How to Buy a House in Iowa: A Homebuyer’s Guide
Updated: October 21, 2023
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As of 2022, the median home price in Iowa is $199,882. Prices in the state have increased 10.2% year-on-year, but it’s lower compared to the U.S. average house price of $357,589.
Iowa is among the cheapest places in the U.S. to buy a home. However, prices in the state have consistently gone up in recent years, which follows the trend across the country.
If you’re planning to buy a house in Iowa, it’s a good idea to understand the entire process before you commit to anything. Remember, homebuying involves a mortgage that you’ll have to pay for decades, and you’ll likely live in that house for several years. You have to be sure that you’re making the best decision for your needs.
Choose an Ideal Location
Location has a significant impact on how much it costs to buy a house in Iowa. Neighborhood amenities, accessibility, appearance and other similar factors may bring prices up or down.
For instance, an average house in Des Moines costs $194,461. That’s significantly more expensive compared to the median house price in Newton at $143,299.
Calculate Mortgage Rates
It’s important that you understand the mortgage options that are available for you if you’re buying a home in Iowa. Since rates vary depending on the loan type, your profile and financial situation will determine the best mortgage for your needs.
Your mortgage options and interest rate will depend on your income, credit rating and other relevant factors. Shopping around and comparing quotes is the best way to get the lowest offers.
Prepare Down Payment Requirements
Different loan products have varying down payment requirements. You may need to pay as little as 3.5% for some mortgages, while other loans require a 20% down payment. Meanwhile, if you’re qualified for a VA or USDA home loan, you might be able to get a no-down-payment option.
Get Pre-Approved for a Mortgage
It’s recommended that you get pre-approved for a mortgage before you look for houses in Iowa. This makes you a more attractive buyer for sellers and gives you an idea of how much money you’re working with.
It’s important to note the difference between pre-approval and prequalification. Pre-approved means the lender is committed to providing you with a certain amount of money to purchase a home. A prequalification only means you qualify for a loan. However, this is not a guarantee.
Conduct a Home Inspection
Home inspections are a necessary step in your homebuying journey. They are crucial in identifying potential problems in the house.
If you accept the house without inspecting it first, you may have to deal with costly repairs or safety issues in the future. Additionally, lenders usually require that the house undergo a professional home inspection before they approve your loan application.
Close Your Mortgage Loan
After the house inspection and appraisal, the bank can now issue you a loan offer. Study the document closely. Then, if you agree with the terms, you can now start the closing process.
Note that there are various expenses that you may have to pay during this stage. If you’re having difficulties securing funding for your closing costs, there are programs in Iowa that can help you.
Frequently Asked Questions About Buying a Home in Iowa
Buying a house is a major financial and personal commitment, and the process may be challenging. MoneyGeek responded to some frequently asked questions about buying a home in Iowa to help you on your homeownership journey.
sources
- American Society of Home Inspectors. "Home Inspection Requirements for Iowa." Accessed October 22, 2022.
- Homeia. "10 Most Affordable Places to Live in Iowa." Accessed October 22, 2022.
- Iowa Association of Realtors. "Housing Stats." Accessed October 21, 2023.
- Iowa Finance Authority. "Down Payment and Closing Costs Program." Accessed October 22, 2022.
- RentCafe. "Cost of Living in Iowa." Accessed November 24, 2022.
- USDA. "Rural Housing Services." Accessed October 22, 2022.
- USDA. "Single Family Housing Direct Home Loans in Iowa." Accessed October 22, 2022.
- USHUD. "Homeownership Assistance: Iowa." Accessed October 22, 2022.
- USVA. "VA Home Loans." Accessed October 22, 2022.
- World Population Review. "Cost of Living Index by State 2022." Accessed October 22, 2022.
- Zillow. "Compare Today's Mortgage Rates in Iowa." Accessed November 24, 2022.
- Zillow. "Des Moines Home Values." Accessed November 24, 2022.
- Zillow. "Iowa Home Values." Accessed November 24, 2022.
- Zillow. "Newton Home Values." Accessed November 24, 2022.
- Zillow. "United States Home Values." Accessed October 22, 2022.