New report ranks best, worst cities for first-time homebuyers

First-time buyers are struggling to purchase homes in Denver, New York City and San Francisco, according to a new analysis of the nation’s 100 largest cities from LendingTree.

These hot markets took the top three spots in the company’s list of 10 most challenging cities for first-time homebuyers. Rounding out the rankings are Austin, Texas; Las Vegas; Los Angeles; Oxnard, Calif.; Boston; Sacramento, Calif.; and Miami.

LendingTree examined six criteria to evaluate each city’s accessibility to first-time buyers:

• Average down payment amount
• Share of buyers using an FHA mortgage
• Average down payment percentage
• Percentage of buyers who have less-than-prime credit (below 680)
• Share of homes sold that the median family income can afford (Housing Opportunity Index)
• Average FHA down payment as a percentage of average down payment for all loans

“In addition to tight inventory boosting prices in many markets, first-time homebuyers must now contend with rising mortgage interest rates, further reducing their buying power,” said Tendayi Kapfidze, chief economist at LendingTree. “As affordability declines, borrowers should consider all the programs available to assist them in becoming homeowners, including FHA loans.”

On the other end of the spectrum, a number of cities, mainly in the Midwest and South, are welcoming to first-time home buyers. LendingTree ranked the following cities the top 10 most accessible:

1. Little Rock, Ark.
2. Birmingham, Ala.
3. Grand Rapids, Mich.
4. Youngstown, Ohio
5. Winston, N.C.
6. Dayton, Ohio
7. Indianapolis
8. Scranton, Pa.
9. Pittsburgh
10. Cincinnati