Luckily for Oklahoma homebuyers, the state ranks very highly in terms of housing affordability. In fact, according to MoneyGeek’s research, it is the 10th cheapest state to buy a home.
Homes in Oklahoma cost an average of $189K, which is about a 15% increase over the previous year. Although median home prices in the state have seen slightly greater growth rates since 2020, rates are still much cheaper than the national average, which is currently at $358K.
MoneyGeek developed this expert guide to assist you in the homebuying process and help you close the deal without falling into money traps along the way.
Homes in Oklahoma have an average price of $189K, which represents a 15.2% increase over the past year.
When applying for a mortgage, Oklahoma homebuyers must meet the lender’s qualifications for the minimum credit score, income and debt-to-income ratio. Depending on the type of loan that you apply for, you might be required to put in a down payment as well.
Some of the essential steps that you need to take when buying a home in Oklahoma include checking the mortgage rates that you qualify for, preparing application requirements and closing the loan.
Choose an Ideal Location
As a homebuyer, one of the key factors that you should consider is the property’s location. This has a significant impact on your home’s cost and, consequently, on the mortgage that you’ll need to pay off.
Additionally, your home’s location determines the cost of living and your access to amenities, such as schools and hospitals. It will also give you an idea of the available recreational activities and the neighborhood culture.
Working with a real estate agent can significantly simplify the time you spend looking for, selecting and buying a home. Your agent will present you with a selection of homes within your budget and preferred areas. They can also schedule tours (in person or virtually) and negotiate with the seller on your behalf.
To avoid making costly mistakes, MoneyGeek suggests the following when looking for a real estate agent:
- Do your research and compare agents.
- Ask for referrals.
- Check the agent’s license, training and experience.
- Make sure that the agent has in-depth knowledge of the local housing market.
The cost of living depends on where in Oklahoma your chosen property is located. It can give you a rough idea of how much you’ll need to spend on consumer goods and services and whether your income is enough to cover these necessities.
When deciding to purchase a property, you should consider the affordability and livability of the area based on costs such as:
- Food and groceries
- Health care
- Child care
- Income taxes
- Property taxes
- Transportation expenses
- Medical and auto insurance
- Entertainment and leisure
Use MoneyGeek’s cost of living calculator to get an idea of the average monthly expenses in Oklahoma for a typical family.
The cost of living in Oklahoma is relatively lower than in most other states. But you can make this even cheaper by buying a home in one of the cheaper areas in the state. Some of these are:
- Del City
Living in these towns may be more affordable in terms of home prices and cost of living, but there are a few tradeoffs to consider. For instance, there can be limited access to amenities, such as schools, hospitals and malls. This might be a dealbreaker if you prefer to spend less time on the road. Having a more centrally located home in a major city puts you right in the middle of recreational activities and amenities.
Calculate Mortgage Rates
When determining your eligibility for a mortgage and calculating your rates, your lender will typically look at your income, credit score and debt-to-income ratio. Make sure to get the best possible rates by shopping around and comparing lenders. You also might be eligible for various mortgage loan options with varying rates that can affect how much you need to pay per month.
The average interest rates for various mortgage types are:
These average APR rates can still vary based on a few factors, including your creditworthiness, which lender you choose to apply with and the exact location of your selected property.
Also, some loans will be limited to candidates who meet specific requirements. For instance, VA loans are only for veterans, active-duty military members and eligible surviving spouses. Meanwhile, USDA loans are restricted to certain borrowers looking to build a home in an eligible rural location.
The first thing to consider when buying a home is whether you can conveniently afford the monthly mortgage payments.
There are several mortgage options to choose from. Depending on your personal details and credit profile, you may be eligible for a government-backed mortgage, a conventional home loan or both. Make sure to study the available options to you and compare APRs so you can get the lowest possible rates.
MoneyGeek’s mortgage calculator can help you see the various costs associated with your mortgage. Use our free tool to get a quick and accurate estimate of your monthly payments. We also have an FHA vs. conventional loan calculator to help you compare rates at a glance.
The mortgage rates and terms that will be available to you will mainly depend on your credit profile.
Here are a few factors that lenders will consider in mortgage borrowers:
- Credit score: Borrowers with good credit typically receive higher loan amounts, better APRs and longer terms.
- Credit history: Lenders will conduct a hard pull of your credit report to check for any missed payments and loan defaults.
- Income: There may be income requirements that you must meet.
- Debt-to-income ratio (DTI): Lenders will check if you have enough income to safely afford another loan on top of your current financial obligations.
- Down payment: With a higher down payment, you can get better rates and cheaper monthly premiums.
Prepare Down Payment Requirements
The rule of thumb is to save 20% for a down payment on a house. But this market standard has relaxed over the years, especially if you’re willing to buy private mortgage insurance (PMI), making homeownership more affordable.
Depending on the type of mortgage that you apply for, down payment guidelines may start from as low as 3.5%. If you qualify, there are also federal housing loans that don’t require any upfront payment, such as USDA and VA home loans.
Down payment requirements vary depending on the type of mortgage you apply for. Your credit score has a huge effect on your mortgage down payment. If you can afford it, consider paying a larger upfront payment to get lower interest rates and cheaper monthly installments.
You should also check if you qualify for government-backed zero-down-payment options. For example, if you wish to purchase a home in an eligible rural area with a total population of under 35,000 people, you might be eligible for a USDA home loan. VA loans also don’t require down payments, although only military personnel will qualify for this option.
You also need to be prepared to pay mortgage insurance. This is a requirement for most conventional home loans if you cannot afford a 20% down payment.
Private mortgage insurance (PMI) serves as a lender’s protection against the risk of having a borrower who defaults on the loan. Different types of mortgages have varying requirements for mortgage insurance.
- Conventional loan: This requires PMI if a homebuyer puts in a down payment of less than 20%.
- VA loan: Doesn’t require PMI.
- USDA loan: Doesn’t require PMI, but does require a monthly guarantee fee.
- FHA loan: Doesn’t require PMI, but you need to pay a mortgage insurance premium (MIP).
There are several first-time homebuyer financial assistance programs in Oklahoma that you might qualify for if you have not purchased a home in the past three consecutive years. These programs can help you settle both the down payment and closing costs.
These down payment assistance programs include:
- OHFA Homebuyer Down Payment Assistance: Offers 3.5% of your total loan amount for use toward your down payment or closing costs.
- Oklahoma City HOME: Provides up to $14,999 in down payment assistance for homes in Oklahoma City, Oklahoma County and Canadian County. Both first-time and repeat homebuyers can qualify.
Get Pre-Approved for a Mortgage
Getting pre-approved for a mortgage is an essential step and can be a requirement for some sellers.
Mortgage pre-approval is different from prequalification. A pre-approval means that a lender has committed to giving you a mortgage at a given loan amount after reviewing your credit report and other financial documents. Meanwhile, a prequalification only serves to prove that you meet the requirements for a mortgage loan with a rough estimate of the amount you’re eligible to borrow.
Make sure to prepare the necessary documents to facilitate the processing of your mortgage application. Most lenders will require you to provide documents to verify your personal and financial information. These include your credit reports, debt-to-income ratio, income and employment history. You may also be asked to submit additional documents depending on your situation and the type of mortgage that you’re applying for.
It's best to have these documents on hand:
- Social Security number
- Driver's license
- Bank account statements
- Current pay stubs
- Three years of tax returns with W-2s
- List of credit accounts and existing debts
A mortgage pre-approval is not necessary when buying a home in Oklahoma, but it can be tremendously helpful. This process of getting pre-approved can take up to 10 days, depending on the lender.
The mortgage pre-approval letter will state the loan amount that you are qualified to borrow. Generally, this document is only valid for up to 90 days. Therefore, you should have already decided to buy a home and be sure that you are willing and able to take on this financial obligation. Keep in mind that you’ll need to reapply for another mortgage pre-approval once your letter’s validity period has lapsed.
Upon receiving your mortgage application, your lender will review the submitted documents and conduct a credit check. If you meet the eligibility requirements based on this evaluation, your lender will send you a pre-approval letter stating its commitment to granting you a loan at a specified amount.
Getting pre-approval letters from multiple lenders will let you compare rates. Keep in mind that the validity of these letters varies per lender, but typically, they last from 30 to 90 days.
Note, however, that this strategy might not work for everyone since the hard credit inquiries that lenders typically perform can cause a significant dip in your credit score.
Conduct a Home Inspection
It is critical to perform a home inspection before buying a property. For a fee of up to $450, a licensed inspector will check for any issues that may require a substantial amount of repairs and expenses. You can use this to your advantage as a homebuyer by negotiating a lower price, especially if the home requires significant repairs or upgrades to meet the current standards.
It is important to check if the home inspector that you’re hiring is licensed in Oklahoma. By working with a licensed and reputable professional, you’ll receive reliable and accurate information about the home’s overall state that could inform your purchase. This will spare you from facing unexpected and costly repairs down the road.
Your home inspector will provide you with a comprehensive report of any damages, construction flaws and safety issues that you need to be aware of before purchasing the property.
These include issues with the home’s:
- Electrical system
- HVAC systems
- Doors and windows
State law in Oklahoma requires home sellers to disclose any faults and issues to buyers. But this transparency should not prevent you from conducting your own inspection of the property. This critical step shouldn’t be overlooked since it can save you from the money trap of shouldering costly repairs for structural flaws and safety hazards.
Make sure to hire the services of a professional home inspector for a full and comprehensive assessment of all areas in the home. Beyond Oklahoma state law, there are also certain inspection laws that are specific to certain cities or counties. That is why it’s best to work with licensed home inspectors and real estate agents that are knowledgeable about local regulations in Oklahoma.
Before finalizing your mortgage loan, your lender will typically hire a professional appraiser to perform a thorough and independent appraisal to assess the property’s value. This ensures that the home’s listing price is not vastly different from its actual value. This prevents homebuyers from overborrowing, which increases the risk of a borrower defaulting on the loan.
In addition to inspecting the home’s physical features, the appraisal will also account for current trends in the real estate market. This means that the value of the home will be influenced by current mortgage rates and the value of similar properties within the area.
Close Your Mortgage Loan
Your lender will give you a loan offer once the home inspection and appraisal have shown satisfactory results. Carefully review this offer before proceeding to close the mortgage loan.
Keep in mind that there are closing costs that you must be prepared to pay. Fortunately, there are financial assistance programs in Oklahoma that can help you pay these additional expenses if you’re short on funds.
During the closing process, you’ll be asked to sign these documents. Make sure to carefully review the following documents before signing:
- Property deed: This contains necessary information about the property and transfers ownership to the buyer.
- Mortgage note: This document states the loan amount, interest rate and repayment terms. It also legally binds the borrower to pay the monthly amortization.
- Loan application: You’ll have to confirm that your personal and financial details in the final mortgage application are correct and current.
- Closing disclosure: This details the terms of your mortgage. Your lender will provide you with this document at least three days before closing your mortgage in accordance with federal law.
Aside from the down payment and potential mortgage insurance costs, another significant expense that you must prepare for is closing costs. These typically range from 2% to 5% of the home’s purchase price. But note that rates will tend to vary depending on your lender and the location of the property.
Closing costs generally include the following:
- Lender fees: You will need to cover the lender’s fees, including home appraisal costs.
- Origination fee: Some lenders charge an origination fee, which covers expenses associated with processing the loan application.
- Escrow: This includes payments for mortgage insurance, property tax, homeowners insurance and any annual fees.
- Third-party fees: These third-party costs include legal fees, home inspection fees and other expenses depending on your situation.
A home is one of the biggest investments that anyone can make, and there are money traps that have to be avoided throughout the homebuying process. MoneyGeek created this step-by-step guide to help you successfully navigate the journey toward homeownership in Oklahoma.
This guide contains detailed information about the essential steps, from selecting the best place to buy a home in Oklahoma all the way through to finalizing your home purchase. But don’t forget to also consult with your realtor for additional advice, especially concerning local regulations.
A mortgage requires regular installments, so make sure to keep tabs on when payments are due. We recommend that you sign up for automatic payments to prevent the possibility of forgetting due dates. Owning a home also requires maintenance and upkeep, so you should set aside money each month toward these expenses.
Oklahoma Homebuying Details
There are several homebuying details unique to Oklahoma that you need to be aware of before purchasing a property in the state. For instance, the median home prices and cost of living in Oklahoma tend to be lower than the national average, which makes it a good choice for homebuyers who value affordability.
Oklahoma’s home prices and the overall cost of living are very affordable compared to most states. But these can still vary greatly depending on the municipality. Typically, homes that are located in suburbs or rural areas are much cheaper but have limited access to amenities like schools, hospitals, malls and recreational centers in exchange for the lower costs.
If you aren’t financially prepared to cover the market standard of a 20% down payment, check if you qualify for government-backed home loans and conventional loans that have lower down payment requirements. There are also financial assistance programs that can help you with both down payment and closing costs, like the OHFA Homebuyer Down Payment Assistance and Oklahoma City HOME programs.
Frequently Asked Questions About Buying a Home in Oklahoma
Below are MoneyGeek’s answers to a few commonly asked questions to guide you on how to buy a home in Oklahoma.
- International Association of Certified Home Inspectors. "Home Inspection Standards of Practice." Accessed October 22, 2022.
- Oklahoma Housing Finance Agency. "Homebuyers." Accessed October 24, 2022.
- Tax-Rates.org. "Oklahoma Property Taxes by County." Accessed May 21, 2023.
- U.S. Department of Agriculture. "Single Family Housing Guaranteed Loan Program." Accessed October 26, 2022.
- U.S. Department of Veterans Affairs. "VA Home Loans." Accessed October 27, 2022.
- Zillow.com. "Oklahoma Home Values." Accessed October 20, 2022.
- Zillow.com. "United States Home Values." Accessed October 20, 2022.