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

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Updated: November 13, 2023

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Wisconsin's median home price of $268K is up 11% from the previous year and is increasing at a slower pace than the national average, which is around $365K.

Budget is crucial, but you'll need to consider other factors, such as the lender's terms when buying a house. Finding a home, completing the application and avoiding incurring significant debt can be easier when you have researched and know what to expect. MoneyGeek outlines the purchase process for the average homebuyer, including details such as how much it costs to buy a house in Wisconsin.

Key Takeaways

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Wisconsin has a substantially lower average house price than the rest of the country ($268K vs. $357K).

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Homebuyers must satisfy the lender’s minimum credit score, debt-to-income ratio and income standards to qualify for a home loan. You typically also need to make a down payment.

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Wisconsin homebuyers should do their research, find a suitable property, calculate mortgage rates, get pre-approved for a mortgage and have the property professionally inspected before signing the contract.

Choose an Ideal Location

Buyers consistently rank location as one of the most important considerations in the home purchasing process. The home's price and your monthly mortgage payments will fluctuate widely depending on where you decide to buy. Taking stock of your priorities and current lifestyle is important. Culture, cost of living and proximity to essential services and entertainment options are some indicators that point to a neighborhood's quality.

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WORK WITH A REAL ESTATE AGENT

Searching for a property can feel overwhelming. If you want help buying a home in Wisconsin, talk to a realtor. Realtors can help wade through the options and match you with a home that fits your needs and budget.

Ask your friends and family for realtor suggestions. Once you have a short list of realtors, ask for references from current clients. MoneyGeek suggests looking for the following traits in a real estate agent:

  • Comprehends the local property market
  • Has a license and substantial experience in the industry
  • Has a solid reputation for honesty
  • Communicates in a concise way

However, your individual needs and goals are the most important considerations when selecting a real estate agent.

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CALCULATE THE COST OF LIVING

Living expenses differ considerably across the state of Wisconsin. In Milwaukee, for example, the cost of living is 1% higher than the national average and 13% higher than in Green Bay when it comes to necessities like food, housing and utilities.

When looking for the cheapest possible home in Wisconsin, it is vital to consider the house's price and the average living costs in the area.

Consider the following expenditures while choosing the best place to buy a house in Wisconsin:

  • Food
  • Education and healthcare
  • Utilities (electricity, water, etc.)
  • Education
  • Entertainment
  • Transportation
  • Insurance rates
  • Property taxes

You can find the cheapest places to buy a house in Wisconsin using MoneyGeek's cost of living calculator. It will give you an idea of how living costs differ across the state's popular cities.

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CONSIDER AFFORDABLE NEIGHBORHOODS

Wisconsin has below-average property prices when it comes to purchasing a home, with a cost of living index of 94.8 compared to the national average of 100. Moving to a cheaper area is an option for additional cost-cutting. While the cost of living is lower in the suburbs, amenities like hospitals, public transportation and shopping centers are more difficult to reach. On the contrary, city life is more expensive, but it offers many benefits, including easy access to public amenities and recreational and entertainment services.

For example, Milwaukee has lower median house prices but a higher cost of living than Madison. You’ll need to strike a good price-to-quality ratio between housing and other living expenses before settling on a location.

Calculate Mortgage Rates

Before you start house hunting in Wisconsin, check the state's mortgage rates. Wisconsin buyers can choose from a variety of mortgage plans, and the ideal one for you will depend on your individual needs.

Factors like your income, credit history and score, and debt-to-income ratio can be crucial in determining the loan amount and the interest rate lenders will offer you. You may need to compare various lenders to determine which offers the best rate for your circumstances.

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SEE YOUR MORTGAGE OPTIONS

The mortgage plan you select will also affect your interest rate. If you are a veteran and meet the requirements, a VA loan offers a lower interest rate than a conventional loan.

Interest rates will vary based on the lender and other personal factors,

The average interest rates for various types of mortgages in Wisconsin are as follows:

Keep in mind the average annual percentage rate (APR), which varies by lender and region, while sorting through and comparing your options.

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USE A MORTGAGE CALCULATOR

Mortgages require monthly payments, so make sure you can comfortably afford to make them. Comparing interest rates is the best way to decide between a conventional mortgage and a mortgage backed by the government.

You can estimate your monthly payment with the help of a mortgage calculator like the one MoneyGeek provides. This tool will break down your payment into its components, such as principal, interest, taxes and insurance. You can also determine the best loan for your needs by comparing rates for conventional and FHA loans.

Once you have a rough idea of how much you'll need to borrow, start shopping around and comparing interest rates, minimum down payments, loan amounts available and other parameters from different lenders. First-time buyers may also have multiple alternatives to expedite their homebuying process, so they should investigate their lending choices wisely.

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KNOW YOUR QUALIFICATIONS

Each lender has different criteria borrowers must meet for loan approvals. It’s best to investigate and learn what each lender puts forth as eligibility criteria. Lenders typically consider the following factors when assessing your mortgage application:

  • Credit score: Most lenders prefer applicants with at least a fair credit score, although not all loan types need a minimum score.
  • Gross income: Your income often determines your capacity to repay the mortgage.
  • Debt-to-income (DTI) ratio: Your debt-to-income (DTI) ratio shows how much of your income goes toward unpaid debt.
  • Down payment: Making a down payment demonstrates to the lender that you are not a high-risk borrower.

Note that if you do not meet the lender's requirements, you’ll need to work to improve the weaker parts of your application.

Prepare Down Payment Requirements

It is conventional to make a down payment when buying a house. Your down payment amount affects your annual percentage rate (APR). Typically, the higher the down payment, the lower the rate.

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DETERMINE DOWN PAYMENT REQUIREMENTS

Different mortgage types require different down payment amounts. Conventional loan applicants typically need to make a 20% down payment. Those who qualify for USDA and VA loans, however, may obtain financing with no down payment. FHA loans need a minimum down payment of 3.5%.

Once you have determined the loans you qualify for, you can calculate your down payment. The amount you put down will considerably affect your monthly payment amount. In most circumstances, larger down payments result in cheaper monthly payments and vice versa. Knowing how much you need for a down payment can give you a general estimate of how much you should save aside each month.

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CALCULATE MORTGAGE INSURANCE

Another cost potential homeowners should consider is mortgage insurance, a policy that protects lenders in the case of a borrower's payment failure. FHA and USDA loans require mortgage insurance. Loans guaranteed by the Department of Veterans Affairs (VA) are exempt from the need to pay for private mortgage insurance.

Additionally, candidates who put down less than 20% on a conventional loan must also obtain mortgage insurance, paid monthly. However, after a few years of making responsible payments, a lender may enable some borrowers to remove this insurance from their mortgage.

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DOWN PAYMENT ASSISTANCE PROGRAMS

A 20% down payment may not be feasible for all prospective buyers. Thankfully, Wisconsin offers a few programs that assist with down payments.

  • WHEDA Down Payment Assistance Programs (WHEDA): WHEDA’s Easy Close DPA and Capital Access DPA are two programs WHEDA offers to assist Wisconsin residents. Through the Easy Close DPA, residents are eligible for $1,000 or up to 6% of the purchase price of the first loan. Capital Access DPA offers up to 3.5% of the purchase price.
  • Milwaukee Home Down Payment Assistance Program: Grants of up to $5,000 (or up to $7,000 houses in specially designated areas) are available to first-time homebuyers in Milwaukee. Borrowers can use the funds to cover the down payment and closing expenses.
  • Home-Buy the American Dream: The City of Madison's down payment and closing cost assistance program provides $1,000 to $20,000 with no interest or monthly payments. Borrowers can repay the amount, plus appreciation value, when they sell the house or refinance the mortgage.

Wisconsin offers other home assistance loan options. For example, programs for Wisconsin’s first-time homebuyers can help those who have never owned a home.

Get Pre-Approved for a Mortgage

After you've decided on a lender, you must be pre-approved for a mortgage. Don’t confuse pre-approval with pre-qualification. Pre-qualification does not require a credit check, whereas a pre-approval requires a hard credit check on your financial profile, which can lower your credit score. Pre-approval is a commitment from the lender to let you borrow a certain amount.

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GATHER NECESSARY DOCUMENTS

To apply for a mortgage in the state of Wisconsin, you will need to supply the following information:

  • W-2 forms
  • Tax returns
  • Identity information, including Social Security number and Photo ID
  • Investment statements
  • Bank account statements
  • Pay stubs
  • Other mortgage statements
  • Debt-related documents

Depending on the mortgage, the lender may require additional documents. For example, self-employed individuals may need to provide profit-and-loss statements.

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TIME YOUR PRE-APPROVAL

An important stage of the homebuying process is getting a mortgage pre-approval. Pre-approval for a loan can take up to 10 days, although the time frame varies. When you are pre-approved, you will receive a letter stating your maximum loan. Pre-approval letters often only last 30 to 90 days, so request one only when ready to make a deal.

Note that the pre-approval letter will become void when the stipulated time period has expired. Once the letter has expired, you'll have to apply again.

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RECEIVE PRE-APPROVAL LETTER

A pre-approval letter certifies that you are a serious buyer who can afford a mortgage and includes information like the amount a lender is willing to let you borrow. Although there is no restriction on how many pre-approval letters you may get, each comes with a stringent credit check that can affect your credit score.

A pre-approval letter often includes the following details:

  • Maximum loan amount
  • Loan type
  • Loan term
  • Mortgage monthly payment
  • Annual percentage rate

However, the specifics of a lender's pre-approval letter will vary. In most cases, the information you provided will be sufficient for the lender, but some may need more.

You can improve your profile and negotiate better terms with your lender if you get a pre-approval letter and use it within the 30- to 60-day validity window.

Conduct a Home Inspection

Before buying a house, you should arrange for a home inspection. A certified home inspector will offer insight into the property's condition and identify any necessary repairs. Typically, the house inspection fee is the buyer’s responsibility. If the house requires repairs or renovations, the home inspection results can give the buyer negotiating leverage.

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CONTACT A LICENSED INSPECTOR

If you need a home inspection in Wisconsin, it is imperative that you select someone with the proper credentials. When you employ a qualified inspector, you receive a comprehensive report that will assist you in deciding whether or not to proceed with the purchase.

Your home inspection checklist should cover the following items to rule out serious structural problems, safety hazards and other damages:

  • Roof
  • Foundation
  • Windows and doors
  • Surrounding grounds
  • Attic and basement
  • Exteriors and interiors
  • Heating and cooling systems
  • Plumbing system
  • Electrical system
  • Major appliances

You can also arrange for specialist home inspections that look for pest infestations, wood-destroying organisms, rot in the foundation or mold and sewage problems.

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FOLLOW WISCONSIN-SPECIFIC INSPECTIONS

Wisconsin does not require a home inspection when purchasing real estate. However, some municipalities and counties may require one.

Discuss the parameters of the inspection with your home inspector. You may need to conduct a specialized examination, costing between 100 and 700 dollars.

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GO THROUGH APPRAISAL

When purchasing a home in Wisconsin, it is essential to obtain an appraisal. To make an assessment, the appraiser will consider the current market value of comparable nearby residences.

Appraisers provide the mortgage lender with a written report showing whether the applicant is overborrowing. Lenders employ appraisals to mitigate the risk that a borrower may fail to repay a loan because the borrower has taken on more debt than the home is worth.

Close Your Mortgage Loan

You'll incur closing costs when buying a home. Credit report retrieval, lender appraisal and document preparation fees all fall under the umbrella of closing costs. Third-party services, such as a home inspection, legal advice, pest inspection and so on, may also factor into the closing costs.

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SIGN ALL DOCUMENTS

Closing documents typically include the following:

  • Closing disclosure: Describes the loan terms and must be sent to you at least three working days before the mortgage closing, according to the law.
  • Homeowners insurance policy: Protects you financially against losses to your home's structure and belongings.
  • Title insurance policy and survey: Ensures the property is free of encumbrances and can be legally owned.
  • Loan application: To attest to the veracity of your information, you must sign the original loan application. At this stage, you must let the lender know if your financial situation has changed.

Before signing any documents, read the fine print carefully to avoid overlooking tiny but significant components that might be costly later. If you encounter any unfamiliar language, consult an expert or your lender.

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PAY CLOSING COSTS

Loan closing expenses typically range from 2% to 5% of the total purchase price, depending on the lender, the region, your particular situation and other elements. The following closing charges are typical for a mortgage:

  • Origination fee: Some lenders charge loan origination fees, typically a low percentage of the total loan amount.
  • Escrow: Fees like taxes, insurance, mortgage insurance and the annual funding fee all go into an escrow account.
  • Title search charges: Costs associated with a title search, performed to ensure that the property is legally transferred to your name, are your responsibility.
  • Lender fees: The lender incurs expenses like an appraisal fee and a fee to obtain your credit report, and you'll have to cover those costs.
  • Third-party fees: Additional third-party charges, including inspections and legal fees, homeowner association transfer fees and any other necessary expenses, will be borne by you, the buyer.
  • Home inspection charges: You might need to hire a certified home inspector to evaluate the state of the property.
  • Homeowners insurance: This insurance shields homeowners from losses to their residences and possessions as well as liabilities resulting from specific accidents that might occur on the property.
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COMPLETE YOUR HOME PURCHASE

The homebuying process requires that you select a house in the area of your choice, calculate mortgage rates and gather the required documents. Additionally, you should obtain a pre-approval letter and conduct a home inspection to close the deal.

Once you successfully complete these tasks, you will be a Wisconsin homeowner. Two responsibilities that come with homeownership are budgeting for basic house maintenance (cleaning, repairs and maintenance of mechanical and electrical systems) and saving funds for a rainy day. If you want to lower your monthly payments, consider making a larger down payment.

Wisconsin Homebuying Details

Wise Wisconsin homebuyers should do their homework on different home locations and shop for the best interest rates. Your lender or real estate agent will inform you of additional Wisconsin-specific requirements.

Wisconsin residents can also research and determine whether they qualify for homebuyer assistance programs.

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Milwaukee County Mortgage Assistance Program

Homeowners in Milwaukee County who have fallen behind on their mortgage payments due to employment or wage concerns because of the COVID-19 pandemic may be eligible for emergency assistance through the Milwaukee County Mortgage Assistance Program.

Frequently Asked Questions About Buying a Home in Wisconsin

MoneyGeek responds to questions about buying a home in Wisconsin.

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

Experts' Insights About Buying a Home in Wisconsin

  1. What are the key factors to consider when buying a house in Wisconsin?
  2. What is the minimum credit score required for purchasing a house in Wisconsin?
  3. What are some common mistakes that home buyers make when trying to purchase a property in Wisconsin, and how can they avoid these pitfalls?
  4. Are there any programs available to help first-time home buyers in Wisconsin?
Loren Fellows
Loren FellowsVP Mortgage Production Manager at Johnson Financial Group
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