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 significantly lower than nationwide averages.
On top of that, the North Dakota Housing Finance Agency provides eligible first-time buyers with special mortgages, often with below-market interest rates. It can also assist with your down payment and closing costs. 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
The median home sale price in North Dakota was $238,509 in January 2023. That was up 5.5% year-over-year, according to Zillow. By comparison, the nationwide average home price was $467,700 that same month. So first-time home buyers in North Dakota may have an easier time with their homeownership goals than elsewhere.
Still, saving enough for a home purchase can be challenging. Thankfully, the Peace Garden State offers first timers plenty of housing assistance. Here’s what you can expect.
North Dakota home buyer stats
|Average Home Sale Price in ND1||$238,509|
|Minimum Down Payment in ND (3%)||$7,155|
|20% Down Payment in ND||$47,702|
|Average Credit Score in ND2||733|
|Maximum ND Home Buyer Grant3||3% of mortgage value statewide|
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 that 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 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 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 your mortgage loan, 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 or real estate agent 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. 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:
- Contribute at least $500 from your own pocket
- Live in the home you’re buying as your primary residence
- Pick your lender from a list of participating mortgage companies
- Complete a home buying education course
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. We explore down payment and closing cost assistance in the next section.
1. NDHA FirstHome program
The FirstHome program is NDHA’s main first-time home buyer loan. It offers middle and low-income borrowers below-market mortgage rates on conventional, FHA, VA, or USDA loans. It can also be paired with down payment and closing cost assistance.
In addition to NDHA’s standard loan requirements, you’ll also need to meet income and purchase price limits to qualify.
2. NDHA HomeAccess program
The HomeAccess program is a special mortgage program for single-parents, military veterans, disabled home buyers, and senior home buyers. First-time buyers are welcome to apply, provided they’re in an eligible group and meet the other requirements.
To qualify, you’ll need to satisfy NDHA guidelines and meet home purchase price limits and income caps for your county.
3. NDHA North Dakota Roots program
This loan program may be an option for first-time and repeat home buyers whose household income or home purchase price exceeds the limits of other NDHA mortgages. Keep in mind that the maximum loan amount must conform to Fannie Mae or Freddie Mac’s loan limits, which are currently $ for a single-family home.
4. NDHA Targeted Area Loan program
ND first-time home buyers who are purchasing in an eligible census tract, may qualify for a reduced interest rate through the Targeted Area Loan program.
The NDHA says, “The Internal Revenue Code requires that NDHFA, as an issuer of tax-exempt mortgage revenue bonds, set aside a portion of the proceeds of a bond issue for up to one year for reduced interest rate mortgage loans in Targeted Areas of North Dakota.”
Targeted areas currently include tracts in Benson, McKenzie, Rolette, and Sioux. You can check to see if your home is located in a targeted area on the NDHA website.
ND first-time home buyer grants
The NDHFA has down payment and closing cost assistance programs called Start and DCA. Here’s what you need to know.
The DCA program provides buyers with assistance equal to 3% of the first mortgage loan amount. This can be used toward your down payment, closing costs, and/or prepaid items. You must meet income limits, purchase either a single-family home or two-unit property, and complete a homeowner education course to be eligible.
The Start Program provides assistance equal to 3% of the first mortgage loan amount. It can be applied 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. Indeed, Bismarck had the fastest home price inflation in the fourth quarter of 2022 — an eye-watering 21.1%. Fortunately, real estate prices in Fargo and Grand Forks remain more steady.
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 $266,800 in January 2023. That was up 4.6% year-over-year, according to Realtor.com.
At those home prices, making a down payment in Fargo might cost:
- $8,004 for 3% down payment
- $53,360 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).”
So contact your local mortgage lender or the NDHFA for more information.
Bismarck first-time home buyers
The median listing price for homes in Bismarck was $339,000 in January 2023. That was up 16.9% year-over-year, according to Realtor.com.
At those home prices, making a down payment in Bismarck might cost:
- $10,170 for 3% down payment
- $67,800 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 $270,000 in January 2023. That was up 6.7% year-over-year, according to Realtor.com.
At those home prices, making a down payment in Grand Forks might cost:
- $8,100 for 3% down payment
- $54,000 for 20% down payment
Red River Valley Community Action has programs for homeowners, but none that we could find for first-time 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?
You can check current mortgage interest rates in North Dakota here.
When you’re ready to start the home buying process, experiment with a mortgage calculator to see how down payment and interest rates will affect your mortgage payment. Then, make sure you get personalized rate quotes from at least three to five mortgage lenders.
Don’t just look at advertised rates online. Apply for preapproval and compare the interest rates and fees you’re offered. Because that’s the only way to know you’re getting the best deal possible on your new home loan.
1Source: Zillow.com North Dakota Home Values Report
2Source: Experian.com 2022 study of 2021 data
3Based on a review of the state's available DPA grants at the time this was written