10 US States Where Buying a Second Home Makes the Most Financial Sense

Deluxe Holiday Homes recently ran a study that evaluated US states to identify the most attractive locations for purchasing a second property as an investment. This kind of deal is perfect for buying a vacation rental home for a more convenient and comfortable stay away from home.

Which US states offer the most attractive locations for a second property

Vacation rental website, Deluxe Holiday Homes, has recently run a study to evaluate US states to reveal the most attractive locations for buying a second home as an investment. Besides the investment, this property would also be the perfect vacation home for the purchaser and its family.

Key metrics for the study

Meanwhile, key metrics in the study included average house sale price, 30-year mortgage rates, average down payment percentage, and disposable income. Moreover, lower income-to-mortgage ratio percentages indicate better affordability and greater viability for second home investment.

The top 10 US states to purchase a second home

1. Ohio

Among the best US states for second property investments, Ohio ranks at No. 1, with an estimated 81.82 percent of monthly disposable income required for mortgage payments. Moreover, it is the combination of a relatively low average home price at $219,861 and a moderate down payment percentage that makes it the most accessible market for potential investors seeking manageable monthly costs.

2. Illinois

Following closely behind Ohio, Illinois boasts 84.85 percent of disposable income going toward estimated mortgage costs. While average home prices are higher at $259,430, this state maintains strong affordability.

3. Michigan

Coming in third place, Michigan boasts an income-to-mortgage ratio of 86.83 percent. Meanwhile, home prices are modest at $236,678, and average incomes support consistent affordability. Furthermore, its balance of pricing and financing options positions the state as a viable choice for second-home investors in the Midwest.

4. Iowa

Iowa comes in fourth place with an 89.39 percent mortgage-to-income. Moreover, the state benefits from one of the lowest average home prices among the top 10, at $209,333, as well as a relatively high down payment percentage of 15.5 percent. This helps reduce ongoing mortgage costs, despite tighter disposable income margins.

5. West Virginia

While West Virginia boasts the lowest average home sale price in the study at just $158,255, its fifth-place ranking is driven by limited disposable income. Meanwhile, the income-to-mortgage ratio sits at 90.97 percent, which indicates that low property costs alone do not guarantee investment value.

6. Kansas

In sixth place, Kansas boasts an estimated 91.66 percent of disposable income required to cover mortgage payments. While affordability remains in easy reach, slightly higher average house prices and less favorable income-to-cost ratios weaken Kansas’ investment appeal.

7. North Dakota

North Dakota comes seventh and its placement is tied to its higher average home price of $257,276, plus a 15 percent down payment rate. Moreover, the income-to-mortgage ratio reaches 92.63 percent of disposable income, signaling tighter affordability despite solid economic fundamentals.

8. Missouri

Missouri has an average home price of $238,797, and sees mortgage payments consuming 93.25 percent of monthly disposable income. Its eighth-place ranking is due to a moderate down payment rate and mortgage terms that edge affordability limits.

9. Oklahoma

Coming in at No. 9, Oklahoma features constrained disposable income, despite a low average house sale price of $200,266. Meanwhile, mortgage costs take up 93.59 percent of available monthly funds, which highlights how lower home prices alone cannot assure affordability.

10. Kentucky

Kentucky rounds out the top ten in the study with 98.02 percent monthly income allocation to mortgage, the highest among the ranked states. While home prices remain accessible at $201,708, limited disposable income erodes investment potential, making it less appealing for buyers considering the purchase of a second property.

A spokesperson from Deluxe Holiday Homes commented on the study, saying:

Second homes aren’t just about the listing price – they’re about how comfortably the ongoing costs fit into real financial lives. It’s the gap between income and outgoings that decides whether a second property is a smart investment or a financial strain.

In many cases, what looks affordable on paper becomes unsustainable once you factor in the full picture of mortgage terms and disposable income.

Readers can view the full research by following this link.