15 Top States Where Professionals with Student Debt Own Homes
Many SoFi members choose to invest in themselves as homeowners while still paying down student debt. It’s a natural extension of the way they invested in themselves as professionals with top-flight educations and advanced degrees. Now, some of the hottest real estate markets in the nation are drawing them. From MBAs in Illinois and computer scientists in Oregon to lawyers in Texas, SoFi members are becoming homeowners just about everywhere you look.
Student debt doesn’t have to block homeownership
The thought of buying a home while paying off student loans can be intimidating at first. For many young and emerging professionals, the single biggest investment made before buying a home is in their own education. Naturally, the larger their debt, the more likely it is to complicate the process of saving for a new home.
According to the 2016 Student Loan Debt and Housing Report by The National Association of Realtors (NAR) and American Student Assistance, 71% of student loan borrowers surveyed said that they have not purchased a home because of the amount of unpaid student loan debt . After student loan debt, the two factors cited most frequently by prospective home buyers as impediments to home ownership are credit card debt (40%) and car payments ( 34%).
Despite widely held perceptions about how student loan debt can complicate eligibility for an affordable mortgage, lenders like SoFi are actually making it easier for borrowers to own a home while still managing student loan and other consumer debt. For example, SoFi allows qualified mortgage borrowers to finance up to 90% of a home purchase price with no borrower-paid private mortgage insurance (PMI).
Where SoFi members buy homes
It’s a big, diverse United States we live in, but SoFi members tend to stick together, gravitating to some particular locations across the U.S. Ninety-six percent of SoFi members who have mortgage loans with us live in 14 states, plus the District of Columbia. It’s a coast-to-coast list of cultural strongholds and hotbeds for professional success.
Most home buyers don’t travel very far to buy a home. According to NAR data, the median distance between a previous home and a buyer’s new home is just 12 miles.
What it all means
To better understand where SoFi members are choosing to buy homes, we analyzed SoFi data from 2012-present, covering over 1,500 SoFi-funded mortgages across 26 states, as well as approximately 54,000 student loan refinance members in these top 15 states where the most SoFi mortgage members reside, listed below. “Most expensive” and “least expensive” homes, as well as down payment percentages, refer to homes purchased by mortgage members only. Stats related to degrees earned also reflect mortgage members only.
We also looked at key characteristics of each state, such as the cost of living and innovation potential relative to other states, as found in the CNBC America’s Top States for Business 2016 report. Additionally, we reviewed statewide homeownership averages (via United States Census Bureau).
States are listed here in descending order by SoFi mortgage member population.
California – SoFi Mortgage member rank: #1
Statewide home ownership: 53.2%
CNBC Cost of Living rank: #47 of 50
CNBC Technology and Innovation rank: #2 of 50
California has the third-lowest homeownership rate in the nation (ahead of only New York and the District of Columbia), and it’s not hard to understand why. Home prices range from simply well above national averages in metro areas, such as Riverside and Sacramento, to stratospheric in San Francisco and San Jose.
Luckily for home buyers in those markets, though, the Golden State has the second highest average salaries on the list, just behind D.C. On the other hand, the average student debt burden is the 3rd highest of the states on the list, which balances out their finances quite a bit.
The most populous state is also one of the most economically diverse. While home prices are very high in California, there are also many opportunities. The most expensive home purchased by a SoFi member is in this state, but so is one of the least expensive. That breadth of choice is why so many SoFi members choose to live there. And because so many of SoFi’s mortgage members live there, the 17% down payment is also the member-wide average.
Washington State – SoFi Mortgage member rank: #2
Statewide home ownership: 61.5%
CNBC Cost of Living rank: #37 of 50
CNBC Technology and Innovation rank: #1 of 50
Surprisingly, anchored by Microsoft, Amazon, and countless startups in Seattle, Washington State actually beats California, home of Silicon Valley, for tech leadership in the CNBC rankings. Champions of Washington point to leadership in 21st century technologies, such as cloud computing, life sciences, and virtual reality, as key strengths.
Homebuyers in Washington are substantially younger than the national average. Despite that fact, they’re making the highest down payment on the list at 21%. It’s a growing state for people who are looking for bigger things in themselves and investing to make it happen.
Texas – SoFi Mortgage member rank: #3
Statewide home ownership: 61.0%
CNBC Cost of Living rank: #21 of 50
CNBC Technology and Innovation rank: #10 of 50
Third in the SoFi rankings is Texas. Austin is a dual draw for young people interested in both technology and the arts, while the metro area of Dallas-Ft. Worth continues to grow in appeal.
If you’re a SoFi member with an advanced degree in Texas, you’re most likely a lawyer—advanced degree holders in other states preferred business school to J-school. Like Washington, members in the Lone Star state are a few years younger than the national and SoFi member averages. In fact, Texas is tied with Florida on SoFi’s list as having the youngest average homebuyer age at 38.
Texas’ urban areas offer diversity, while the wide-open plains of the state boast some real bargains, including the second least-expensive home bought by a SoFi member in these top 15 states. And the average down payment tends to be higher than the average for members across the states, meaning SoFi Texans are great savers.
Illinois – SoFi Mortgage member rank: #4
Statewide home ownership: 65.3%
CNBC Cost of Living rank: #34 of 50
CNBC Technology and Innovation rank: #11 of 50
The Land of Lincoln is also the land of the youngest SoFi member homeowners. Chicago’s many-faceted strengths and the downstate university towns continue to be magnets for professionals looking for livable, appealing places to get established. Big consulting firms like Accenture and KMPG continue to attract MBA grads out of Northwestern’s Kellogg School of Business, and industry leaders like aerospace giant Boeing and the headquarters of Hyatt Hotels dominate as some of the biggest employers in the metro area.
Florida – SoFi Mortgage member rank: #5
Statewide home ownership: 64.2%
CNBC Cost of Living rank: #28 of 50
CNBC Technology and Innovation rank: #17 of 50
Florida is a diverse and populous state that offers much more than beaches and Disney. Home to several Fortune 500 companies and distinctly sports-loving residents, the state has a number of urban centers on both coasts and inland to draw young professionals looking to make roots there.
Like Californians, Florida members have some of the highest salaries (only second to California, in fact), and, to balance that out, they also have the second highest student loan debt on the list. To continue their streak of second place, they’re also the second youngest homeowners on our list (just behind Illinois).
New Jersey – SoFi Mortgage member rank: #6
Statewide home ownership: 64.2%
CNBC Cost of Living rank: #41 of 50
CNBC Technology and Innovation rank: #17 of 50 (tied with Florida)
On the strength of being home to Verizon, one of the biggest telecommunications companies in the world, New Jersey is a tech player to be reckoned with. The constant cross-pollination with New York aside, New Jersey has given rise to several successful startups, including shopping site Jet.com, and boasts a slate of top-flight universities that stands up against any state on this list.
While New Jersey might have the second lowest salaries on the list, the good news is that they have the third lowest amount of student debt, so that balances out nicely. The least expensive home that was purchased in this state still bears one of the highest prices of the list, though (the third highest, in fact), indicating that New Jersey real estate can still get pricey. The average age of the Garden State homebuyer is right in line with the SoFi average, at 40 years old.
Georgia – SoFi Mortgage member rank: #7
Statewide home ownership: 62.3%
CNBC Cost of Living rank: #17 of 50
CNBC Technology and Innovation rank: #13 of 50
The emergence of Atlanta as a massive business and travel hub a generation ago forced the world to take notice of Georgia, and that interest still holds. Today, in addition to being home to a wide variety of international companies (like Coca Cola, for example), Atlanta is a hotbed of creative and performing arts.
Georgia has the best CNBC rating for cost of living of the states on this list, making it easier for SoFi members to aggressively seek out homes that are among the least expensive in the SoFi study. They’re also buying with the smallest down payments in this list.
Colorado – SoFi Mortgage member rank: #8
Statewide home ownership: 63.5%
CNBC Cost of Living rank: #32 of 50
CNBC Technology and Innovation rank: #8 of 50
Get the giggles out of the way about Colorado being the ideal state for leading a laid-back professional life. The state has more to offer than Denver, Boulder, and tons of skiing—it’s actually a vibrant tech hub. But if you had to settle for a great combination of city life and winter sports, you could do much worse. It looks like you could get away with finding a spacious, rustic home, as Colorado had the third highest home price on the whole list. But the average down payment in this state is lower than the SoFi average
Speaking of giggles, it turns out there might be something to the state’s “grizzled old prospector” trope: Colorado has the oldest homebuyer members on this list.
Pennsylvania – SoFi Mortgage member rank: #9
Statewide home ownership: 68.0%
CNBC Cost of Living rank: #35 of 50
CNBC Technology and Innovation rank: #12 of 50
There’s a lot going on in the data for SoFi members in Pennsylvania. The state has made a long, multi-generational conversion from an industrial giant to a 21st century economic hub, and a strong tech and innovation rank shows that the efforts are paying off.
Still, home prices are the lowest overall on the list and Pennsylvania is not among the costliest states. Good thing it’s a cheap real estate market, because members there also earn the lowest salaries of the 15 states on this list. In spite of that, the average down payment is still the second highest on the list.
Connecticut – SoFi Mortgage member rank: #10
Statewide home ownership: 65.0%
CNBC Cost of Living rank: #46 of 50
CNBC Technology and Innovation rank: #19 of 50
Living between New York and Massachusetts has its advantages—many of the East Coast’s cultural hubs are a short jaunt away.
Like Pennsylvania, Connecticut brings some surprises to this study. Despite a reputation for high cost of living (more than only California on the CNBC rankings), SoFi members are actually buying comparatively inexpensive homes there. They are, however, taking on a good deal of additional debt to do so, with the smallest down payments in the study, tied with Georgia and Oregon at 13%. Fortunately, they do have the third highest salaries on the list and the lowest average student debt, meaning taking on a mortgage is less of an obstacle for Connecticut residents.
Maryland – SoFi Mortgage member rank: #11
Statewide home ownership: 66.6%
CNBC Cost of Living rank: #38 of 50
CNBC Technology and Innovation rank: #5 of 50
If any state has a case to be the ‘hottest draw that young professionals forget about,’ it’s Maryland. With many serious life sciences and technology jobs, a revitalized urban landscape, and plenty to do, this jewel of the Mid-Atlantic is overdue for a day in the sun. SoFi mortgage members living there are a little older than most, which might be a sign that the influx of up-and-coming talent is still in its early stages.
More good news: the average down payment is higher than the SoFi average, and they are fourth overall for statewide homeownership on the list. Keep in mind, they do have the second highest home price on the list, so it’s a state where you could potentially live large.
North Carolina – SoFi Mortgage member rank: #12
Statewide home ownership: 66.7%
CNBC Cost of Living rank: #18 of 50
CNBC Technology and Innovation rank: #7 of 50
North Carolina is a Goldilocks state, with a solid cost of living ranking and a reputation for pioneering tech that’s tough to beat—save the West Coast, of course. The Research Triangle region (Raleigh-Durham metropolitan area) has been a hotbed for tech innovators and startups for a generation, and its largest city, Charlotte, is an important trade and business hub.
North Carolina residents take on more debt purchasing their homes, as the average down payment is below the SoFi average. Home prices in this state run the gamut, though, as the highest home price in North Carolina is the 5th highest of all the states, yet the lowest home price is still the third lowest. The average age of the home buyer in this state is just one year older than the SoFi average.
Washington D.C. – SoFi Mortgage member rank: #13
District-wide home ownership: 41.5%
CNBC Cost of Living rank: N/A
CNBC Technology and Innovation rank: N/A
No one lives in Washington D.C. by accident. As the capital of the United States, there is simply no substitute for the types of people you can meet, influence, and be influenced by there. And that’s probably why D.C.-based SoFi members are predominantly social scientists and lawyers, rather than accountants and MBA-holding professionals (as found in other states). Access and power come at a cost, so D.C. is a very expensive place to call home. Every penny counts there, where the “least expensive” home is much more expensive than anywhere else SoFi members cluster.
The capital’s draw makes sense in other ways, too: D.C. members have both the highest average salaries, and, due to the highly educated nature of the population, the highest average debt. The data gives you a pretty good feeling they’re putting those refinance savings to smart use, though, as D.C. residents also have a higher than average down payment, and the average age of a D.C. homebuyer is actually a year younger than the SoFi member average.
Minnesota – SoFi Mortgage member rank: #14
Statewide home ownership: 71.3%
CNBC Cost of Living rank: #27 of 50
CNBC Technology and Innovation rank: #9 of 50
And then there’s Minnesota, a thriving jewel in the Midwest offering idyllic summers and some seriously brutal winters. The state is home to 16 members of the S&P 500, with the Twin Cities of Minneapolis and St. Paul being strong draws for business. The Mayo Clinic, which is virtually synonymous with medical innovation, is in Rochester. Minnesota is gaining in popularity, and there’s even some concern that the state’s pool of skilled professionals isn’t growing fast enough to meet demand.
For first time home buyers looking to move, one bright spot is that Minnesota has the highest overall statewide homeownership. Their down payments also tend to be a bit higher, meaning they are good savers. As such, home buyers in Minnesota tend to be older than the average SoFi member, indicating a “slow and steady wins the race” mentality in the state.
Oregon – SoFi Mortgage member rank: #15
Statewide home ownership: 64.1%
CNBC Cost of Living rank: #36 of 50
CNBC Technology and Innovation rank: #14 of 50
Last but not least is Oregon, home to all things athletic and outdoors, as indicated by Nike and Columbia Sportswear, two of the largest companies in the state. Of course, when talking about Oregon, one cannot forget the draw of Portland, where tons of millennials have poured in seeking arts, culture, and a cheaper cost of living compared to other West Coast hotspots like San Francisco and Seattle. It’s also a science and tech hub as well, since, unlike other states where MBAs are the most popular grad degrees, Oregon’s most common graduate studies are engineering and computer science.
Oregon had the least expensive home on the list, at $100K, and its most expensive home had the lowest price of the states, at just $750K. This might explain why they’re a little more comfortable with taking on a mortgage, as they have the lowest average down payment.
How to prepare for a mortgage while paying student debt
The most important rule of making an affordable home purchase is to avoid sabotaging your budget plan. Zillow data shows that 39% of first-time buyers overspend their budget on a home. So, if a house doesn’t fit within your spending range, walk away—other homes will come on the market.
You can also make some personal finance progress no matter where you live by refinancing your student loans. Refinancing can not only lower your interest rate, but also lower your monthly payments. That’s particularly helpful when saving to buy your first home.
Make paying off other high-interest debts a top priority, too. Credit card debt, for example, is expensive, so leveraging a personal loan to pay off the plastic is an important step in a total debt makeover.
If you’re aspiring to become a homeowner in any state, but not sure how to get there, SoFi can help. Check your rates for student loan refinancing and reach out to our wealth advisors to help you make sense of it all.