As an Iowa first-time home buyer, you have an advantage over those in other states.
Home prices in Iowa are below average and increasing at a slower rate than elsewhere in the country. Also, you might be eligible for home-buying assistance.
Iowa has programs that help with down payments and special mortgages that can make buying a home cheaper. Here’s how to get started.
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The median home sale price in Iowa was $244,400 in July 2024. That rose 5.5% year-over-year, according to Redfin.
| Average Home Sale Price in Iowa 1 | $244,400 |
| Minimum Down Payment in Iowa (3%) | $7,332 |
| 20% Down Payment in Iowa | $48,880 |
| Average Credit Score in Iowa 2 | 729 |
| Maximum Iowa Home Buyer Grant 3 | Up to $14,999 as a forgivable loan in Cedar Rapids |
Down payment amounts are based on the state's most recently available average home sale price. “Minimum” down payment assumes 3% down on a conventional mortgage with a minimum credit score of 620.
If you're eligible for a VA loan (backed by the Department of Veterans Affairs) or a USDA loan (backed by the U.S. Department of Agriculture), you may not need any down payment at all.
If you’re a first-time home buyer in Iowa with a 20% down payment, you can get a conventional loan with a low interest rate and no private mortgage insurance (PMI).
Note that government loan programs (including the FHA, VA, and USDA home loans) require you to buy a primary residence. That means you can’t use these loans for a vacation home or investment property.
Depending on your mortgage loan, you could get into your new house with minimal cash out of pocket. These programs even let you use gifted money or down payment assistance (DPA) to cover the down payment and closing costs.
If you’re unsure which program to choose for your first mortgage, your lender can help you find the right match based on your finances and home-buying goals.
The Iowa Finance Authority (IFA) has different home loan programs to help first-time and repeat home buyers in Iowa buy a new home.
The FirstHome Program offers special mortgages to eligible Iowa first-time home buyers
To qualify, you must meet IFA financing guidelines. While IFA provides an online eligibility checker tool to see if you can get a FirstHome mortgage, here’s what you can expect.
In addition, to qualify for a loan through the Iowa Finance Authority, you must fall into one of these categories:
These mortgages are only available through a participating lender. But there are plenty to choose from. Pick yours using the IFA’s Find a Lender online tool. It will help with all your queries, including eligibility concerns.
Unlike the FirstHome Program, the Homes for Iowans Program is available to both first-time and repeat home buyers. This program offers low-cost 30-year fixed-rate mortgages with lower interest rates and higher limits on income and purchase price.
Eligible Iownas must:
It is important to look into the specific eligibility requirements and application processes for each IFA home loan program. Working with a participating lender and talking to a housing counselor can help people who want to buy a home figure out how to apply and which program will work best for them.
Iowa’s first-time home buyer grants help eligible people get the money they need for a down payment and closing costs. This makes it easier for people to become homeowners.
Both the FirstHome and Homes for Iowans programs offer eligible home buyers down payment and closing cost assistance in the form of a second mortgage. The assistance can be up to 5% of the loan amount and is subject to repayment under certain conditions.
The IFA’s home-buying assistance comes in two forms. To qualify for either, you’ll need:
Those are the main criteria but check for more conditions. Exact requirements are subject to change and may differ by the time you read this.
One option is a $2,500 down payment grant that can be used toward your down payment and closing costs. Grants are free money and don’t have to be repaid.
If you need more, you could borrow up to $5,000, or 5% of the home purchase price, as a second mortgage. No interest is charged, and there are no monthly payments. But you must repay your loan in full when you sell the home, refinance, or finish paying down your mortgage. Most similar programs also require you to remain in residence in the home.
Also note that military home buyers may be in line for additional help. The IFA’s Military Homeownership Assistance Program gives extra help to eligible service members and veterans. The grant doubles to $5,000, and, with one of those second mortgages, it’s possible to receive a loan of up to $10,000.
The IFA MCC provides eligible first-time home buyers a federal tax credit, reducing their federal income tax liability. This credit allows borrowers to keep more of their income, making qualifying for a mortgage and affording monthly payments easier.
Be sure to compare the IFA’s offerings with any that your city or county may be providing. Then pick the one that suits you best.
You can ask your loan officer or real estate agent for recommendations, or do an internet search for "[your city or county] down payment assistance.”
The three largest cities in Iowa have median home prices close to the state’s as a whole. If you’re an Iowan looking to buy your first home, you might find one of these cities more affordable than where you live currently.
The median list price of homes in Des Moines was $240,000 in May 2024. That stayed flat year-over-year, according to Realtor.com.
If you want to buy a home at that median price, your down payment options might fall between:
The City of Des Moines says it doesn’t have a down payment assistance program. But it does give money to nonprofit partners who may be able to help. There’s a list of partners at that link, and you can ask each what assistance it can provide.
The median list price of homes in Cedar Rapids was $232,500 in May 2024. That increased 1.1% year-over-year, according to Realtor.com.
If you want to buy a home at that median price, your down payment options might fall between:
The City of Cedar Rapids offers first-time home buyers $1,000–$14,999 in down payment and closing cost assistance. This comes in the form of a loan forgiven after five years, subject to conditions.
Call (319) 286-5874 to talk to the Homeownership Program Coordinator and find out more, including if you qualify.
The median list price of homes in Davenport was $219,900 in May 2024. That decreased 12% year-over-year according to Realtor.com.
If you want to buy a home at that median price, your down payment options might fall between:
The City of Davenport offers outright grants (that don’t have to be repaid) to eligible first-time home buyers. You can receive 50% of your down payment and all reasonable closing costs up to a total of $10,000.
Eligibility criteria and conditions are available through the city’s website. You can also call the Community and Economic Development department at (563) 326-7765 for help.
All the organizations listed above should provide free advice to any first-time home buyer in Iowa or within their local areas.
Local home buyer resources in Iowa
You can see today’s live mortgage rates in Iowa here. Use a mortgage calculator to see how your down payment, interest rate, homeowners insurance, and property taxes affect your monthly mortgage payment.
When you’re ready to start the home-buying process, get personalized rate quotes from at least three mortgage lenders. Instead of looking at advertised rates online, apply for preapproval and compare the interest rates and fees offered. Because that is the only way to ensure you receive the best possible deal on your new home loan.
3 Based on a review of the state's available DPA grants at the time this was written
Authored By: Peter Warden The Mortgage Reports EditorPeter Warden has been writing for a decade about mortgages, personal finance, credit cards, and insurance. His work has appeared across a wide range of media. He lives in a small town with his partner of 25 years.
Updated By: Ryan Tronier The Mortgage Reports EditorRyan Tronier is a personal finance writer and editor. His work has been published on NBC, ABC, USATODAY, Yahoo Finance, MSN Money, and more. Ryan is the former managing editor of the finance website Sapling, as well as the former personal finance editor at Slickdeals.