What to know about buying a house in North Dakota
There’s good news if you’re a North Dakota first-time home buyer: Both home prices and home price inflation in the state are way lower than nationwide averages.
On top of that, the North Dakota Housing Finance Agency provides special mortgages (often with below-market interest rates) for eligible first-time buyers. And it can offer assistance with your down payment and closing costs, too.
Here’s how to get started.
In this article (Skip to ...)
- ND home buyer overview
- Home loan options
- ND home buyer programs
- First-time buyer grants
- Buying in North Dakota’s cities
- ND mortgage rates
North Dakota home buyer overview
In April 2022, the median home listing price in North Dakota was $271,140 according to Zillow. That was up 9.7% year-over-year. By comparison, the nationwide average home price was $424,405 that same month, representing an increase of rose by 15.5% year-over-year.
North Dakota home buyer stats
|Average Home Sale Price in ND||$271,140|
|Minimum Down Payment in ND (3%)||$8,130|
|20% Down Payment in ND||$54,230|
|Average Credit Score in ND1||733|
|Maximum ND Home Buyer Grant2||3% of mortgage value |
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 US Department of Agriculture), you may not need any down payment at all.
First-time home buyer loans in North Dakota
If you’re a first-time home buyer in North Dakota 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: Backed by Freddie Mac or Fannie Mae. 3% down payment and 620 minimum credit score. You can usually stop paying mortgage insurance after a few years
- FHA loan: Backed by the Federal Housing Administration. 3.5% down and a 580 minimum credit score. You’re on the hook for mortgage insurance until you refinance to a different type of mortgage, move, or pay off your loan
- VA loan: Only for veterans and 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 check your eligibility if you have a military service history
- 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
- NDHFA: Special mortgages with below-market rates. Plus down payment assistance for eligible borrowers
Note that government loan programs (including 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.
In addition, most programs let you use gifted money or down payment assistance (DPA) to cover your down payment and closing costs. Depending on the mortgage loan you choose, you could potentially get into your new house with minimal cash out of pocket.
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.
ND first-time home buyer programs
The North Dakota Housing Finance Agency (NDHFA) offers a few different loan programs for first-time home buyers.
- FirstHome: General first-time home buyer loan program that may come with down payment and closing cost assistance
- HomeAccess: Special mortgage program for single parents, military veterans, disabled home buyers, and senior home buyers
- North Dakota Roots: Mortgage program intended for low- and moderate-income first-time home buyers in ND
Some of these loans have exceptionally competitive mortgage rates (or at least they did at the time this was written). You can check for yourself and compare NDHFA rates against current mortgage rates in North Dakota.
To be eligible for an NDHFA mortgage loan program, you must:
- Have an income at or below household income limits that vary by family size and county
- Buy a home within purchase price limits
- Contribute at least $500 from your own pocket
- Live in the home you’re buying as your principal residence
- Pick your lender from a list of participating mortgage companies
- Take a home buyer education class
The NDHFA says your first step should be to contact one of the participating lenders on that list. Your chosen lender will assign you a loan officer to guide you throughout the process.
If you qualify for one of these loans, there’s a good chance you’ll be eligible for down payment assistance, too. And that’s coming up next.
ND first-time home buyer grants
The NDHFA has down payment and closing cost assistance (DCA) programs called START and DCA.
- DCA: Provides 3% of the home’s purchase price toward your down payment, closing costs, and/or prepaid items. You must purchase a one- or two-unit property and complete a homeowner education course to be eligible
- Start program: Provides 3% of the home’s purchase price toward your down payment, closing costs, and/or prepaid items. This cannot be used in conjunction with any other assistance program, and you must purchase a one- or two-unit property to be eligible
Aside from this basic information, there’s little detail about North Dakota’s down payment assistance programs online. So reach out to an NDHFA-approved lender to learn more and find out whether you qualify.
Buying a home in North Dakota’s major cities
On average, Grand Forks is the most affordable of North Dakota’s three biggest cities and Bismarck the least. However, Grand Forks had had the fastest home price inflation over the year leading up to May 2022, while Bismarck had had the slowest. Fargo was the happy medium between the other two. Details below.
Unusually, none of North Dakota’s biggest cities appears to have its own down payment assistance program. But those buying there can use the NDHFA’s program (see details above).
Fargo first-time home buyers
The median listing price for homes in Fargo was $280,200 in May 2022. That was up 14.4% year-over-year, according to Realtor.com.
At those home prices, making a down payment in Fargo might cost:
- $8,410 for 3% down payment
- $56,040 for 20% down payment
The City of Fargo does not appear to have its own down payment assistance program. Instead, its website says, “First-time homebuyers in Fargo are eligible to receive Down Payment and Closing Cost Assistance (DCA) from the North Dakota Housing Finance Agency (NDHFA).”
Bismarck first-time home buyers
The median listing price for homes in Bismarck was $329,900 in May 2022. That was up 7.5% year-over-year, according to Realtor.com.
At those home prices, making a down payment in Bismarck might cost:
- $9,900 for 3% down payment
- $65,980 for 20% down payment
Community Action Program Region VIII appears to cover Bismarck. However, we couldn’t find a down payment assistance program on its website. You can call (701) 258-2240 to check. And, of course, you can still take up the NDHFA’s offer.
Grand Forks first-time home buyers
The median listing price for homes in Grand Forks was $266,800 in May 2022. That was up 16% year-over-year, according to Realtor.com.
At those home prices, making a down payment in Grand Forks might cost:
- $8,000 for 3% down payment
- $53,360 for 20% down payment
Red River Valley Community Action has programs for homeowners but none that we could find for home buyers. You can call (701) 746-5431 to check that we haven’t missed something. But it’s looking as if you might have to turn to the NDHFA for down payment assistance.
Where to find home buying help in North Dakota
All the organizations we’ve listed above should provide advice freely to any first-time home buyer in North Dakota.
In addition to our selection, the U.S. Department of Housing and Urban Development (HUD) provides a list of statewide and city- and county-specific programs across North Dakota. The list is as follows:
Statewide first-time home buyer programs in North Dakota
Home buyer programs in Eastern North Dakota
- Fargo Housing
- Fargo SE North Dakota Community Action Agency — Serving Steele, Traill, Cass, Ransom, Sargent, and Richland counties
- Grand Forks Red River Valley Community Action Agency — Serving Nelson, Pembina, Walsh and Grand Forks counties
- Jamestown Community Action Region VI — Serving Barnes, Dickey, Foster, Griggs, McIntosh, Stuttsman, and Wells counties
Home buyer programs in Western North Dakota
- Bismarck Community Action Program Region VIII — Serving Burleigh, Emmons, Grant, Kidder, McLean, Mercer, Morton, Oliver, Sheridan and Sioux counties
- Dickinson Community Action and Development Program — Serving Adams, Billings, Bowman, Divide, Dunn, Golden Valley, Hettinger, McKenzie, Slope, Stark and Williams counties
- Minot Community Action Opportunities — Serving Bottineau, Burke, McHenry, Mountrail, Pierce, Renville and Ward counties (701) 839-7221 or (800) 726-8645 or TDD (701) 852-3028
- Williston Community Action and Development — Serving Divide, McKenzie and Williams counties (701) 572-8191
Tribal agencies serving North Dakota home buyers
- Fort Berthold Housing Authority — New Town — (701) 627-4731
- Spirit Lake Housing Authority — Fort Totten — (701) 766-4131
- Standing Rock Housing Authority — Fort Yates — (701) 854-3891
- Turtle Mountain Housing Authority — Belcourt — (701) 477-5673
What are today’s mortgage rates in North Dakota?
When you’re ready to buy, be sure to apply with at least three to five lenders to make sure you’re getting the lowest mortgage rate available.
Rate quotes can vary significantly between lenders, so shopping around for rates could save you thousands on your new home.
1Source: Experian.com 2022 study of 2021 data
2Based on a review of the state's available DPA grants at the time this was written