How to Buy a House in Idaho: 6 Steps

Purchasing a house is a major financial decision that requires careful consideration. The average home value in Idaho is $460,288, higher than the national average of $362,481. This difference can impact your budget and financing options when buying a home in the Gem State.

Understanding down payment assistance programs, various mortgage types and Idaho-specific regulations can facilitate a smooth journey toward homeownership. MoneyGeek compiled essential pointers to help you navigate the homebuying process in Idaho, from saving for the down payment to finding the best financing option for your needs and credit history.

According to the U.S. Census Bureau, the homeowner vacancy rate in Idaho for the second quarter of 2024 was 0.9%. The homeowner vacancy rate measures the percentage of homes that are vacant and available for sale, which helps gauge the balance between housing supply and demand.

With a stable vacancy rate for homeowners being around 2%, Idaho's 0.9% rate indicates there is not enough inventory on the market to satisfy homebuyer demand. This suggests a competitive housing market where buyers may face challenges in finding available homes.

Before buying a house in Idaho, take a close look at your financial and credit history. A strong financial profile increases your chances of getting approved when applying for a mortgage.

Your credit score plays a significant role in determining the mortgage loans and interest rates you qualify for — the higher your score, the more likely you are to get a desirable rate. According to Experian, the average credit score in Idaho is 729.

If you have bad credit (between 300 and 579 on the FICO scale), getting approved for a mortgage may be more difficult. Check the table below for your best mortgage type based on the minimum credit score requirements.

Source: Experian

Your debt-to-income (DTI) ratio helps lenders see how much of your monthly income goes to paying off debts. This allows them to evaluate the amount of mortgage debt you can take on. In Idaho, the average mortgage debt is $243,353, according to Experian. This figure highlights the additional financial responsibility you may consider when taking on a mortgage.

Monthly debt payments included in your DTI are mortgage payments, credit card payments, auto loans, student loans and other debts. Use our DTI ratio calculator to see your front-end DTI, back-end DTI and total monthly debt payments. The front-end DTI represents the percentage of your income spent on housing costs, while the back-end DTI includes all debt payments.

Buying a house is a significant financial commitment, and it's easy to fall into the trap of purchasing a property beyond your means. To avoid this, consider using the 28% rule as a guideline. This rule advises you to not spend more than 28% of your monthly income on your mortgage payment. This way, you can maintain financial stability and avoid the stress of overextending yourself financially.

According to the U.S. Bureau of Labor Statistics, the median annual income in Idaho in April 2024 was $44,240. This translates to a gross monthly income of $3,687 before taxes. Applying the 28% rule, you should aim to keep your monthly mortgage payment at or below $1,032.

Use our mortgage calculator below for a more precise estimate tailored to your situation.

A down payment is the initial amount you pay when buying a house, often 20% of the home's value. This standard can be a significant hurdle for many homebuyers. In Idaho, for example, the average home value is $460,288, which means a 20% down payment would be $92,058. For homes above the average, valued at $500,000, the down payment would be $100,000.

Fortunately, saving up for a 20% down payment is not a requirement. Many mortgage types allow for lower down payments. Government-backed loans like VA loans require 0% down, and FHA loans require only 3.5%.

Note that if you put down less than 20%, your lender may require you to take out private mortgage insurance. Use our PMI calculator to estimate your monthly private mortgage insurance (PMI) premium based on your credit score and down payment.

Idaho offers several down payment assistance programs that can make homeownership a reality for many individuals. These programs provide financial support to help cover the initial costs associated with purchasing a home. Check out the table below for the available down payment assistance programs in Idaho offered by the Idaho Housing and Finance Association (IHFA).

Finding the right location in Idaho for your new home involves evaluating several key factors. Consider the average house price in the area, ensuring it aligns with your budget. Proximity to family, friends, and your work or school can greatly impact your daily life, so choose a location that minimizes travel time. Access to public transportation, parks, restaurants and shopping centers can enhance your quality of life, making these amenities important to consider.

The cost of living is a crucial factor in your decision-making process. According to the Missouri Economic Research and Information Center (MERIC), Idaho's cost of living index for the first quarter of 2024 is 101, slightly above the national average of 100. When choosing the right location, consider the following expenses:

• Food
• Healthcare
• Clothing
• Utilities
• Education
• Transportation
• Entertainment

Check out the table below to see some cities in Idaho and their average home values based on recent data. You can also use our cost of living calculator to help estimate how much you'll need to pay for all the essentials in different locations.

Source: Zillow

Working with a real estate agent can expedite your house hunt in Idaho. They provide the advice you need, extra hands to deal with paperwork and an expanded list of property options you won't have access to alone. They can also recommend other service providers like title companies and inspectors to help you buy your home in Idaho.

When finding a real estate agent, do your due diligence and interview agents with experience in the neighborhoods you're interested in. Consider the following tips:

• Find someone compatible with your needs and personality
• Verify the agent's credentials, training and licensure
• Ensure they have in-depth knowledge of the area
• Shop around for agents and compare their rates

The homebuying process in Idaho involves finding a mortgage that aligns with your budget. Options include conventional, jumbo, FHA, VA and USDA loans. You can select from 10, 15, 20 or 30-year terms and decide between a fixed-rate mortgage or an adjustable-rate mortgage (ARM). Choosing the best financing option can increase your approval chances and save money over time.

Interest rates on a mortgage can change daily due to factors like the type of mortgage, the lender and the economy. The annual percentage rate (APR) differs from the interest rate as it includes additional costs like fees, providing a clearer picture of the actual cost of borrowing.

As of September 2024, the APR for a 30-year fixed conforming loan in Idaho is 5.87%, while the APR for a 30-year fixed rate FHA loan is 8.00%. Check the table below to see the current mortgage rates in Idaho by mortgage type.

Obtaining a mortgage pre-approval in Idaho is a strategic step in the homebuying process. It allows you to understand your borrowing capacity, which helps set a realistic budget for your new home. A pre-approval also gives you an edge in the competitive housing market, as sellers often prefer buyers who have secured financing. Lenders typically issue a mortgage pre-approval letter, which serves as a commitment to lend you a specified amount. This letter is usually valid for 60 to 90 days, providing a window to find a suitable property.

To get pre-approved, you'll need to submit several documents, including:

• Proof of income (such as pay stubs or tax returns)
• Credit report
• Employment verification
• Bank statements
• Identification documents

It's important to distinguish between a mortgage pre-approval and prequalification. Prequalification is a preliminary step that gives you an estimate of how much you can borrow based on self-reported information. In contrast, pre-approval involves a more thorough review of your financial situation, including a credit check and verification of income and assets, providing a more accurate picture of your borrowing potential.

Home inspections are a recommended step in the homebuying process in Idaho. Inspectors typically examine structural elements, roofing, plumbing, electrical systems and HVAC. The inspection report includes findings on the condition of these parts and any potential issues.

For instance, an inspection might reveal major issues such as foundational cracks or outdated electrical systems. These findings can affect the home's appraisal value, potentially lowering it. In such cases, buyers may decide to rescind their offer based on the inspection results.

Idaho does not regulate home inspections or require certification for home inspectors. Despite this, many home inspectors in the state voluntarily obtain certification from reputable organizations like the American Society of Home Inspectors (ASHI) or the International Association of Certified Home Inspectors (InterNACHI). This certification can provide additional assurance of their expertise.

If you're looking for a home inspector in Idaho, ensure they are licensed. Consider what other clients have said by checking online reviews and asking for references.

Home appraisals determine a property's fair market value. This necessary step ensures buyers do not overpay and that lenders can confidently provide a mortgage. According to the 2023 Appraisal Survey from the National Association of Realtors (NAR), the median cost of a home appraisal in 2023 was $500.

For example, an inspection might uncover significant issues like a faulty roof or outdated electrical wiring. Such findings can impact the home's appraisal, potentially lowering its value. This could lead the buyer to reconsider their offer, especially if the cost of repairs is substantial.

Closing is the final step in buying a house in Idaho, marking the transfer of ownership and the moment you receive the keys. Your lender must provide a closing disclosure document three days before the official closing. This document outlines your loan terms, projected monthly payments, and closing costs. Plan a final walk-through of the property with your real estate agent near closing day to ensure it remains in the expected condition.

During closing day, you'll review and complete a lot of paperwork. Some of the key documents you need to sign include:

• Final loan application: Confirms all the details of your loan, including the interest rate and loan amount. It verifies your financial information and ensures everything is accurate before finalizing the loan.
• Deed transfer: Transfers property ownership from the seller to you. It is a legal requirement to officially become the home's new owner.
• Promissory mortgage note: Outlines your loan repayment terms, including the amount you owe, the interest rate and the repayment schedule. It is a legal promise to repay the loan under the specified terms.
• Homeowners insurance: Protecting your new home is essential. Idaho home insurance covers potential damages to your home and provides peace of mind as you settle into your new property.

Closing costs are fees paid at the end of a real estate transaction. For more details, you can check out closing costs. In Idaho, the average closing costs amount to $2,831 according to NAR. These costs include various fees that you should be aware of:

• Appraisal fee: The cost of having a professional appraiser determine the property's value.
• Title search and insurance fee: Fees for verifying the property's title and securing insurance to protect against future title disputes.
• Escrow deposit: Funds held in a mortgage escrow depositaccount to cover future property taxes and insurance premiums..
• Prepaid costs: Advance payments for property taxes, homeowners insurance and mortgage interest.
• Other closing costs: Additional fees such as loan origination, recording and credit report fees.

If you are a first-time homebuyer, learning about the first-time homebuyer programs in Idaho can help you achieve homeownership faster.

Buying a house is a significant financial commitment that will last for years. To help you kickstart your homebuyer journey, we answered some frequently asked questions about buying a home in Idaho.