Alaska is known for wide open spaces, stunning natural beauty and home prices that are a bit more expensive than other parts of the U.S. Alaska also offers better-than-average wages, which boosts your chances of qualifying for a mortgage. This page will walk you through the housing and mortgage market in Alaska, with special attention to programs for first-time buyers. Read on for a step-by-step guide to getting a mortgage in Alaska.


Deadbeats are Rare: Understanding Mortgage Rates in Alaska

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A few factors specific to Alaska affect the mortgage market and how much you'll pay. One negative: Alaska's land mass is huge, but its population is relatively tiny, so competition between lenders isn't as stiff as in the more crowded states in the Lower 48.

That said, variables specific to you - such as your credit history and income - are the most important factors in determining your mortgage rate. For an explanation of financial factors affecting loans, see MoneyGeek's guide to mortgage rates.


Homebuying Help in Alaska for First-Time Buyers

The Alaska Housing Finance Corp. offers numerous loan programs for first-time buyers, which the state defines as someone who hasn't owned a home for the past three years. One such program is the Tax-Exempt First-Time Home Buyer Loan Program, so-called because it is financed with tax-exempt bonds. This program offers below-market interest rates but has income limits. If you are looking to buy a house in an area targeted for growth or are a qualified veteran, there are fewer restrictions, including not having to be a first-time homebuyer to qualify for the loan.

There also are acquisition cost limits. For example, the cost of your home can be no more than $368,675 in Anchorage and $386,024 in Juneau, with higher-priced homes allowed in the target areas. Take note, if you sell the home for a profit within nine years, you might owe some federal income tax to make up for the low interest rate you received.

Alaska also has a Taxable First-Time Homebuyer Program offering a smaller discount on interest rates but without income limits or price caps.

Buyers who meet certain credit requirements also can apply for down payment or closing cost assistance of up to 4 percent of the loan amount.

In addition to state programs, federal programs are an option. Alaska is home to many veterans, who qualify for generous VA loans, and many parts of Alaska are considered rural for the purposes of USDA loans. For more about those programs, see MoneyGeek's first-time homebuyers guide..

Financial Aid for Alaska's First-Time Buyers

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High Prices, High Wages Affect Alaska's Home Affordability

In every state, home prices are determined by the supply of homes for sale and the demand for those properties. Alaska prices are a bit steeper than the national norm. But with its small population and comparative lack of demand from newcomers, the state is generally an affordable housing market, thanks in large part to wages that are well above the national average. In Anchorage, nearly 83 percent of homes sold in the third quarter of 2019 were affordable to a median-income family, according to the National Association of Home Builders/Wells Fargo Housing Opportunity Index. That's based on a median home price of $314,000 for all homes and condos and a median family income of $104,900. And in Fairbanks, affordability is a non-issue. The combination of a median price of $265,000 and median family income of $92,400 means 92.1 percent of homes sold in the third quarter of 2019 were within reach of a typical family.


Alaska's High Loan Limits for Federal Mortgages

There's good news for borrowers in Alaska: The Federal Housing Finance Agency considers the state a high-cost housing market, which means you can borrow up to $765,600 during 2020 in a so-called conforming loan through Fannie Mae and Freddie Mac. In most parts of the country, the 2020 limit is $510,400. The higher loan limits let most borrowers avoid jumbo loans, which often come with higher rates and stricter underwriting standards than conforming loans.

FHA loan limits also are more generous in Alaska than in much of the U.S. The FHA ceiling varies by area, but in Anchorage, the state's largest housing market, the FHA limit is $411,700 for 2020.

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Buying a Home in Alaska: Experts See Affordability, Inventory as Challenges

Steve Schick

Steve Schick is a Realtor who recently took over as broker at Juneau Real Estate. A father of three, he says you'd be wise not to challenge him to a game of pool.

JD Mechem

JD Mechem (NMLS license no. 192173) is a veteran loan originator who works for Residential Mortgage in Anchorage. He's the 2017 president of the Alaska Mortgage Bankers Association.

How has your area fared through the volatile real estate market of the past decade?


We seem to be somewhat insulated from the bigger goings-on down south. In the recession of 2007-08, we saw dips, but nothing like the broader market. Alaska's economy has not done too well with the decline in oil prices, and we thought people were going to stop buying homes, but they're still buying. We have a lot of state jobs, a lot of federal jobs, a ton of tourism.


We've been pretty lucky because we've missed most of the volatility. We had a small downturn after the crash, but we didn't have a lot of subprime loans. Oil prices have an impact and make for concerns, but our economy is a lot more diversified than it used to be.

What's the market like for first-time buyers?


A big boon to Juneau came when the U.S. Department of Agriculture changed its guidelines to make buyers here eligible for no-down payment loans. That brought buyers into the market. We have a lot of attached homes in Juneau. You call them duplexes down south, but the difference is, it's not a rental. You own half. You can buy an attached home for $20,000 or $30,000 less than a single-family home. What that means is we have a stair-step for people who are renting or living in a mobile home. They can buy an attached home and live there for five years until they're ready to move up. I did that myself.


The down payment is a struggle for a lot of people, and we've had an inventory problem for some time. The under-$300,000 market is pretty tight. The biggest mistake a lot of first-time homebuyers make is they overextend themselves, and they end up house-poor. I tell people, "Don't base your buying power on what you qualify for. Go home and do a budget. Look at the last three months and see what items you can't live without. Then see if you're comfortable spending what you qualify for, or if you're more comfortable spending less."

What's the biggest challenge in your market?


Low inventory. We are hurting for inventory in the lower price range. Starter homes are in short supply.


Affordability. We've had almost no new construction for seven years, and there's very little land available in Anchorage. People sometimes opt for long commutes so they can get affordable housing.

How is your state's housing market unique?


Most of the towns are very small. Juneau has only 32,000 people, and we're the third-largest town in the state. The thing we run into is the loan underwriter is down south, and they don't understand Alaska. Say they want three comparables within a half mile. That just isn't happening. We have some homes that use rain water and septic tanks, and underwriters don't understand that. Because this is a small market, I know every Realtor, every lender, every appraiser, every title person.


We have higher loan limits for FHA and VA programs, so the government programs get used a lot more up here than down south. And we're a non-disclosure state, so sales prices aren't recorded. Appraisers have to do a lot more leg work, and fancy programs like Zillow are off by a lot in Alaska.


Don't Forget Closing Costs - Especially Alaska's High Appraisal Fees

Closing costs in Alaska rank about average among states, a Bankrate survey of closing costs in 2015 shows. Borrowing $200,000 means paying closing costs that average $1,857 in origination fees and third-party fees. Typical closing costs range from a low of $1,613 in Ohio to a high of $2,163 in Hawaii, Bankrate found. In Alaska, the typical appraisal fee of $616 is on the high side, with the average survey fee around $500. Appraisals are more expensive because sales prices aren't a matter of public record in Alaska. See MoneyGeek's guide to closing costs for a full accounting of what to expect.

Average Closing Costs in Alaska

Average Origination
Average Third-Party
Average Total Closing

Source: Bankrate's 2015 survey of closing costs.

Refinancing a Mortgage in Alaska

Alaska's appreciation has been muted in recent years, which might complicate your refi plans. The state's home values inched up by just 10.5 percent from early 2011 to early 2016, trailing the national appreciation rate of 27.2 percent, according to the Federal Housing Finance Agency's home price index. If slow price growth has left you with little equity in your home, it might be difficult for you to refinance.

However, if you've built equity, this might be the moment to take advantage of low interest rates by locking in a lower rate or jettisoning your private mortgage insurance. The savings can be compelling. Say you have a $200,000 loan at 5 percent interest, for a payment of $1,074 a month. Borrowing the same amount at a 3.5 percent rate will cut your payment to $898 a month. Alaska's refi process has a few quirks you should know about. As a "non-disclosure state," Alaska doesn't require sales prices to be recorded. That means appraisal fees here are higher than elsewhere. MoneyGeek's guide to refinancing your mortgage contains more details about refis.

More Mortgage Resources for Borrowers in Alaska

Alaska Housing Finance Corp. rates

This page offers up-to-date rates for the state's various loan programs.

Closing Cost Assistance Program

Details Alaska's closing cost and downpayment assistance, which provides up to 4 percent of the loan amount.

HomeChoice classes

Alaska offers a free eight-hour course to walk buyers through the details of the home-buying process.

Alaska Community Development Corp

The nonprofit provides down payment assistance to low-income buyers in much of the state.

Rural Alaska Community Housing Program

For low-income buyers willing to work 30 hours a week to build a home, this nonprofit rewards sweat equity by waiving the down payment.