Custom built luxury house in the suburbs.

Resources For First-Time Home Buyers In Iowa: 2022 Edition

Carla Ayers5-Minute Read
March 10, 2022

If you’re looking for a new place to plant your roots, there’s no better soil than in Iowa. Although traditionally known for its rich agricultural industry and sprawling farmlands, today’s Iowa has something to offer everyone. Whether you’re looking for a city with a vibrant nightlife or a town that’s quiet and family-friendly, Iowa has a place for you.

Follow along as we explore how you can make your home ownership dreams come true as a first-time home buyer in Iowa.

Why Should You Buy A House In Iowa?

There are a lot of reasons to make Iowa your home state. Iowa’s natural resources provide endless opportunities to enjoy the outdoors in all four seasons. There’s no shortage of things to do year-round, with nearly 18,000 miles of navigable hiking and water trails, you can experience the stunning Iowa countryside rarely seen on TV.

According to US News & World Report’s affordability list, Iowa is the fourth-most affordable state in the nation. When comparing median housing prices against the average household income, Iowa’s cost of living in some areas is as much as 12% lower than the national average. Iowa is considered the 14th safest state to live in, with lower-than-average crime rates in most counties and a robust infrastructure of public services to keep communities safe.

Education is a high priority in Iowa and there’s no shortage of opportunities for students of all ages to thrive. The public school system is considered one of the top 20 in the country. At the collegiate level, Iowa has a variety of world-class institutions to choose from. For those who prefer a large busy college campus, the University of Iowa might be the perfect fit. If a private close-knit campus is more your speed, Cornell College in picturesque Mount Vernon will have you on a first-name basis with your barista.

Get approved to buy a home.

Rocket Mortgage® lets you get to house hunting sooner.

NMLS #3030

Rocket Mortgage Logo

Iowa First-Time Home Buyer Programs

First-time home buyers can take advantage of programs designed to help them reach their goals of home ownership. The Iowa Financial Authority (IFA) provides down payment and closing cost assistance to new and experienced home buyers.

It’s always a good idea to dig deeper into a program’s requirements when buying a house. If the guidelines are unclear, contact the program’s administrator to make sure you understand the process and can move forward confidently. Below we explore assistance resources available to Iowa home buyers, along with their requirements.

1. FirstHome 

The FirstHome program connects home buyers with approved local lenders that provide affordable 25- to 30-year fixed interest rate mortgages. Interest rates offered through this program are typically lower than the market rate. Applicants can choose a grant of up to $2,500 or a second loan of up to 5% of the home’s sale price or $5,000 (whichever is less). Funds help cover closing costs and down payment assistance.

Program eligibility guidelines:

  • Household income limit: $79,500 – $99,700
  • Debt-to-income ratio no higher than 45%
  • At least 620 FICO® credit score
  • Home purchase price limit: $311,000
  • Minimum 3% down payment required

2. Homes for Iowans 

The Homes for Iowans program is open to both first-time and repeat home buyers. Homes for Iowans has a much higher home purchase price limit of $381,000 and an increased income limit of $139,580. Another unique advantage of this program is the ability to combine program funds to increase your total down payment assistance.

Program eligibility guidelines:

  • Household income limit: $139,580
  • Debt-to-income ratio no higher than 45%
  • At least 620 FICO® credit score
  • Home purchase price limit: $381,000

3. Military Homeownership Assistance 

The Military Homeownership Assistance Program is a thank you for active duty or veteran military service members. This $5,000 grant can go toward down payment or closing costs. The grant may also be combined with the FirstHome or Homes for Iowans programs with a maximum of $7,500 in funding assistance.

Spouses of eligible veterans or honorably discharged service members may also be eligible for this grant. However, a spouse may be waitlisted should there ever be a lack of state funding or a surplus of applicants applying.

Program eligibility guidelines:

  • The borrower must meet the IFA’s military service history requirements
  • The borrower must be working with an IFA-approved lender
  • The borrower must have received approval before closing on their home
  • The borrower must be interested in purchasing an eligible Iowan home
  • The borrower must plan to make the home their primary residence

4. Free Title Guaranty Owner’s Certificate  

Borrowers can request an Iowa Title Guaranty Owner’s Certificate at closing. While not common, should a title defect arise, Iowa Title Guaranty will intervene and defend the title to your home and assume attorney’s fees and other costs associated to do so.

Additional First-Time Home Buyer Grants For Iowa Residents

As a first-time home buyer, you may also qualify for national programs. Below are a few of those program that may be worth exploring to help purchase your new home:

Good Neighbor Next Door  

If you’re a Pre-K – 12 teacher, emergency medical technician, firefighter, or law enforcement officer you can take advantage of the Good Neighbor Next Door program sponsored by the Department of Housing and Urban Development (HUD). This program offers a generous 50% discount off select HUD properties. The properties available are foreclosures and are very affordable without the generous discount.

Program Eligibility Guidelines:

  • Applicant must meet requirements for law enforcement officer, teacher, firefighter, or emergency medical technician
  • HUD requires the program participant to sign a second mortgage for the discount amount. No interest or payments are required on this “silent second” if you reside in the home for the minimum 3-year occupancy requirement

Native American Direct Loan

If you’re a veteran, and either you or your spouse is Native American, the Native American Direct Loan (NADL) program can help you get a loan to buy, build, or improve a home on federal trust land. Applicants can also get a loan to refinance an existing NADL.

Program Eligibility Guidelines:

  • Your tribal government has an agreement or Memorandum of Understanding (MOU) detailing how the program will work on its trust lands
  • You have a valid VA home loan Certificate of Eligibility (COE)
  • You plan to live in the home you’re using the NADL to buy, build, or improve

Disability Housing Grants for Veterans

To help veterans adjust and make the best possible adaptations for the future, the Department of Veterans Affairs makes a limited number of grants available each year for the construction or modification of a home to better support the needs of veterans.

There are two programs with very similar qualifying requirements, but different funding limits based on the type of disability of the applicant.

  • Specially Adapted Housing (SAH): This grant is intended for new construction or major modification of a home with special adaptations for better outcomes in living with a service-connected disability. The 2022 total maximum SAH grant amount is $101,745.
  • Special Home Adaptation (SHA): This grant can be used to assist in buying, building, or modifying your permanent home to meet your needs while living with a service-connected disability. The 2022 total maximum SAH grant amount is $20,387.

The Bottom Line

If you’re thinking of taking flight and landing in the Hawkeye state, it could be worth the effort to research first-time home buyer programs offered to potential Iowans before take-off.

With the FirstHome and Homes for Iowans down payment assistance programs, home buyers can qualify for a grant or loan to assist with down payment and closing costs. If you or your spouse are veterans, the Military Homeownership Program grant is another resource to help reduce the upfront costs of purchasing a home.

Want to learn more about making a home purchase in Iowa? Talk to a Rocket HomesSM agent today.

Need a real estate agent?

Match with a local expert.

Carla Ayers

Carla is a Realtor® with a background in commercial and residential property management, leasing  and arts management. She has a Bachelors in Arts Marketing and Masters in Integrated Marketing & Communications from Eastern Michigan University.