclosed home.

Here are the 15 cheapest small towns to live in the U.S.

Source: C2ER's Cost of Living Index, 2025 Annual Average Data, published August 2025. Index data is based on average prices of goods and services collected during the second quarter of 2025, with index values based on the new weights for 2024. Population data, household incomes, home values, poverty rates and other demographic information are from the U.S. Census Bureau. Local unemployment rates, courtesy of YCharts, are not seasonally adjusted and are as of December 5, 2025, for the month of August 2025, which is the latest available final data.

15. Morristown, Tennessee

• Cost of living: 11.8% below U.S. average
• Population: 30,983
• Median household income: $44,811 (U.S. average: $81,604)
• Median home price: $423,537 (U.S. average: $540,508)
• Unemployment rate: 3.6% (U.S.: 4.4%)

Morristown is a city in and the county seat of Hamblen County, and is centrally located between eight counties. This location allows Morristown to be the regional hub for employment, shopping, recreation, healthcare and educational opportunities in the area. The city lies within the Ridge and Valley of the Appalachians and is considered part of a region known as the "Lakeway Area," consisting of a land area surrounding Cherokee and Douglas lakes.

The Cherokee’s 400 miles of shoreline is dotted with a variety of public access areas, county and municipal parks, commercial boat docks, Panther Creek State Park, and a state wildlife management area. And, with a temperate climate, anglers can enjoy fishing nearly every day of the year. So, grab your rod, boat, kayak or canoe and set sail for a fun day on the water at Cherokee Lake. With over 400 miles of shoreline, beautiful Cherokee Lake is a fisherman’s haven.

Tennessee is one of the few states to earn a spot on Kiplinger’s 10 Most Tax-Friendly States for Retirees and Best States for Middle-Class Families Who Hate Paying Taxes. It may be no surprise that the cost of living in Morristown is easy on your pockets. Housing and transportation costs are well below average, coming in at 23.1% and 16.2% less than the mean.

There is plenty of free entertainment in the summer. The Downtown Green, located in Morristown’s historic district, is the home of a monthly summer concert series as well as the popular Morristown Craft Beer Festival, held on the fourth Saturday in September. And if you prefer to indulge in some wine, you’ll pay 9% above average for the vino.

Another plus: the city boasts four championship disc golf courses, making it the premier destination in Tennessee for competitors of all skill levels.

14. Dublin, Georgia

• Cost of living: 12.8% below U.S. average
• Population: 16,023
• Median household income: $40,417
• Median home price: $371,433
• Unemployment rate: 4.1%

Tiny Dublin, Georgia, punches well above its population-size weight. This town, situated about halfway between Atlanta and Savannah, hosts three institutions of higher education (Georgia Military College, Oconee Fall Line Technical College and Middle Georgia State University all have campuses there), a Veterans Administration Medical Center, and two nationally recognized historic districts.

Whether residents buy or rent, expenses related to keeping a roof over one's head are 25.5% lower than the U.S. average. The average price of a house in Dublin stands at $371,433, per C2ER, as opposed to $540,508 nationally. That represents a savings of 31.3%. Rents, meanwhile, are cheaper by 13.8%.

And in a special break for Dublin's senior citizens, Georgia happens to be one of the more tax-friendly states for retirees. Although pensions and 401(k), and IRA distributions are partially taxable, taxpayers age 62 and older may exclude up to $35,000 of their retirement income; that exclusion goes up to $65,000 for those aged 65 and older.

Sadly, too many of Dublin's residents struggle despite its low cost of living. The town's poverty rate is 35.1% and that's more than double the Georgia state poverty rate of 13.5%.

13. Kankakee Illinois

• Cost of living: 12.3% below U.S. average
• Population: 24,384
• Median household income: $45,119
• Median home price: $319,467
• Unemployment rate: 5.7%

Kankakee is the county seat of Kankakee County and serves as an anchor city in the rural plains outside Chicago. The Kankakee River, which runs through the city, is approximately 133 miles long and serves as a major attraction and defining landmark. The river water is refined at the Kankakee Water Company, and electricity is generated at the Kankakee River Dam, providing vital resources to the community.

Major employers encompass a diverse set of industries. Midwest Transit Equipment is the largest bus dealer in the United States. It was founded in 1976 and has only 100 employees and an annual revenue of $300 million.

Small Newspaper Group publishes newspapers in the Midwest and employs about 100 people in the area. Serological Proteins is a medium-sized health care company with 651 employees and a revenue of $350 million.

The cost of living in Kankakee offers some relief from the difficult employment environment. Housing and utilities are, on average, 34.6% and 8.4% below average, respectively.

However, Illinois has earned a place on our list of the 10 Least Tax-Friendly States for Middle-Class Families. There is some good news for retirees, as this is one of 13 states that don’t tax retirement income.

The city has two softball complexes that have both been inducted into the Softball Hall of Fame. They host annual state and international tournaments, drawing nearly 50,000 spectators throughout the year. Some Kankakee youth baseball leagues have won state championships.

It's also home to two important Frank Lloyd Wright houses: the B. Harley Bradley and Warren R. Hickox houses. These two homes were the first of their kind and mark the beginning of Wright's "Prairie Style" period. For the next decade, his architectural commissions reportedly drew on the basic plans of these two houses.

12. Danville City, Virginia

• Cost of living: 12.8% below U.S. average
• Population: 42,239
• Median household income: $42,778
• Median home price: $397,500
• Unemployment rate: 6.6%

Just 20 years ago, Danville City, Virginia, was in the throes of an economic crisis. The tobacco and textile industries on which it relied had collapsed, and the town’s key employer, Dan River Mills, had shuttered its huge operation, leaving thousands out of work and a local landmark derelict.

Fast forward to the present day, and it’s a different story. A concerted effort to regenerate the town and preserve its heritage i succeeding, evidenced by a recent influx of new residents that goes against the rest of the region's trend of outward migration.

The Caesars casino, which opened in 2024, and the Danville Science Center have boosted the local economy, creating new jobs and drawing in visitors to the area. Even the iconic Dan River Mills building is being restored and will soon offer residents a mix of housing, office and retail spaces, as well as a new riverfront park.

Housing costs in Danville City are 24.4% below the national average. The average renter pays $1,288, $366 less than the national average of $1,624. The average mortgage payment of $1,915 is $675 lower than the typical payment around the country of $2,590.

Unfortunately, for retirees, Virginia pension income and distributions from IRAs and 401(k)s are taxable. However, Social Security benefits are tax-exempt. Gas is more expensive as gas taxes increased to 30.8 cents per gallon from 29.8 cents as of July 1.

As you might expect in a riverside town, outdoor pursuits feature heavily on the list of things to do. The River Dan, flowing 214 miles in Virginia and North Carolina, supports fishing, paddle boarding, kayaking and wild swimming. But those who prefer dry land will find plenty of walking and mountain biking trails to explore, plus a local vineyard and a beer trail, as well as plenty of places to stop and refuel in the town itself.

11. Wilkes-Barre, Pennsylvania

• Cost of living: 12.9% below U.S. average
• Population: 44,217
• Median household income: $47,970
• Median home price: $273,323
• Unemployment rate: 5.4%

Wilkes-Barre is a hidden gem in northeastern Pennsylvania. Around two hours from New York and Philadelphia, the town sits on the banks of the Susquehanna River, in the heart of the Wyoming Valley. If you’re looking for a cheap place to live with plenty of access to outdoor activities, this might be the ideal spot.

The town boasts three riverfront parks: Nesbitt Park, the River Common, which hosts Rockin’ the River, a series of free concerts every summer, and Kirby Park, which has softball playing fields, tennis and volleyball courts, and a running track. Baseball fans take note: Babe Ruth hit the longest home run in baseball history on October 12, 1926, during an exhibition game in Wilkes-Barre. He blasted the ball some 650 feet into Kirby Park; a kiosk marks the spot where it landed.

Kirby Park is a starting point for the Luzerne County Levee Trail — a 12-mile stretch that’s perfect for walking and cycling. Keen walkers might also enjoy the town’s Walkitecture tour, which takes you around historic landmarks, including the Market Street Bridge, designed by the firm that built the New York Public Library.

Housing in Wilkes-Barre is a comparative bargain, as the average home price of $273,323 is a whopping $267,185 (49%) less than the national average of $540,508. A number of other costs run above average. Utilities (+2.8%), transportation (+5.8%), and health care (+2.3%) will cost you more than most other communities. Groceries offer a small savings, coming in at 3% below average.

Downtown, you’ll find coffee shops, restaurants and community events in the Public Square (known as ‘the Square’), as well as a Farmers’ Market from summer through fall. The town has a growing network of independent shops and small businesses, while local employment relies heavily on transportation, utilities, education and health care.

Pennsylvania has a flat state income tax rate of 3.07%; however, municipalities and school districts can also impose taxes on wages or income. The average effective property tax rate is 1.41%, which is higher than in most other states. Pennsylvania's inheritance tax ranges from 0% to 15% depending on the age of the decedent and the relationship of the party that inherits.

Retirees are in luck, as Pennsylvania doesn’t tax any traditional types of retirement income. That means your Social Security benefits, pension income and 401(k)/IRA distributions are tax-free.

10. Burlington, Iowa

• Cost of living: 13.4% below U.S. average
• Population: 23,800
• Median household income: $55,274
• Median home price: $362,625
• Unemployment rate: 6.0%

The American Fur Company of John Jacob Astor established a post in the area in 1829. Burlington was once a bustling river port in the steamboat era and a central city to the Chicago, Burlington and Quincy Railroad. The Port of Burlington is now a rental facility on the Mississippi River just south of the Great River Bridge. Its population peaked in 1970.

Burlington's roots are in transportation and manufacturing, and saw many of the manufacturing jobs relocate in the 1970s and 80s. Manufacturing plants are still among the largest employers in the area, including companies such as American Ordnance LLC, Case Corporation, ABB (formerly General Electric), and Champion Spark Plugs. The average income and home values reflect the economic difficulties in Burlington. Income is $26,330 below average, and home prices are over $175k lower than the national average.

Ripley's Believe It or Not has designated Snake Alley as "Unbelievably Crooked" and the #1 Odd Spot in Ripley's Guide to the Curious Corners of America. What might be Burlington's most famous landmark, Snake Alley, consists of five half-curves and two quarter-curves and is reminiscent of vineyard paths in France and Germany. It reminds me of Lombard Street in San Francisco. It plays host to an annual uphill bike race and art fair.

Residents of Burlington pay slightly below average for utilities (7.7%) and transportation (.8%) despite having an overall cost of living 13.4% below average. And, grocery bills are about 6.3% lower.

Iowa's tax rates are generally favorable. Iowa no longer taxes retirement income for taxpayers 55 or older. And in another tax-friendly move, Iowa's inheritance tax ranges from 2% to 6% and has been completely repealed for all decedents dying on or after January 1, 2025.

9. Cookeville, Tennessee

• Cost of living: 14.2% below U.S. average
• Population: 35,544
• Median household income: $48,501
• Median home price: $391,695 
• Unemployment rate: 4.0%

Cookeville, TN, packs a surprisingly big punch for its size (population just under 35,000, according to the 2020 United States Census). Home to Tennessee Tech University, it’s a college town with a thriving arts, food and music scene, just over an hour east of Nashville.

Residents are justifiably proud of the town and its heritage, including the courthouse, which stands in pride of place in the historic west side district and took no fewer than four attempts to build (attempts one to three were successively built and burned down in the 1800s). It now sits among art galleries and studios, shops, restaurants and bars, and close to the train depot museum.

The overall cost of living in Cookeville is 14.2% below the national average, with housing and health care offering the biggest savings at 28.2% and 29% lower, respectively, than what most Americans pay. Grocery prices (4.6%) and miscellaneous goods and services (5.1%) offer the least savings.

The nearby Performing Arts Center is the town’s main destination for concerts and theater performances, while Dogwood Park holds outdoor Shakespeare plays in early fall. The town’s strong community spirit is at the heart of successful annual events such as the Firefly music festival, Fall Fun Fest, and Cooking on the Square — a Cajun feast held to raise funds to build homes for families in need.

Manufacturing is a major part of the local economy. Oreck Corporation has its principal manufacturing facilities in Cookeville, as does ATC Automation, which makes industrial machinery. Transportation and supply chain management company Averitt also has its corporate headquarters in the town. But you don’t have to travel too far to escape all things industrial — Cookeville is within an hour of 10 state parks, including popular beauty spot Cummins Falls.

Tennessee comes in as the second most tax-friendly state to live out your retirement. It also has no estate and inheritance taxes. The Volunteer State also earned a spot on Kiplinger's list of States With the Lowest Property Taxes.

8. Hutchinson, Kansas

• Cost of living: 14.8% below U.S. average
• Population: 39,837
• Median household income: $58,801
• Median home price: $409,367
• Unemployment rate: 4.7%

When you’re deicing your driveway with salt, you’re probably not asking yourself where it was mined, but the answer might surprise you. In the U.S., there’s a chance it comes from the Midwest — Hutchinson, Kansas, to be precise.

This unassuming town, with a little more than 40,000 residents, dates back to 1871, when frontiersman Clinton “C.C.” Hutchinson established a town at the Santa Fe railroad’s crossing over the Arkansas River.

But it was Ben Blanchard, a land speculator, who hit the jackpot a few years later. When drilling for oil, Blanchard discovered the area’s rich salt deposits. Known as “white gold,” the mineral was vital for food preservation in the days before refrigeration. Salt mining became a major industry in the town and is still going strong, owing to its importance for agriculture and snow removal.

Ironically, Hutchinson doesn't get much snow. The snowy period of the year lasts from November to March, with its peak in December, with an average snowfall of 2.9 inches.

The business’s success reflects the bigger picture in Kansas, which remains slightly above the national average in terms of the proportion of employees in manufacturing. Other large employers in the Hutchinson area include Siemens (wind turbine components), Kuhn Krause (agricultural machinery and parts), Sonoco (packaging) and Morton Salt.

In this urban-rural community, life can be as quiet or as busy as you want to make it. Outdoor types will enjoy the surrounding scenery, bike and hiking trails and protected open spaces, including Dillon Nature Center. Hutchinson is home to the world-renowned Prairie Dunes Country Club and golf course (founded in the 1930s by a salt tycoon, Emerson Carey and his sons). Families will also enjoy the annual Kansas State Fair, the Cosmosphere space museum and the Strataca underground salt museum.

Buying a home in Hutchinson is a bargain, with prices at 30.9% below the national average, but it comes with a "relatively high" risk of experiencing tornadoes, according to FEMA. Grocery and utility expenses aren't as much of a bargain, offering a savings of 4% and 4.1%, respectively. Health care expenses are only 3.1% lower than the national average.

Downtown is a hub for community events, shopping, dining, and entertainment. Public investment has redeveloped the area, and further improvements will include public green spaces, a river walk, an amphitheater and a water spray park. Uptown, you’ll find more shopping and the beautifully renovated B&B Theaters.

If you feel the need for the bright lights of a big city, you’re an hour’s drive from Wichita and around three hours from Kansas City.

Kansas recently enacted a number of tax cuts, including a repeal of its tax on Social Security benefits. However, it continues to tax income from private retirement plans, IRAs and 401(k)s. Retirees can plan on passing on more of their wealth because there is no estate tax or inheritance tax in Kansas.

7. Meridian, Mississippi

• Cost of living: 16.7% below U.S. average
• Population: 34,466
• Median household income: $34,657
• Median home price: $325,589
• Unemployment rate: 4.5%

Meridian was rebuilt from 1890 to 1930 after being almost totally destroyed in the Civil War. As a result, it has not one but nine registered historic districts. The Highland Park Dentzel Carousel, dating to 1909, is one of the more whimsical ones.

Meridian's other claim to fame is as the birthplace of Jimmie Rodgers, known as the "Father of Country Music." Music remains a centerpiece of Meridian's cultural scene.

Today, the federal government plays an important role in its economic life, as Naval Air Station Meridian and Key Field are two of the largest employers.

Happily, the men and women in uniform — as well as all of Meridian's civilian citizens — catch a break on living costs, which stand 13.1% below the U.S. average. But what pushes Meridian onto the list of America's absolute cheapest small towns is its comparatively modest housing costs, which are 38.4% lower than what the average American pays.

Meridian's older residents also benefit from the fact that Mississippi is one of the more tax-friendly states for retirees.

Sadly, as with several of the small towns on this list, Meridian's low cost of living comes at a high price. Its poverty rate of 31.9% is considerably higher than Mississippi's rate of 19.1%.

6. Ponca City, Oklahoma

• Cost of living: 17.2% below U.S. average
• Population: 24,377 
• Median household income: $55,270 
• Median home price: $373,500
• Unemployment rate: 3.7%

Ponca City traces its lineage to the days of the Land Run of 1893, when pioneers decided to build a town in north-central Oklahoma near the Arkansas River and a freshwater spring.

Not long after its founding, enterprising oilmen successfully drilled wells in the area, and Ponca City remains an oil town to this day. Some of the area's largest employers include energy firms such as Schlumberger (SLB), ConocoPhillips (COP) and Phillips 66 (PSX).

Local attractions include the Marland Mansion, which was built by oil baron E.W. Marland in the early 20th century. It's now a museum. Dedicated in 1930, the Pioneer Woman Statute, a 30-foot-tall monument of a pioneer woman holding a young child, is also not to be missed.

Household incomes are well below the national median, but housing is a heck of a deal. The median price of a Ponca City home is just $373,500. Nationally, it's $540,408. Total housing costs are almost 30% less than what the average American pays, according to C2ER's Cost of Living Index.

Residents also catch a break on all manner of miscellaneous goods and services, which are 16.2% lower than the national average. The health care discount is 9.1% and groceries are a smidge cheaper at 4.7% below the national average.

Although it's among the cheapest small towns in America, Ponca City's low cost of living does come at a cost: The town sits pretty much in the middle of Tornado Alley.

5. Muskogee, Oklahoma

• Cost of living: 17.5% below U.S. average
• Population: 36,819
• Median household income: $48,735 
• Median home price: $373,500  
• Unemployment rate: 4.8%

Muskogee packs a lot of history, culture and higher education into a pint-sized package.

Located about 50 miles southeast of Tulsa, the town traces its roots to 1817. It's home to four institutions of higher learning, as well as the Oklahoma School for the Blind.

Jim Thorpe – All-American, the 1951 film starring Burt Lancaster, was shot on the campus of what was then known as the Bacone Indian University in Muskogee. The town also boasts six museums and the Oklahoma Music Hall of Fame.

Let's not forget what is arguably the town's most famous appearance in popular culture: Merle Haggard's hit song "Okie from Muskogee," which became an emblem of Vietnam-era America.

Today, the area's employers include the U.S. Department of Veterans Affairs, a VA medical center and paper company Georgia-Pacific.

What really puts Muskogee on the map is its ultra-low cost of living. The biggest break comes from housing-related expenses, which are 33.4% lower than the national average, according to C2ER's Cost of Living Index. Health care is cheaper, too. Costs are almost 11.1% lower than what most Americans pay.

Retirees will be happy to know that Social Security benefits, military pensions and Railroad Retirement benefits are not taxed at the state level. However, pension income and distributions from 401(k)s and IRAs are partially taxable.

4. Salina, Kansas

• Cost of living: 18.1% below U.S. average
• Population: 46,432 
• Median household income: $60,624 
• Median home price: $355,200 
• Unemployment rate: 3.9%

The small town of Salina sits at the intersection of Interstates 70 and 135, about 90 miles north of Wichita and 175 miles west of Kansas City.

Manufacturing and health care are among the town's most important industries. Major employers include Schwan's Company, the maker of Tony's frozen pizza; Great Plains Manufacturing, which serves the agricultural industry; and the Salina Regional Health Center.

Salina is also home to several institutions of higher education, including the University of Kansas School of Medicine Salina Campus and Kansas State University Polytechnic Campus.

Salina's economic mix has proven adept at delivering both low unemployment and low living costs. Housing expenses come in at roughly two-thirds of the national average, according to C2ER. Transportation is cheaper, too, running about 11.3% less than the national average.

Locals catch breaks in lots of other ways, too. Groceries and miscellaneous goods, and services all cost less than the national averages. Utilities are the outlier and is 2.5% above the national average.

On the other hand, taxes are somewhat burdensome statewide. Kiplinger's Kansas State Tax Guide rates Kansas as one of the least tax-friendly states for middle-class families, largely because of a high sales tax. Although, Kansas is no longer one of the state states that taxes Social Security benefits, many types of retirement income are subject to income taxes. Distributions and income from private pensions IRAs and 401(k)s will be taxed as income.

3. Pittsburg, Kansas

• Cost of living: 18.3% below U.S. average
• Population: 20,606 
• Median household income: $40,220
• Median home price: $411,000
• Unemployment rate: 5.7%

Pittsburg is about a two-and-a-half-hour drive due south from Kansas City on Route 69. When you get there, you'll find a small town with a cost of living almost 18% below the national average.

Once upon a time, the town was known for its abundance of coal and the Southern and Eastern European immigrants who worked the mines. Today, the area relies more heavily on higher education, thanks to the presence of Pittsburg State University. Famous alumni of Pittsburg's local university include actor Gary Busey and Brian Moorman, a retired two-time Pro Bowl punter for the NFL's Buffalo Bills.

Other major employers include transportation company Watco and Via Christi Hospital medical center.

As for leisure activities, tiny Pittsburg doesn't lack for family-friendly things to do. Area highlights include Lakeside Park, the Crawford County Historical Museum and the Pittsburg Aquatic Center.

Although median incomes are well below the national average, average home prices are a whopping $129,508 cheaper. All told, housing costs are 33.3% lower than what the typical American pays. Myriad other items are economical, as well. Health care is 21.3% lower and Miscellaneous goods and services run about 16.3% cheaper in Pittsburg.

2. Richmond, Indiana

• Cost of living: 19.5% below U.S. average
• Population: 35,551 
• Median household income: $46,395
• Median home price: $325,000
• Unemployment rate: 4.4%

Few cities of any size can claim Richmond's place in the early history of recorded jazz. Some of the first jazz records were made in this small town, featuring greats such as Hoagy Carmichael, Duke Ellington and Louis Armstrong. There's a Walk of Fame celebrating jazz and other artists who recorded with Richmond's Gennett Records.

While jazz will always be part of its history, today's Richmond, which is an hour's drive west from Dayton, Ohio, is known more for its colleges and seminaries. They include Indiana University East, the Earlham School of Religion (part of Quaker-influenced Earlham College), and the Bethany Theological Seminary.

Inexpensive housing is a key to Richmond's place among our nation's cheapest small towns. Residents spend a third less on housing than the average American. Apartment rents are 45.2% lower, at $890, than the national average of $1,624. The average home price of $325,000 is 39.9% less.

Health care is comparatively a bargain, with costs coming in 16% lower than the national average.

Indiana has a flat rate income tax rate of 3.05%, which is applied to 401(k), IRA and pension income. However, Social Security is exempt from income taxes. There are also no estate or inheritance taxes in Indiana.

1. Tupelo, Mississippi

• Cost of living: 21.2% below U.S. average
• Population: 37,825 
• Median household income: $66,314 
• Median home price: $341,500
• Unemployment rate: 3.9%

Tupelo, which sits 110 miles southeast of Memphis's Graceland, is best known as the birthplace of Elvis Presley. Tourists flock to the town's Elvis Presley Birthplace museum and the annual Elvis Festival held in June.

Not a fan of The King? The area's leisure and cultural scene also includes the North Mississippi Symphony Orchestra, Buffalo Park and Zoo, Tombigbee National Forest, the Tupelo National Battlefield, and the Tupelo Automobile Museum, among other attractions.

Tupelo's second-largest claim to fame is arguably its super-low living costs. The comprehensive cost of living comes in at 21.2% below the national average. Housing is almost 39.3% cheaper, groceries go for 5.7% less, and locals save about 12.5% on transportation, 21.7% on health care and 17.3% on utilities.

For residents not making their living as Elvis impersonators, major employers include North Mississippi Health Services and Cooper Tire & Rubber. Additionally, two regional banks — Renasant Bank (RNST) and Cadence Bank (formerly BancorpSouth) (CADE) — are headquartered in Tupelo.

Mississippi has a flat income tax rate of 4.4%. Retirement income is exempt in Mississippi, including Social Security, pensions and IRA and 401(k) distributions. Last, but not least, Mississippi does not have an estate or inheritance tax.

Related content

• The 15 Cheapest Places to Live: US Cities Edition
• The Cheapest Places To Retire in the US
• Average Retirement Income by Age and State
• The Best Places to Retire in the US

The 25-basis-point Fed rate cut in early November 2024 will help the construction and housing markets, although more cuts will help. Home mortgage rates will lower somewhat, but some buyers still want to wait for more favorable rates unless they have found the house they want and feel that the risk of losing it outweighs a slightly lower mortgage rate.

The Fed sees that the American economy is almost at the 2% inflation target, but going overboard on rate cuts might reignite inflation, something they do not want to do. Also, bond investors who are happy with high-interest returns from bonds and the money markets will prefer to move their money to risk on assets like stocks, crypto or other riskier ventures if the bond returns fall back to the just-above-zero returns of previous years.

The real challenge is how the 10-year Treasury bond yields are doing as well as other factors that could impact the housing markets. As a general statement, if investors and lenders are happy with the 10-year Treasury yield, they would rather keep their money there safely than risk it on things like real estate construction projects, which have a checklist of things that could go right or wrong.

It is important to note that while the Fed directly influences short-term rates, it is the market that drives long-term bond rate prices depending on their outlook and demand/supply considerations. But in general, when future bond cash flows are not to their liking, this is when bondholders look to other riskier assets or cash flow-generating projects (such as real estate).

While the office sector cash flows have been decimated by less demand due to work-from-home and artificial intelligence as well as layoffs, the housing market demand is nondiscretionary. People need a place to live, whether they rent or buy a house. As the population grows, and local economies have good, well-paying jobs for them, people generally want to move up the social ladder. They also want their children to be able to buy their own houses.

Unfortunately, as interest rates were raised by the Fed these past few years, fewer people are inclined to sign up for long-term mortgages, especially if their paychecks are strained by car, credit and student loans as well as rent, food, groceries and energy bills.

Real estate developers, noting how fewer people are leasing offices or buying houses with mortgages, have also cut back somewhat in certain geographies on their efforts. Real estate is heavily debt-financed, and many loans have a debt-service coverage ratio (DSCR), which is calculated by taking the net operating income and dividing it by total debt service that includes the principal and interest on a loan.

Thus, if the developer is earning $1.5 million on the property annually, and the debt service payment is $1 million annually, then the DSCR is 1.5 for that property under a loan. A DSCR of 1.2 to 1.25 is generally the acceptable range. A higher DSCR allows the lender and borrower to sleep well, while anything less than 1.0 is problematic and could trigger some negative contract clauses.

It is important to note that there are huge housing supply backlogs in many areas, exacerbated by less construction that occurred during the pandemic years. However, the sudden rise in interest rates made homebuying prohibitive for many who were just starting to recover from a decreased income stream during the pandemic years as well as high inflation brought about by too much money in the economy due to the government cash injections.

Now that inflation is starting to cool off and approach the Fed's 2% target, everyone (except bondholders) prefers that the rates go back to the point where mortgages become affordable on a monthly payment basis. Higher interest rates, while benefiting bondholders, work against both homebuyers and real estate developers because the more expensive debt raises the pressure on both.

The construction and housing industry is a major contributor to the American economy and gross domestic product (GDP). Lower interest rates will give it life again as this will likely create more homebuyers and demand, more incentives for developers and thaw a static market with few buyers and sellers.

Related Content

• I’m Retired. Should I Pay Off My Mortgage?
• Will Rising Interest Rates Lead to Soft Landing or Recession?
• Don’t Panic About Interest Rate Increases: Look to Profit Instead

The information provided here is not investment, tax or financial advice. You should consult with a licensed professional for advice concerning your specific situation.

Decades ago, homeownership was a realistic goal for many people. In recent years, sky-high real estate prices and increased costs of living have made it harder for would-be buyers to envision themselves ever achieving that milestone.

Though the path to homeownership can be difficult in today's economy, it's still possible with the right strategies. Here, members of Kiplinger Advisor Collective recommend practical tips for moving the needle on your goal of owning a home.

Find a fixer-upper in a lower-demand location
“Location, age and condition of the home matter when it comes to price. Find an older home that may need some work in a location not so high in demand. Then, time it to secure a mortgage with a decent rate to lower mortgage costs. Budget for all homeowner costs, such as insurance, property tax, utilities and home services. Sacrifice other areas of life (travel, entertainment) to save money and buy an asset.” — John Bodrozic, HomeZada

Consult with a lender
“Talk to a lender first. A loan officer will review your current financial situation to see if you qualify for state down payment assistance programs or home loan programs that require low or no down payments. If you're not quite eligible for a loan now, the loan officer can suggest steps to improve your creditworthiness, for example, by boosting savings and paying down high-interest consumer debt.” — Laura Ostrem, Success Mortgage Partners, Inc.

Avoid waiting for your dream home
“I recommend buying an affordable starter home or fixer-upper rather than waiting for your ‘dream home.’ This way, you can start building equity and gain homeownership experience. Making a smaller initial investment reduces your financial risk if market conditions or your own personal and economic conditions change.” — Hari Prasad Josyula, DowJones

Explore down payment assistance programs
“Most would-be homebuyers don't know that they can get down payment assistance and help with closing costs from a variety of sources. City, county, state and federal programs, as well as nonprofit initiatives, offer $5,000 to $50,000 to first-time and move-up buyers. Help can even come from sellers, as mortgage lenders allow buyers to get a 3% seller credit.” — Lynnette Khalfani-Cox, TheMoneyCoach.net LLC

Focus on improving your financial health
“Start by improving your financial health. Focus on saving for a larger down payment and boosting your credit score to qualify for better mortgage terms. Explore first-time homebuyer programs or government-backed loans with lower requirements. Being patient and financially prepared can help you make homeownership more attainable, even in a competitive market.” — Stephen Nalley, Black Briar Advisors

Consider moving to an area with a low cost of living
“Take advantage of down payment assistance for first-time homebuyers in your state, as well as VA, FHA and USDA loans that make mortgages accessible to people with low credit scores and little savings. If homeownership is a top priority, you can also consider moving to an area with a low cost of living, especially if you can work from anywhere.” — Dana Miranda, YOU DON'T NEED A BUDGET

Pay off your credit cards
“You shouldn’t buy a home until you pay off all, or at least most, of your credit cards. It simply makes no sense to search for the best mortgage rates of 6% to 9% when you’re paying 25% or more on your credit cards. Buying a home is expensive, but so is maintaining one. If you can’t pay off those cards, then you can’t, say, fix a leaky sink without adding even more to your balances.” — Howard Dvorkin, Debt.com

Pare down your 'must-have' list
“Even on a modest income, homeownership is possible if you’re willing to compromise on things. Review your ‘must-have’ items to see which areas can be put on hold until finances allow. For example, while having a rent-paying roommate may not be ideal, it could help you build equity in a home. Or, you could buy a smaller home that, once you outgrow it, you could rent out when you upgrade to something larger.” — Justin Donald, Lifestyle Investor

Look for properties with an ADU
“One tip for aspiring homeowners is to consider properties with an accessory dwelling unit (ADU). Buying a home with an ADU offers you the potential to rent out the additional unit, creating an income stream that can offset mortgage payments. This approach can help bridge affordability gaps and make homeownership more manageable while turning your home into a long-term investment asset.” — Greg Welborn, First Financial Consulting

Determine a number you feel comfortable with
“First, figure out the expenses you cannot cut and the discretionary ones that you can. Then, decide (for yourself or your family) what you can do without. After this, you can figure out how much you can safely pay monthly over the next few years without going overboard. This ensures you will not default on your multiyear mortgage. Wait for interest rate cuts so your monthly mortgage payment becomes less.” — Zain Jaffer, Zain Ventures

Calculate the down payment you'll need to make
“Make sure you don't buy more than you can afford. If you feel you can't afford a mortgage now or ever, understand that the more you put down, the lower your monthly payment will be. Find out what monthly payment you can afford, run the numbers to see what amount you will need to put down and start saving. At the same time, start improving your credit score.” — Bob Chitrathorn, Wealth Planning By Bob Chitrathorn of Simplified Wealth Management

Build a foundation of liquid assets
“Start by building a foundation of liquid assets. Invest in cryptos, options and stocks. This approach can accelerate wealth growth, creating a financial base that could later be leveraged for a down payment on a home when the time is right. Diversifying in these markets offers flexibility and the potential to build capital faster than traditional savings alone.” — Dr. Clemen Chiang, Spiking

Create a dedicated home savings fund
“Start by building a dedicated home savings fund and automating contributions to it, even if it’s small amounts. Improve your credit score to qualify for better mortgage rates and explore first-time homebuyer programs or low down payment options. Consider purchasing a smaller or fixer-upper home in a more affordable area as a stepping stone to homeownership.” — Amrita Choudhary, Wasabi Technologies

Related Content

• Four Ways Parents Can Help Kids Be First-Time Home Buyers
• Six Myths of Homeownership
• Best Cities for First-Time Homebuyers
• Five Practical Ways You Can Buy a Home With Cash

The information provided here is not investment, tax or financial advice. You should consult with a licensed professional for advice concerning your specific situation.

The post-pandemic spike in home prices, elevated mortgage rates and persistently rising costs have made paving a strong financial foundation feel increasingly out of reach for many young people. With the transfer of wealth barreling ahead, some parents and grandparents are looking for ways to help ease some of the cost burdens associated with buying a home, rather than waiting to pass wealth to heirs later on.

This generous gesture still needs to be carefully considered and strategic, since not all families are in a financial situation to part with large portions of their retirement savings if their principal investments are maintaining cash flow. Financial support is very much like the airplane safety instructions you receive before takeoff — always put your oxygen mask on first before assisting others.

Tax and mortgage implications

Homeownership is fast becoming a difficult milestone for young adults. In a supply-constrained housing market, all-cash home purchases have become increasingly common. According to the National Association of Realtors, homebuyers who paid cash accounted for 32% of home sales in January, marking the highest rate since 2014. Many buyers bring in equity from previous homes, making it more challenging for first-time homebuyers to compete.
Based on your net worth, you could end up with more money in retirement than you could ever spend.

In these scenarios, it can be easier to part with a down payment or lump sum of cash for a family member to use for a home purchase. However, gifting funds over a certain amount can have considerable tax implications for you and the recipient and, in some cases, may not be allowed by mortgage lenders. That’s why it’s important to think about and plan for an allocation of cash, or other ways to relieve a financial burden, in advance.

Strategy one: Selling assets

Many of the clients I work with are accustomed to saving and have been tucking money away for most of their lives to live comfortably in retirement. This mindset is still important, but for many fortunate retirees, their savings far eclipse their estimated financial need. This has allowed us to explore real-time gifting strategies to help relieve some of the pressures that first-time homebuyers are facing, especially in some hot markets like the Washington, D.C., area.

If your investment portfolio is strong, you may consider raising cash by selling some of those assets to provide the necessary funds for a down payment and closing costs. While this approach may incur capital gains taxes, it can be a straightforward way to generate cash and get started.

Strategy two: A securities-based loan

If you prefer to avoid selling your investments due to the risks involved, you might consider taking advantage of a securities-based loan. This type of loan allows you to borrow against the value of your investment portfolio. With this option, you can maintain your investment portfolio with no immediate tax liability; but if the value of your portfolio decreases significantly, you may be forced to sell or add cash to maintain the loan.

Generally, this can be a solution in a shorter time frame, so if the intent is for the child to make an all-cash offer and then get a mortgage and pay you back, borrowing against your investment portfolio may be an efficient choice.

Get expert advice

Each of these approaches can help the next generation gain a solid financial footing. By leveraging thoughtful strategies for assisting with a home purchase, you can make a significant impact on their future with an investment in an appreciating asset.

It is wise to consult with a financial adviser and tax professional to tailor these approaches to your unique situation so you are not jeopardizing your own stability. With careful planning, you can empower the next generation to build a financially prosperous future.

Investment and insurance products offered through RBC Wealth Management are not insured by the FDIC or any other federal government agency, are not deposits or other obligations of, or guaranteed by, a bank or any bank affiliate, and are subject to investment risks, including possible loss of the principal amount invested.

RBC Wealth Management does not provide tax or legal advice. All decisions regarding the tax or legal implications of your investments should be made in connection with your independent tax or legal advisor. No information, including but not limited to written materials, provided by RBC WM should be construed as legal, accounting or tax advice.

Securities-based loans involve special risks and are not suitable for everyone. You should review the provisions of any agreement and related disclosures and consult with your own independent tax and legal advisors about any questions you have prior to using securities-based loans or lines of credit. Subject to credit approval. Additional restrictions may apply. Lending services may be offered by bank affiliates of RBCWM-US. RBCWM and/or your advisor may receive compensation for offering or referring these services. RBC Wealth Management, a division of RBC Capital Markets, LLC, registered investment adviser and Member NYSE/FINRA/SIPC.

Related Content

• One-Third of Parents Are Paying an Adult Child's House Down Payment. Are You?
• How to Help Your Children Buy a Home
• Want to Give Money to Your Adult Children? 10 Things You Should Know
• How to Give an Inheritance While You're Alive
• Pass the Gravy, and Then Let's Talk About Estate Plans

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

In the 1980s, back when Donald Trump was dealing in real estate, first-time homebuyers getting their foot on the U.S. property ladder were typically in their late 20s. Now, as Trump prepares to enter the White House for the second time, first-time buyers are closer to 40.

That’s one of the key findings of the latest survey of U.S. home buyers and sellers by the National Association of Realtors (NAR). The data, collected annually since 1981, offers a unique insight into the makeup of those making the leap to home ownership amid the housing affordability crisis.

This year’s survey, based on transactions completed between July 2023 and June 2024, found that the age of a typical first-time buyer has risen to 38, up from 35 the previous year. That’s the highest age since the survey began.

While married couples make up the majority of home buyers overall, only 36% of first-time buyers said they had children under 18 at home, and the share of single female first-time buyers rose by 5%. The median household income of first-time home buyers was a pretty healthy $97,000. Overall, though, these first-timers accounted for only 24% of all house purchases in 2023-24. This is the lowest share recorded and forms a stark contrast to the historical norm of 40% before 2008.

Jessica Lautz, NAR deputy chief economist and vice president of research, explained: “First-time buyers face high home prices, high mortgage interest rates and limited inventory, making them a decade older with significantly higher incomes than previous generations of buyers.”

“The most difficult step, even among successful first-time buyers, was just finding the right property,” she noted.

First-time homebuyers vs repeat buyers

The survey's results suggest first-time buyers may find themselves squeezed out of the market by all-cash buyers who can offer large down payments, typically 23%, likely earned through increased equity in their home. Almost one in three repeat buyers (31%) paid cash and didn’t need to finance their home purchase in 2023-24.

For first-time buyers, typical down payments reached 9%, the highest figure since 1997. To finance these, 7% of first-time buyers used inheritance (an all-time high) and 21% used financial assets, such as savings and cashing out stocks. Successful first-time buyers said high rent, student debt, credit card debt and car loans had hampered their saving.

Many potential homebuyers — and sellers — have also been scared off by high mortgage rates. You can look at current mortgage rates here:

Multigenerational living

If there’s an upside to this gloomy picture of the challenges facing those wanting to buy their first own home, it’s that the survey found more people than ever (17% of all buyers) had bought homes for multigenerational living, solving the issue of housing costs, child and elder care in one fell swoop.

Until Trump works out how exactly to solve the problem of unaffordable housing, it’s something more Americans may choose in order to realize their dream of home ownership.

Related content

• Selling Your Home? Set the Right Price
• 13 Home Features Today's Buyers Want Most
• Find The Best 30-Year Mortgage Rates

Livable cities and resilient communities prioritize the well-being of their residents. But what makes one city livable and another not, and is there something we can learn from them to improve other cities around the U.S.?

AARP has been trying to answer those questions since 2015, with annual reports showcasing the most livable cities, towns, and communities nationwide. The AARP Livability Index™ explores the top communities for key services and amenities.

The study showcases cities and towns that score well on its index of 61 different indicators. The best communities provide opportunities for a high quality of life, a strong economy, and a clean environment, as well as world-class communities that support their schools, parks, recreational opportunities, and other public spaces.

"Urban populations are growing rapidly, and cities are grappling with the effects of climate change, social isolation, and rising mental health issues," said Tye Farrow, a globally recognized architect and author of "Constructing Health: How the Built Environment Enhances Your Mind’s Health.

"As we rethink the future of our cities, we must remember that livability isn’t a luxury — it’s essential for long-term sustainability and resilience. A livable city creates a framework for individuals to thrive, not just exist, and sets the stage for healthier, happier communities for generations to come."

Livable cities by size

Here, we’ve listed the top 10 communities by population, following the AARP report. The lists are broken down into "extra large" cities (population over 500,000), "large" (100,000-499,999), "mid-size" (25,000-99,000) and "small" (5,000-24,999).

Each neighborhood, city, county or state was scored on a scale from 0 to 100. Those communities with more livability-friendly practices earned a score above 50 and those facing obstacles to livability scored lower.

Extra large communities (over 500K)

Large communities (100K - 499.99K)

Mid-size (25,000 - 99,000)

Small (5,000 - 24,999)

Digging into the results

Overall, smaller communities ranked a bit higher on the AARP Livability Study than larger cities and towns.

Although many of these communities may not offer the entertainment, shopping and recreational opportunities of a big city, smaller towns may provide a sweet spot for connecting into the community. They also tend to provide abundant green spaces and the chance to get outdoors, and most have low crime rates.

Additionally, the best communities tend to cluster together, regardless of size. Several of the top 10 small communities on AARP's list are near big cities, providing access to big-city life without the hassle. These "urbanish" small towns are near extra-large communities that also score well on the Livability Index.

For example, the top-rated Great Neck Plaza, New York, is less than an hour's drive from New York, NY. So are mid- and large-sized Fairview, Cliffside Park, Fort Lee, Bergenfield, West New York and Union City, New Jersey. Kiplinger digital managing editor Alexandra Svokos grew up around those towns in New Jersey and can attest to their livability.

"The infrastructure is there to keep people moving, including with public transportation, and nearly every town has a great, walkable downtown area with restaurants vying to compete with New York City," she said. "Plus, even though we grumble about them, we're proud of the fact that our higher taxes mean better services, including great public education and local parks."

Other clusters include the Boston, Massachusetts area (Cambridge, Sommerville, Brookline County) and Northern Virginia (Falls Church, Fairfax County, Arlington County, Alexandria) outside of Washington, D.C. Similarly, the small town of Takoma Park abuts giant Montgomery County, Maryland.

"Livable cities focus on what matters for everyone, especially as populations age. Think easy mode of transportation through reliable public transit, so not everyone has to rely on cars," Aaron Cirksena, founder and CEO at MDRN Capital, added.

"Efficient access to health services is important too. Safe public spaces also play an important role not just for families with kids but for everyone. The main thing everyone thinks of is affordable housing, which also promotes long-term stay."

What makes a town or city livable?

For the AARP Livable Study, every community and neighborhood in the U.S. was measured for the key amenities and services that affect the quality of life for people of all ages in the areas of housing, transportation, neighborhood, health, environment, social and civic engagement, and educational and economic opportunity.

Related content

• The 25 Cheapest Places to Live: U.S. Cities Edition
• The 10 Most Expensive Cities to Live in the U.S.
• 10 Most Livable Small & Midsize U.S. Cities
• Listed: Luxury Ski Town Homes for Sale in Colorado