How to Buy a House in Idaho: A Homebuyer’s Guide

Contribution by 1 expert

Updated: January 23, 2024

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Based on Zillow's Home Values Index, the average home value in Idaho is $467,694. This data indicates that, on average, it's significantly more expensive to own a home in the state than in the rest of the country, as the average home value in the U.S. is $357,589.

In comparison to the rest of the U.S., the average value of a home increased by significantly less over the past year. Last year, home values in the nation increased by 13.5%, while home values in Idaho only increased by 4%.

While it may seem time consuming to learn all about the ins and outs of the homebuying process, spending a few hours researching now could help you avoid falling into crippling debt. To help you, MoneyGeek went into detail about factors like mortgage rates, location, home inspection and other details.

Key Takeaways

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On average, a home in Idaho costs $467,694, which is 4% more than last year.

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You can qualify for a mortgage loan if you meet the lender’s credit score, income and debt-to-income ratio requirements.

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To find the best home in Idaho, you must finalize the right location, satisfy mortgage requirements, conduct a home inspection and apply for a mortgage.

Choose an Ideal Location

Your property’s location is one of the most important factors in the homebuying process, as it impacts multiple factors including access to amenities, price and property tax. For instance, the median cost of a home in Boise is $497,877 while it’s $896,608 in Stanley.

Choosing the best home location comes down to your lifestyle and your personal preferences. Homes in rural areas may be less expensive than those in urban areas. However, access to certain amenities, like dining options and recreation, may be limited.

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Since the homebuying process can be overwhelming, it’s best to contact a real estate agent for help. They can assist you in a variety of ways, including finding the ideal home for your situation, negotiating price, taking care of the paperwork and closing the deal.

Before you look for a real estate agent, you should consider your needs and know what type of property you want. Then, you can ask for referrals from your friends and family, interview prospective real estate agents and choose the one that you see fit.

In general, it’s helpful to keep in mind the following tips to ensure you choose a qualified real estate agent:

  • Verify that your agent is licensed and experienced
  • Obtain referrals from friends and family
  • Read reviews from former clients
  • Choose an agent that’s highly knowledgeable about local market conditions
  • Select agents who appear responsive to your needs and communicative
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In Idaho, the cost of living varies by city and neighborhood. When choosing where to live, it’s important to factor in the cost of your property in addition to other living expenses. To calculate the cost of living in an area, you should take into account the following factors:

  • Food
  • Taxes
  • Healthcare expenses
  • Education costs
  • Clothing
  • Transportation
  • Insurance premiums

The best way to calculate your living expenses is by using MoneyGeek’s cost of living calculator. Simply enter your current location, the neighborhood you’re thinking of moving to and your annual income and it will generate an estimate of how much it will cost to live in a specific area.

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On average, the cost of living in Idaho is less than the rest of the U.S. To save even more money, you can choose to live in an affordable area in the state; however, know that it comes with various pros and cons. For instance, you might save money living in a small town, but your job opportunities may be limited and you may have less access to quality healthcare and other public services.

MoneyGeek found that a few of the most affordable cities in Idaho are Payette, Preston, Ammon and Idaho Falls.

Calculate Mortgage Rates

There are multiple types of mortgages to choose from, depending on your borrower profile. Key factors that significantly affect your mortgage interest rates include your credit score, home location, down payment, property price and loan amount, loan term and loan type. If you want the best rate, you should evaluate your needs first, shop around and compare lenders.

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Lenders offer various types of mortgages and offer different interest rates and terms based on a borrower’s profile.

Depending on your profile, you may be eligible for a lower interest rate if you have a strong credit history or a lower debt-to-income ratio. Based on MoneyGeek’s analysis, the following are the average interest rates for each loan type:

Since each lender has different terms, it’s best to know the eligibility requirements of your preferred lender before applying. For instance, only veterans and active-service military members are eligible for VA loans.

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MoneyGeek recommends using a mortgage calculator before applying for a loan, as it will allow you to estimate your monthly payment and see the effect of adjusting your loan term and amount on your loan payment.

If you can’t figure out which type of loan will suit you best, you can use MoneyGeek’s FHA vs Conventional loan calculator. It will give you an idea of which loan will be best for your current situation.

Once you have a clear understanding of the loan you need, you can begin comparing different lenders that offer mortgages in your area. Before finalizing a lender, you should compare their rates to find the best deal.

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To determine your loan terms, lenders will analyze your financial profile and other important factors. MoneyGeek’s research shows lenders review the following factors of the borrower’s profile.

  • Credit score: Although you can still qualify for a loan if you have a low credit score, you must have a strong credit history to receive the best interest rates.
  • Debt-to-income (DTI) ratio: Your DTI ratio shows how much your income goes towards paying off existing debt. Lenders generally prefer borrowers that have a low DTI ratio.
  • Down payment: Lenders usually want borrowers to make a higher down payment on a property. However, depending on your situation, you may qualify for a zero-downpayment or low-downpayment loan option.
  • Employment history: Your employment history will show the lender that you have a steady source of income to repay the debt.
  • Income level: You must have sufficient income to qualify for a mortgage. This income requirement will vary by lender and your requested loan amount.

Prepare Down Payment Requirements

Down payment requirements differ by mortgage type and lender. For instance, some lenders offer loans that require at least a 20% down payment. On the other hand, many low-down-payment and zero-down-payment options are also available.

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Depending on which type of loan you choose, you may be required to make a down payment. If you opt for a conventional loan, you will have to pay 20% of the home’s purchase price as a down payment. However, FHA loans only require a 3.5% down payment. For VA and USDA loans, lenders often have zero-down-payment and low-down-payment options.

Although zero-down-payment and low-down-payment loans might seem suitable options, only those that meet certain criteria will qualify.

Your down payment amount is important because it will impact the cost of your monthly payments. For instance, making a higher down payment will likely reduce the amount you pay each month and lower the interest rate on your mortgage.

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Some types of loans require you to purchase mortgage insurance, which protects the lender in case you fall behind on your loan payments.

You must purchase mortgage insurance if you opt for USDA or FHA loans that require a low down payment. Mortgage insurance is mandatory if you put in less than a 20% down payment on a loan.

With conventional loans, the borrower must purchase private mortgage insurance (PMI) and pay its monthly cost. However, VA loans do not require mortgage insurance.

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Many first-time homebuyers might be unable to afford a large down payment on a new home. To help such borrowers, many down payment assistance programs are available in Idaho. Based on MoneyGeek’s analysis, the following programs are offered in the state:

  • Idaho Housing and Finance Association: First-time homebuyers can take advantage of homebuyer programs offered by the Idaho Housing and Finance Association. It also offers down payment and closing cost assistance to eligible borrowers.
  • USDA Loans: The U.S. Department of Agriculture offers several financial assistance options for borrowers looking to purchase a home in an eligible rural area.

In addition to these programs, more options might also be available depending on your home’s location.

Get Pre-Approved for a Mortgage

After finalizing a lender, it’s best to get pre-approval for a mortgage loan. A pre-approval is essential as it shows your ability to secure a mortgage.

However, know that there’s a difference between pre-approval and pre-qualification. In pre-qualification, the lender reviews your information and lets you know if you will be able to get a loan. On the other hand, pre-approval usually involves hard credit checks and the lender might make a conditional commitment to lend you the loan amount.

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To increase your chances of approval, you must provide the lender with the necessary documents. It’s best to ask the lender what information they will need so you don’t miss anything. MoneyGeek recommends gathering the following documents before applying:

  • W-2 forms
  • Recent payroll stubs
  • Tax returns
  • Proof of real estate income (if any)
  • Bank statements
  • Social Security number
  • Photo ID
  • Investment account statements
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Since pre-approval shows your financial ability to take on a mortgage loan, applying for it as soon as possible is essential. Securing pre-approval at the right time can help you maintain your credit score and save on unnecessary costs.

Depending on the lender, it generally takes up to ten days to be pre-approved. When you receive your pre-approval letter, it will be valid for a limited time, between 30 and 60 days.

A fee is required to receive a pre-approval letter. It’s also important to note that since your pre-approval letter is only valid for a limited time, and involves hard credit checks, you should only request one if you’re ready to buy a home.

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A pre-approval letter is a valuable document that shows your loan amount, loan term, loan type, monthly payment details and other important information.

It lets the seller know that you have secured the financing to purchase their home and may persuade them to seriously consider your offer. Although you can request as many pre-approval letters as you like, the lender performs hard credit inquiries every time you request one.

However, know that pre-approval letters generally expire in 30 to 60 days. During this period, you can review the lender’s terms, shop around and compare rates from different lenders.

Conduct a Home Inspection

Before you close a home purchase, it’s essential to conduct a home inspection. This will allow you to get a better idea of the home’s current condition and identify any necessary repairs. Depending on the lender you choose, you may be required to conduct a home inspection before your loan is approved.

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A licensed home inspector can look at significant issues with the home’s structure and other potential problems, helping you save money on repairs down the road. MoneyGeek found that the following home features and systems are typically included in a standard inspection:

  • Ceilings
  • Floors
  • Doors and windows
  • Walls
  • Foundation
  • Interior
  • Heating and cooling system
  • Structural components

More specific types of home inspections include the wood-destroying organism (WDO) inspection, mold inspection, foundation inspection and radon testing.

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Although home inspections aren’t a state requirement in Idaho, depending on your location within the state, some cities and counties may mandate it. Regardless, MoneyGeek highly recommends hiring a licensed home inspector prior to purchasing a home to save on unnecessary costs later on.

A standard home inspection can cost around $200 to $500. However, this cost can vary if your home requires additional inspections. To find a home inspector that meets your needs without breaking your budget, you should compare them for their services offered and cost.

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During the home appraisal process, a licensed appraiser evaluates the home's condition and contents to give an unbiased opinion of its value. Lenders generally require home appraisals to ensure that the borrower isn't overborrowing since if the borrower defaults on their loan, the lender will have to sell the home to recover the money. The cost of a home appraisal generally falls to the borrower.

It may take seven to 10 days to complete the appraisal process and generate a report. The report contains information about a home's value based on its location, condition, amenities, quality and other essential factors.

Close Your Mortgage Loan

After you have gone through your loan terms and are satisfied with them, you can move forward with closing your mortgage loan. At this stage, you will have to pay closing costs, which are usually 3% to 5% of the loan amount. These include costs for various expenses like taxes, attorney fees, appraisal costs, mortgage insurance, title insurance and loan origination fees.

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To close your mortgage loan, you will have to sign multiple documents. It’s essential to thoroughly review these documents before you sign them to ensure you understand what you’re agreeing to. Typically, you’ll be required to review and sign the following documents:

  • Closing Disclosure
  • Property Transfer Forms
  • Mortgage or Promissory note
  • Mortgage Application
  • Deed of Trust

If you don’t understand something in a document, it’s important that you clarify it with your lender. That way, you won’t be surprised by any unexpected costs later on.

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There are various costs associated with closing a mortgage loan. MoneyGeek’s analysis shows that mortgage closing costs might include the following fees and expenses:

  • Escrow fee: The escrow company or the attorney who collects the closing costs and disburses them to the appropriate parties is usually paid this fixed fee.
  • Attorney fee: This amount is paid to the attorney who prepares the home purchase contract and other important documents.
  • Application fee: This refers to the upfront fee you must pay to the lender to process your loan application.
  • Homeowners insurance: The lender typically requires the buyer to pay the first-year homeowners insurance premium upfront.
  • Title insurance: This helps protect the lender in case any ownership dispute about the property arises.
  • Credit report fee: Although not all lenders charge this, you might have to pay a fee to the lender when they pull your credit report from the credit bureaus.

In addition to these fees, you might have to pay many other costs. It’s best to contact your lender for more information about closing costs to receive a detailed estimate.

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To become a homeowner in Idaho, it’s best to start by searching for the perfect location, then calculate your mortgage rates and decide how much down payment you will put in. Once you figure that out, you can get pre-approved for a loan, conduct a home inspection and proceed with closing the mortgage loan.

Lenders generally disburse loan funds after you sign the loan documents and meet other requirements. The home purchasing process will be complete when the closing agent receives the funds.

To manage your mortgage effectively, you must make timely monthly payments and save for emergency expenses that may arise.

Idaho Homebuying Details

Finding the best place to buy a house in Idaho generally involves analyzing your needs, lifestyle and other important factors. The cost of a home in the state is generally higher than in the rest of the country, making it essential to shop around and compare rates from different lenders to find the most affordable deal.

You can benefit from various national and state first-time homebuyer programs if you can’t afford a large down payment.

Idaho Heroes Program

This helps first-time homebuyers by providing down payment and closing cost assistance up to 7% of the home’s purchase price. However, since it’s only available for borrowers with a specific background, it’s best to check first if you’re eligible.

IHFA First Loan

Borrowers in Idaho can get a fixed-rate loan through this program. They may also qualify for the down payment and closing cost assistance, low mortgage insurance and affordable rates.

USDA Loans

No down payment is required for borrowers intending to purchase a home in USDA-designated rural regions across the U.S.

Frequently Asked Questions About Buying a Home in Idaho

The road to homeownership might be challenging for some buyers. To make it easier, MoneyGeek analyzed the following frequently asked questions about how to buy a house in Idaho.

What are the most important questions to ask when buying a house in Idaho?
Is buying a house in Idaho a good idea?
Is it wise to buy a house in Idaho in 2023?
How much income do I need to buy a house in Idaho?
How much is property tax in Idaho?
Which Idaho city is the cheapest to buy a home?

Experts' Insights About Buying a Home in Idaho

  1. What are the key factors to consider when buying a house in Idaho?
  2. What common mistakes do home buyers make when trying to purchase a property in Idaho, and how can they avoid these pitfalls?
James C. Brau
James C. BrauProfessor of Finance at the BYU Marriott School of Business