How to Buy a House in Alaska: A Homebuyer’s Guide
Updated: October 29, 2023
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The median price of a home in Alaska is roughly $332K. This is a year-over-year increase of 9.8%. Although the average cost of properties in Alaska has been steadily increasing over the years, it is still lower than the national average of $356K.
Growth in median home prices in Alaska is also slower than the national average, which was 16.5% over the past year, compared to Alaska’s 9.8% increase over the same period.
If you are a first-time homebuyer wondering how to buy a house in Alaska, MoneyGeek broke down the steps to help you navigate and manage the process without falling into crippling debt. Our analysis includes understanding mortgage rates, choosing the best location and the importance of home inspection.
Choose an Ideal Location
Location is one of the main factors that will determine how much it costs to buy a house in Alaska. For instance, based on 2022 data, the median home price in Anchorage is $420,993, compared to an average of $183,928 in Fairbanks.
However, besides cost, other factors like access to amenities, neighborhood culture and cost of living are also important when deciding the best place to buy a house in Alaska.
Calculate Mortgage Rates
When looking to buy a home in Alaska, it is important to understand the mortgage rates available to you. Different mortgage options have various rates, and the best for you will depend on your profile and needs.
Keep in mind that individual factors like your income, credit history and debt-to-income ratio will play a role in the size of the mortgage you qualify for and its interest rates. Comparing lenders is also key in helping you find the best mortgage rates for your profile.
Prepare Down Payment Requirements
There are different down payment requirements depending on the type of mortgage you get. Some mortgage options require low down payments of 3.5%, while others typically have down payments of at least 20%. You may even qualify for a home loan that does not require a down payment, such as a VA or USDA home loan.
Get Pre-Approved for a Mortgage
When planning to buy a home in Alaska, it is important to get pre-approved for a mortgage first. Keep in mind that some sellers will require a mortgage pre-approval before showing you their property.
A pre-approval is a commitment from the lender stating the specific loan amount you can borrow. A pre-approval is different from a prequalification since the prequalification only shows that you qualify for a loan — it is not a commitment.
Conduct a Home Inspection
Before buying a home, it is crucial to have a home inspection done. A thorough inspection will uncover any significant problems with the home and help you avoid life-threatening safety issues. Home inspections can also give the buyer leverage when negotiating if the home requires repairs or other upgrades. Some lenders will also not finance your home unless you have a professional home inspection.
Close Your Mortgage Loan
After the home inspection and appraisal, you can review the lender’s loan offer and proceed to the closing process. It is important to note that there are costs involved in the closing process. However, for those with limited funds, down payment assistance programs in Alaska can help to cover some of the closing costs.
Alaska Homebuying Details
When planning to buy a home in Alaska, it's important to understand that while median house prices are lower than the national average, the cost of living can be quite high. It is also crucial to keep in mind that access to some parts of Alaska by road is limited, so you need to make sure you choose an area that has access to the amenities you need.
Homebuyers in Alaska can access both conventional and government-backed mortgage options. For those who are not able to afford a down payment or closing costs, Alaska has various down payment assistance programs that can help.
The Interest Rate Reduction for Low-Income Borrowers (IRRLIB) program offers subsidized interest rates to economically disadvantaged borrowers. However, to qualify, borrowers are required to take an approved homebuyer education class.
Alaska Housing also has an Energy Efficiency Rate Reduction program — if you buy a home that meets certain energy efficiency standards, you will get an interest rate reduction.
Veterans who want to buy homes and meet certain income limits can also get a 1% interest rate reduction on the first $50,000 of the loan amount.
Frequently Asked Questions About Buying a Home in Alaska
MoneyGeek answered commonly asked questions to help you learn more about how to buy a home in Alaska.
You should ask yourself several questions before purchasing your Alaska home, including:
- Which is the best location based on your needs and budget?
- What type of mortgage and mortgage rates are you eligible for?
- How much down payment can you afford?
Purchasing a home in Alaska can be smart for homebuyers who want to settle in a location with a low population density and access to a lot of outdoor activities. However, keep in mind that the cost of living in Alaska is generally higher than the national average.
Property prices in the area have been appreciating steadily in recent years, with a 9.8% increase over the past year. This means your property value is likely to appreciate with time as demand keeps growing.
The amount of money you need to buy a house in Alaska will depend on the type of mortgage you can get. On average, mortgage lenders will request borrowers to have at least a 20% down payment to avoid private mortgage insurance (PMI).
The average per-capita property tax paid in Alaska is $1,435.
On average, Anchorage is the cheapest city in Alaska, even though its housing prices are typically higher than those in Juneau and Fairbanks. You’ll spend much more on food and utilities in Alaska if you live outside Anchorage.
sources
- Alaska Housing Finance Corporation. "Affordable Housing Enhanced." Accessed September 29, 2022.
- Alaska Housing Finance Corporation. "Down Payment Assistance." Accessed September 29, 2022.
- Alaska Housing Finance Corporation. "Loan Options." Accessed September 29, 2022.
- Alaska.gov. "Alaska Tax Facts." Accessed September 29, 2022.
- Consumerfinance.gov. "What Is a Closing Disclosure?." Accessed September 29, 2022.
- USDA. "Is Mortgage Insurance Required for a Rural Housing Service Single-Family Loan?." Accessed September 29, 2022.
- Zillow.com. "Alaska Home Values." Accessed September 29, 2022.
- Zillow.com. "Compare Today’s Mortgage Rates in Alaska." Accessed September 29, 2022.