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Resources For First-Time Home Buyers In Iowa

Holly Shuffett6-Minute Read
April 22, 2021

As we slowly start to recover from the chaos of the pandemic, you may be left feeling a bit overwhelmed or maybe even a little defeated. With an increasingly competitive sellers’ market, right now can seem like a pretty daunting time to enter the world of homeownership – especially as a first-time home buyer.

But if you’re looking for an affordable and comfortable place to settle down in 2021, you may want to look at the Midwest. More specifically, the Hawkeye state: Iowa.

Why Buy A House In Iowa?

The Midwest is famously resilient when it comes to real estate, but Iowa in particular has a lot to offer your first home. Although it’s best known for sprawling plains and cornfields, Iowa also ranks within the Top 20 states for both its education and healthcare systems, and currently ranks ninth in literacy throughout the whole United States.

Whether you’re looking for an affordable suburban area to settle down with family or long for the rush of city life, Iowa can give you just that at rates that won’t break the bank. In fact, Iowa’s real estate market is so affordable that the cost of living in Des Moines is 10% lower than the overall national average – a rarity when it comes to living in a big city.

Iowa also excels in statewide transportation, low crime rates, offering an abundance of retirement options and of course, delicious Midwestern dairy treats.

What Are The Top Areas For First-Time Home Buyers In Iowa?

From rural to suburban to metropolitan areas, Iowa is home to plenty of affordable housing options. Here are just a few of Rocket Homes’ best-rated areas to live in Iowa:

1. Des Moines

Unlike many areas, living in the largest city in Iowa won’t leave you bankrupt. Well known for its financial prominence and bustling downtown – which offers upscale cuisine, sightseeing and gorgeous views of the Des Moines River – you might expect housing in the city to be out of reach.

But the median list price for living in Des Moines is just $185,000 while the national average exceeds $200,000. It’s also worth noting that Des Moines’ transportation expenses and even the average cost of groceries are lower than the national average. So, if you’re a first-time homebuyer interested in Iowa, Des Moines is a great place to start.

Des Moines Houses For Sale

2. Waukee

Aerial Image Residential Rural Neighborhood

This state capital suburb is a family-friendly area that has a lot to offer – especially for those looking for a forever home. Waukee is home to many young professionals due to its short distance from the city but is best known for being a great and safe place to raise a family.

With high-quality local schools and a median home price of $299,900, first-time homebuyers interested in putting down roots in Iowa should check out Waukee. 

Waukee Houses For Sale

3. Cedar Rapids

Aerial View Of Cedar Rapids

As the second-largest city in Iowa and celebrated as the Eastern hub of art and culture, Cedar Rapids is another Rocket Homes approved city for first-time homebuyers in Iowa.

Cedar Rapids offers the usual dining and shopping tourist experiences, but is also home to live music venues, theaters and museums, along with family-friendly sports teams to root for. And with a median list price of just $154,988 and an 8.4% increase in homes for sale since February, you may want to stay longer than just a visit at this Midwest gem. 

Cedar Rapids Houses For Sale

Are First-Time Home Buyer Programs Available In Iowa?

If you’re a first-time or even a repeat homebuyer in Iowa – so long as you have not owned your primary residence for over 3 years – the Iowa Finance Authority could offer you valuable access to statewide assistance programs and grants.

These programs and grants can help you obtain low interest home loans, get together enough money for a lofty down payment, and they offer numerous benefits for homebuyers with military experience.

The IFA is a great asset to help out lower-income households and their qualifications vary by county and program.

What Are The Eligibility Requirements?

In general, the IFA requires that borrowers have a credit score of 640 or higher, although in some cases you may be able to use nontraditional documentation and obtain assistance without credit history.

The IFA also has numerous other eligibility requirements, including:

  • You must either be a first-time homebuyer, which includes those who have not owned a home in the past 3 years – and this qualification may exempt military members and veterans new to IFA programs, or residents within particular Iowa areas
  • The home must be the borrower’s primary residence
  • The maximum debt-to-income ratio for a borrower is 45%
  • Conventional loans taken through the IFA will require that borrowers complete a homebuyer education course

Types Of First-Time Home Buyer Programs In Iowa

If you’re a qualified homebuyer then be sure to explore the IFA’s programs and take full advantage of their benefits when purchasing your first home.

For homebuyers native to Iowa, you can also request a free Iowa Title Guaranty Owner’s Certificate. This certificate essentially serves as insurance should any issues securing your title come up. And although the chances of this problem occurring are pretty slim, a Title Guaranty is free of charge and should you need it, will help cover the costs of legal representation and other expenses necessary to defend the title to your home.

Now, let’s explore what each IFA program has to offer first-time home buyers.

1. FirstHome Program

The FirstHome program connects homebuyers with approved local lenders and offers affordable 25 to 30 year fixed-interest rate mortgages.

Generally, the interest rates offered by this program are lower than the going market rate, and you may also qualify for a grant of up to $2,500 which can help with down payment or closing costs. Additionally, this program’s conventional loans may require a down payment of just 3% and your credit score should have no impact on your FirstHome interest rate.

The household income limit for FirstHome ranges from $79,700 to $101,200 and your purchase price limit is $294,000 – or up to $360,000 but in targeted areas of Iowa.

2. Homes For Iowans

The Homes For Iowans program is extremely similar to FirstHome with just a few key differences. The first being that this program is open to both first-time home buyers and repeat home buyers. Although though Homes For Iowans has nearly identical borrower requirements as FirstHome, this program is pretty much fair game to anyone interested.

Homes For Iowans also differs from the FirstHome program as it allows for higher priced homes with limit of $360,000 rather than FirstHome’s $294,000. Their income limit is also an increased $141,680.

Home buyers who use Homes For Iowans can also combine their mortgage with a $2,500 down payment assistance grant or loan of up to $5,000 or 5% of the purchasing price.

3. Military Homeownership Assistance Program

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 and may also be used in conjunction with the FirstHome or Homes For Iowans programs with a maximum of $7,500 in funding assistance.

Spouses of eligible veterans or honorable discharge service members may also be eligible for this grant – however, you may be waitlisted should their ever be a lack of state funding or a surplus of applicants upon applying.

To see if you qualify for the Military Homeownership Assistance Program, here are some of their requirements:

  • 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

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Additional Assistance For First-Time Home Buyers In Iowa

If you’re a first-time home buyer, you may also qualify for national first-time home buyer programs. Here are a few of those programs that may be worth exploring:

The Bottom Line

Wherever you may decide to put down roots throughout Iowa, there are programs out there to help first time home buyers like you finance your dream home.

If you’re interested in perusing the listings currently available in Iowa, use Rocket Homes to find homes for sale in your favorite neighborhoods. Also be sure to check out our home buyer’s guide for more valuable advice.

*Median list prices for homes in represented cities are pulled from the March 2021, Rocket Homes Trend Report for the respective city.

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    Holly Shuffett

    Holly Shuffett is a freelance writer for Rock Companies where she usually covers lifestyle and personal finance topics. Holly is also an Oakland University senior pursuing public relations and journalism, and she is interested in learning more about the entertainment and travel industries. In her free time, Holly serves as the secretary for Dance Marathon at OU, is a member of PRSSA, and tutors part time for Dictionary.com.