Iowa is the 9th most affordable state for housing. With the growing demand for homes for sale in Iowa, home values have risen by 52% over the last 5 years. But buying a house here can be tricky. You must get pre-approved, check neighborhoods, and attend open houses.
With Houzeo, Iowa’s best home buying website, managing your home search is simple. You can look through the latest listings in the Hawkeye State, save your favorites, schedule showings, and submit offers, all at your fingertips.
👉 Download the Houzeo mobile app to simplify your Iowa home search.
At a Glance:
- Get a mortgage pre-approval and set your budget to make competitive offers in Iowa’s hot housing market.
- Assess long-term livability, schools, and amenities based on past market trends to pick the right neighborhood for you.
- Consider seasonal risks such as blizzards, tornadoes, and floods.
- Conduct a home inspection to look for termite damage, pest infestation, storm-related issues, and other possible defects.
- Account for additional expenses like HOA dues, flood insurance, property taxes in Iowa, and closing costs in Iowa.
7 Steps for Buying a Home in Iowa 🏡
Buying a home in Iowa doesn’t have to be complicated. Whether you’re just starting your search or are already browsing homes for sale in Garnavillo and other cities, these 7 simple steps will help you move forward with confidence:
Step 1: Decide Your Homebuying Purpose
Whether you’re looking for a getaway or seeking an investment, knowing why you’re buying real estate in Iowa is essential. It sets your expectations and helps you make smarter choices. Here’s what you should keep in mind:
- Primary Residence vs. Investment: If you’re buying a home, choose places that fit your lifestyle, whether it’s a city like Davenport or a suburb like LeClaire. For investment, consider homes for sale in Des Moines, where a growing economy drives rental demand.
- Short-Term or Long-Term: If you plan to live in the house for only a few years, focus on neighborhoods with strong resale value and upward market trends. You can check out homes for sale in Cedar Rapids or Ames, where the housing market continues to grow.
- Space Requirements: If you’re looking for larger lots or big backyards, consider suburbs like the Oak Hills in Burlington. But if you prefer something easier to manage, condos in downtown and university areas of Iowa City can be a smart option.
Calculate the cost of living in Iowa to get a detailed breakdown of expenses like housing, utilities, transportation, and more. 🏡
Step 2: Explore Financing Options
Before making a purchase, it’s important to understand the financing options available for you to make an informed decision. Here’s what you need to do:
1. Prepare Financially
- Check Your Credit Score: Lenders will check your credit score to determine if you’re eligible for a loan. Aim for a score of 500+ for an FHA loan and 620+ for a conventional loan.
- Calculate Your Debt-to-Income (DTI) Ratio: Lenders often use your DTI ratio to assess how much home you can afford. Keep your DTI below 36%, especially if you’re buying in more expensive areas such as Polk City and Johnston.
- Set Your Budget: Ensure your budget includes property taxes, homeowners’ insurance, and insurance for potential floods or tornadoes. This is crucial if you’re buying in high-risk areas like Cedar Rapids, Spencer, Des Moines, and Linn County.
👉 Use an Iowa mortgage calculator to estimate how much property you can afford in the Hawkeye State.
2. Explore Loans and Assistance Programs
Down payments in Iowa usually range between 10% and 20%, but often vary based on the financing option you choose. You can also look for suitable Down Payment Assistance Programs (DPAs) to help you cover part or all of your down payment.
| Program | Description |
| FHA Loans | Require just 3.5% down and are ideal if you’re a first time home buyer in Iowa. |
| VA & USDA Loans | Offer 0% down with lower interest rates. Perfect for veterans or those purchasing homes in rural areas. |
| FirstHome Program | The program offers low interest rates, with only 3% down payment requirement and a free Iowa Title Guaranty Certificate for protection. To qualify, your income must be less than 80% of the median income in your area. |
| FirstHome Plus | The program offers up to $2,500 in closing cost assistance to first-time home buyers, eligible veterans, and buyers in specific areas. To qualify, you need a credit score of 640+, a DTI of 45% or less, and to buy a primary residence under $253,000. |
| Homes for Iowans | The program offers a $2,500 grant for closing cost assistance or a 2nd mortgage up to 5% of the home’s sale price or appraised value. |
Step 3: Get Pre-Approved for a Mortgage
The Iowa housing market is competitive, so get a mortgage pre-approval to show sellers you’re a serious buyer. In fact, 86% of sellers prefer buyers who are pre-approved. It also helps you negotiate better and reduces delays in the transaction.
Shop around to find the best Iowa mortgage lenders—compare their programs, rates, and terms. Once you’ve narrowed down your options, get pre-approved by submitting documents like proof of income, credit history, bank statements, and your ID.
Step 4: Dive Into the Iowa Market
Whether you’re looking at houses for sale in Sioux City or anywhere else in the Hawkeye State, here’s how to buy smart:
- Online Listings: If you’re wondering how to buy a house, starting with online listings is a good first step. Use platforms like Houzeo to search homes for sale by price, ZIP code, and more. You can also filter for must-haves like a backyard, waterfront view, etc.
- FSBO (For Sale By Owner) Homes: Explore FSBO listings, as they often offer more flexibility in price negotiations. This is because sellers aren’t paying 5% to 6% in agent fees.
Waterloo is the nicest and cheapest place to live in Iowa. The number of homes for sale in Mcgregor is on the rise, thanks to its safe neighborhoods and diverse job opportunities.
Step 5: Make a Competitive Offer
In Iowa’s competitive housing market, homes tend to sell fast. Make sure you focus on real estate comps for a more accurate picture. Here’s a checklist to help you craft a strong offer:
- Seller’s Name and Address: Don’t forget the basics—include the seller’s legal name and property address.
- Price and Terms: Offer a price based on Fair Market Value (FMV) and comparable sales. In high-demand areas like Des Moines and Cedar Rapids, you might need to offer above the asking price to stand out.
- Down Payment: In Iowa, down payments usually range from 3% to 20%. In competitive markets like Cumming and Johnston, a larger down payment can strengthen your offer.
- Earnest Money: Boost your earnest money deposit to show sellers that you’re serious, especially in hotspots like Dubuque and West Des Moines, where homes can go fast.
- Contingencies: Include protections like home inspection, financing, and tornado or flood risks. These can safeguard you from tornado or flood damage, or structural problems common in homes.
- Concessions: Request the seller to cover some closing costs. In Iowa, it’s common to negotiate repairs after the inspection, such as roof issues, HVAC problems, or plumbing leaks.
- Deadline for Seller’s Response: Set a 24–72 hour deadline to encourage a prompt reply. This helps prevent delays and keeps you on track for Iowa’s average 44-day closing timeline.
- Closing Costs: Expect closing costs around 2% to 5% of the home’s price, including title insurance, property taxes, and lender fees.
Step 6: Conduct Inspections and Appraisals
A standard home inspection in Iowa should cover:
- Exterior: Examine doors, trim, windows, and siding for any damage or wear. Additionally, check the drainage systems, such as gutters, and proper grading to ensure everything works smoothly.
- Plumbing: Check for leaks, corrosion, and water pressure issues, especially in Iowa homes built before the 1980s. These houses may have outdated pipes that are prone to damage from freezing temperatures during the winter season.
- HVAC System: Make sure the heating and cooling systems are properly checked and can handle Iowa’s cold winters and hot, humid summers. This is essential for year-round comfort.
- Electrical System: Verify everything is up to code and can withstand storm and tornado-related power surges, especially during the snowstorms and tornadoes common in Iowa.
- Roof and Attic Condition: Carefully examine for damage or age-related wear. It’s crucial, especially in this tornado and blizzard-prone area. Check if the attic has adequate insulation, proper ventilation, and if there are any signs of water damage or leaks.
- Foundation and Structure: Look for cracks, moisture, or settlement issues, particularly in flood-prone or sandy soil areas near the water bodies.
If you’re browsing homes for sale in northwestern Iowa and central Iowa, it’s important to get a wind mitigation inspection for storm risk. Also, if you have a condo over 30 years old and higher than two stories, a Milestone Inspection for structural safety is recommended.
Once the inspection is complete, your lender will order a home appraisal to confirm the property’s market value. This step ensures the loan amount aligns with what the home is actually worth. It can impact final loan approval, especially if the appraisal comes in low.
Step 7: Close on Your Iowa Home
Almost there! Closing usually takes 30–45 days, from signing the contract to getting the keys in your hand. Here’s what you can expect:
- Final Walkthrough: Make sure all repairs have been completed, and the home is in the agreed-upon condition.
- Buyer Closing Costs: Expect to pay 2%–5% of the home price. This includes title fees and lender charges, plus prepaid taxes or insurance.
Once you sign the dotted line and transfer funds to the escrow account, congratulations, you’re officially a homeowner. Grab those keys and cue your happy dance! 🎉
What Should You Do After Closing?
Welcome home! Now it’s time to handle a few must-dos to protect your investment:
- File for Homestead Exemption: If it is your primary residence, apply for Iowa’s Homestead Exemption to reduce your property taxes. You could get up to a $4,850 reduction in taxable value—especially useful in high-tax areas like Polk City and Johnston.
- Set Up Utilities: Get water, electric, internet, and trash service connections through the Iowa Utilities Board (IUB). And don’t forget pest control, due to Iowa’s natural landscape, termites, ants, bed bugs, rodents, and cockroaches are a persistent issue here.
- Get Insurance: Homeowners insurance is required if you’re financing. Flood insurance may also be needed in FEMA-designated high-risk zones. The insurance rates are higher in areas near water bodies, such as Davenport and Des Moines.
- Home Maintenance Plan: Schedule AC tune-ups at least twice a year, clear gutters regularly, and inspect roofs for storm damage or algae buildup. Consider wind mitigation upgrades to reduce insurance costs.
How to Buy a House in Iowa Without a Realtor?
Start by researching neighborhoods and browsing listings on trusted sites like Houzeo. Then, schedule showings directly with sellers or their agents. You can also hire a real estate attorney to review contracts and handle legal details.
Next, get pre-approved for a mortgage, make an offer, schedule inspections, and negotiate repairs. With the necessary due diligence, you can buy a house without a Realtor.
Should You Buy a House in Iowa?
Absolutely! Iowa offers incredible opportunities for homeowners, whether you’re buying for investment, residence, or vacation. Moreover, with more homes being sold below the list price, now’s the best time to buy a house in Iowa.
Whether you’re drawn to Des Moines’ growing job market or Cedar Falls’ natural landscape, Iowa has it all. There’s a spot to match every lifestyle and budget. So if you’re on the hunt, check out our list of the best places to live in Iowa!
