Iowa First-Time Home Buyer: 2023 Programs and Grants

By: Peter Warden
July 27, 2022 - 8 min read

What to know about buying a house in Iowa

Iowa first-time home buyers have an advantage over some other states. Average home prices in the Hawkeye State are low and are rising more slowly than elsewhere.

You may also be in line for home buying help. Iowa has special mortgages with low rates and worthwhile down payment assistance programs that can make your purchase more affordable. Here’s how to get started.

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Iowa home buyer overview

The median home sale price in Iowa was $230,000 in June 2022. That was a 12.2% increase year-over-year, and — according to a report from the Iowa Association of Realtors — “a new record high for median sale price in Iowa.”

The good news is that Iowa’s median price is way lower than the national average, which was $428,000 during the same month according to Redfin. So many Iowa first-time home buyers aren’t facing the same pricing pressures as in other states.

Iowa home buyer stats

Average Home Sale Price in Iowa1$230,000
Minimum Down Payment in Iowa (3%)$6,900
20% Down Payment in Iowa$46,000
Average Credit Score in Iowa2729
Maximum Iowa Home Buyer Grant3Up 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.

First-time home buyer loans in Iowa

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 you never have to pay for private mortgage insurance (PMI).

Of course, few first-time buyers have saved enough for 20% down. But the good news is, you don’t need that much. Not by a long shot.

Borrowers can often get into a new home with as little as 3% or even 0% down using one of these low-down-payment mortgage programs:

  • Conventional 97: From Freddie Mac or Fannie Mae. 3% down payment and 620 minimum FICO score. You can usually stop paying mortgage insurance after a few years once you reach 20% home equity
  • FHA loan: Backed by the Federal Housing Administration. 3.5% down and a 580 minimum credit score. But you’re on the hook for mortgage insurance premiums (MIP) until you refinance to a different type of mortgage, move, or pay off your loan
  • VA loan: Only for veterans and active-duty service members. Zero down payment is required. Minimum credit score varies by lender but often 620. No ongoing mortgage insurance after closing. These are arguably the best mortgages available, so apply if you’re eligible
  • USDA loan: For those on low-to-moderate incomes buying in designated rural areas. Zero down payment required. Credit score requirements vary by lender but often 640. Low mortgage insurance rates
  • Iowa Finance Authority loans: May include below-market rates, fewer closing costs, and down payment assistance. More information below

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 the mortgage loan you choose, you could potentially 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 not sure 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.

Iowa first-time home buyer programs

The Iowa Finance Authority (IFA) has a FirstHome Program4 that offers special mortgages to eligible first-time home buyers in Iowa.

IFA loans typically have below-average interest rates compared to the rest of the market. And they come with lower closing costs, at least partly thanks to the free Iowa Title Guaranty Owner’s Certificate, which might replace costly title insurance.

FirstHome eligibility requirements

Qualifying buyers must conform to these IFA guidelines to secure a loan. Use the online eligibility checker tool to see if you can get a FirstHome mortgage.

  • Credit score of 640 and a debt-to-income ratio (DTI) below 45%
  • Meet household income limits. These vary based on the median income in the county where you’re purchasing
  • Meet home purchase price limits. Currently $349,000 in most locations, but as high as $427,000 in targeted areas. Check to see if limits have changed by the time you read this
  • Complete a home buyer education course. Check here for availability

In addition, to qualify for a loan through the Iowa Finance Authority, you must fall into one of these categories:

  • First-time home buyer (or)
  • Haven’t owned a primary residence in the past three years (or)
  • Eligible military member (or)
  • Purchase a home in a targeted area

These mortgages are only available through a participating lender. But there are plenty to choose from. Pick yours using the IFA’s Find a Lender5 online tool. It will help with all your queries, including eligibility concerns.

Iowa first-time home buyer grants

The IFA’s down payment assistance program comes in two forms.

  • Iowa DPA Grant: 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
  • Iowa DPA Loan: If you need more, you could borrow up to $5,000 as a second mortgage. No interest is charged and there are no monthly payments. But you will have to 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

To qualify for either form of Iowa home buying assistance, you’ll need:

  • A household income of $139,580 or less
  • A home sale price of $381,000 or less
  • A credit score of 640 or more
  • A reasonable debt load (your debt-to-income ratio must be 45% or less)

Those are the main criteria but check for more conditions. Exact criteria are subject to change and may be different by the time you read this.

Military Homeownership Assistance

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.

Be sure to compare the IFA’s offerings with ones that may be offered by your city or county. Then pick the one that suits you better or 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.”

Buying a home in Iowa’s major cities

Home prices in Iowa’s three biggest cities have been rising slowly. And the prices themselves are lower than the statewide average price. So, if you’re an Iowa first-time home buyer, you may find it more affordable to purchase in one of these cities.

Still, check out the down payment assistance programs (DPAs) that are available where you’re buying. Provided you’re eligible, they could help a lot.

Des Moines first-time home buyers

The median list price of homes in Des Moines was $199,900 in June 2022. That was an increase of 6.9% 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:

  • $6,000 for 3% down payment
  • $39,980 for 20% down payment

The City of Des Moines says it doesn’t have a down payment assistance program as such. 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.

Cedar Rapids first-time home buyers

The median list price of homes in Cedar Rapids was $185,000 in June 2022. That was an increase of 8.9% 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:

  • $5,550 for 3% down payment
  • $37,000 for 20% down payment

At the time this was written, the Cedar Rapids website said its down payment assistance program was closed but is likely to reopen soon. So check to see its status by the time you read this.

When the program is open, it offers $1,000-$14,999 as a loan. But that loan is forgiven after five years, subject to conditions.

For more information, including eligibility criteria, download the PDF brochure. You can also contact the Homeownership Program Coordinator by calling (319) 286-5874.

Davenport first-time home buyers

The median list price of homes in Davenport was $184,000 in June 2022. That was an increase of 8.3% 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:

  • $5,520 for 3% down payment
  • $36,800 for 20% down payment

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 your reasonable closing costs up to a total of $10,000.

Download the PDF brochure for eligibility criteria and conditions. And you can call the Community and Economic Development department at (563) 326-7765 for help.

Where to find home buying help in Iowa

All the organizations we’ve listed above should provide advice freely to any first-time home buyer in Iowa or within their local areas.

In addition to our selection, the U.S. Department of Housing and Urban Development (HUD) provides lists of statewide, regional, and local resources:

Statewide and regional first-time home buyer resources in Iowa

Local home buyer resources in Iowa

What are today’s mortgage rates in Iowa?

You can see today’s live mortgage rates in Iowa here.

When you’re ready to start the home buying process, make sure you get personalized rate quotes from at least three mortgage lenders.

Don’t just look at advertised rates online; actually apply for preapproval and compare the interest rates and fees you’re offered. That’s the only way to know you’re getting the best deal possible on your new home loan.


1Source: Iowa Association of REALTORS Housing Statistics Report

2Source: Experian.com study of 2021 and 2020 data

3Based on a review of the state's available DPA grants at the time this was written

4FirstHome Program Website

5IFA Find a Lender Tool

Peter Warden
Authored By: Peter Warden

The Mortgage Reports Editor

Peter 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.