Buying your first home is a long journey and might have been a challenge even for one of the age-old Rough Riders, a legendary group with ties to the state. North Dakota mortgage rates are historically low now but so too are the number of homes available for first-time buyers, creating a tight market in the more affordable price ranges. This guide is designed to provide some relief in your search for a new home, offering important information on how to find housing counselors and financial assistance in the state, along with other critical advice on what you will need to qualify for the best possible mortgage rates in North Dakota.

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Mortgage Rates in North Dakota

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North Dakota mortgage rates are expected to remain stable in the short term. But the state also has one of the nation’s fastest growing populations in the past few years – a trend that appears to be slowing along with the oil economy. Despite a downturn in the price of oil and gas and subsequent job losses in the western region of the state, North Dakota is still strong in new job creation, especially in the technology and health care sectors. North Dakota has the lowest unemployment in the U.S. and state residents continue to enjoy the nations’ highest rate of growth for personal income. That is good news for first-time buyers hoping to qualify for the most affordable mortgages.

Mortgage applications are up in the key cities of Bismarck, Fargo, Grand Forks and Minot and foreclosures are down. Tight inventory of homes appealing to first-time buyers remains a problem in major cities, although availability is slowly building in the western region, where oil and gas exploration dominates the local economy. Market conditions suggest home prices in big cities will edge up slowly, while home prices in hard-hit oil and gas regions are expected to fall.

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First-Timer? There’s Help for You in North Dakota

North Dakota offers several programs designed to help first time homebuyers qualify for and receive low-interest mortgage loans or assistance to cover down payments or closing costs. Working with local lenders and realtors, the North Dakota Housing Finance Agency (NDHFA) has helped more than 40,000 individuals and families buy a home over the past 34 years. Its’ First Home, Home Access, Major Home Improvement and Targeted Area Loans programs are just some of the plans available for low-to-moderate-income families trying to buy into the dream of homeownership. David Flohr, director of the Homeownership Division at NDHFA, said applications for assistance are up, especially for those looking to buy in major cities. “Year to date, the number of loans granted is up 16 percent versus last year. The loan dollar amount is up 21 percent, year over year,” Flohr said.

The First Home program offers 2.95 percent fixed rate for a 20-year mortgage and Flohr pointed out that even for conventional loans all rates are under 3.5 percent fixed for a 30-year mortgage. To qualify for NDHFA assistance, potential buyers must meet specific income limits, which for First Home and Home Access are set at $75,800 to $101,545 depending on household size and county location of the home to be financed, which vary by county and family size. The limits are highest in Williams County, the center of the oil and gas boom. Purchase price limits range from roughly $277,000 for a one-unit home to $532,000 for a 4-unit home. Meeting with a housing counselor or attending a class is a requirement, along with making a $500 out-of-pocket cash investment into the program. For more details on the homebuying process, visit our first-time buyer’s guide.

Financial Assistance for First-Timers Hoping to Buy in North Dakota

North Dakota offers loans to help cover closing costs, down payments and even can assist if the home you covet needs repairs before moving in.

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To Get Financial Help in North Dakota You Must See a Housing Counselor

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Can You Afford to Buy? What’s Needed in North Dakota

Buying a home in North Dakota may require taking a personal financial inventory. Do you make enough money to cover the cost of a mortgage? Do you have any wiggle room in your monthly intake or are you living hand-to-mouth? Is your job stable and secure or do you sense that your employer could fold at a moment’s notice? Do you have significant credit card debt or student loan debt? All of these questions are important when you’re trying to determine whether you can afford to buy. At the very least, know that North Dakota has the lowest rate of unemployment in the nation and it continues to see job growth in the technology sector, which has fewer ups and downs than the oil and gas drilling business.

North Dakota Mortgage Rates and Prices Affect Monthly Payments

Metro Area Estimated Monthly Mortgage Payment* Q1 2016 (Change from Previous Year) 2015 Median Home Price 2014 2013
Bismarck $1,118 $237,900 (+2.90%) $245,900 $237,800 $217,700
Fargo $906 $192,700 (+7.10%) $190,600 $173,000 $164,600

Source: National Association of Realtors Q1 2016 Metropolitan Median Area Prices and Affordability report.
*Estimated Monthly Mortgage Payment is based on median home prices for the metro area in Q1 2016 and a 30-year fixed mortgage with today’s rates.

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FHA and Other Borrowing Limits Apply in North Dakota

The federal government and fluctuations on Wall Street typically determine loan limits for conventional and FHA loans, but parameters also vary by state. In North Dakota, conventional and FHA loan limits differ slightly from county to county ranging from $271,050 to $330,050 for a single unit home and from $521,250 to $634,700 for a four-plex. Rates are highest in Williams County and the city of Williston, the tiny town at the center of North Dakota’s oil and gas boom. In theory, the rates are important because many first time homebuyers apply for FHA loans, which are easier to get and require lower down payments. But they also may add to the monthly payment to cover other expenses such as PMI. Conventional loans are less expensive than FHA loans but have stricter credit and income requirements. The below table illustrates the FHA and conventional loan limits throughout North Dakota.

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Buying a Home in North Dakota: Experts Weigh In

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Kevin Hansonis director of lending at Gate City Bank.

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David Flohr is director of the homeownership division at the North Dakota Housing Finance Agency.

What was the market like before the crash, during and now?

Hanson

North Dakota did not experience the 2008 crash: when the rest of the country was on a downward slide, oil and gas exploration and drilling was going up. Laborers were flooding in to western cities and there was so little housing that we saw an increase in temporary housing. As oil prices have come down, the temporary housing has declined, giving us a chance to catch up. Some prices are dropping in the western region, but in the eastern part of the state prices never went up as high and so they are not likely to go as low.

Flohr

Fargo is our biggest market. Bismarck, which is the capitol, is the next biggest market. In the western part of the state in cities like Williston, Dickerson and Watford City, all prime locations for wells, the population was maybe 1,000 and now it’s six to seven times that. If you are selling a home for under $300,000, you can get close to the asking price. If you are selling a home above that, we have seen some price reductions.

What is the status of housing inventory?

Hanson

The big problem is lack of inventory for the first time homebuyers looking in the price range of $225,000 or less. The population continues to grow due to the diversified economy, with job growth in technology, hospital and medical and education. Prices in the state for that range are going up by 3 percent to 5 percent. In the lower price ranges that would suit first time homebuyers, prices are up 5 percent to 8 percent because of the s