Current mortgage rates in Iowa

The state of Iowa has both first-time homebuyer programs and programs for current homeowners moving into a new home. Funds from the state can help residents with making a down payment and paying closing costs for a mortgage, which are often barriers to purchasing a home. As of Saturday, December 2, 2023, current interest rates in Iowa are 7.31% for a 30-year fixed mortgage and 6.66% for a 15-year fixed mortgage.

Mortgage rates have risen since the lows of 2020 and 2021, but they’re still on par with the historical average. For those buying a house in Iowa, your budget might be limited by these higher rates and increased home prices. Compare at least three mortgage offers for the best shot at the best deal.

Refinance rates in Iowa

Mortgage rates are hovering at a peak, meaning it’s probably not the best time to refinance your loan. However, if you have substantial equity and want to remodel or have other expenses to pay, you might still want to explore a cash-out refinance or home equity line of credit (HELOC).

How to find the best mortgage rate in Iowa for you

To find the best mortgage rate in Iowa, compare offers from at least three different lenders. Keep in mind that the APR you see advertised is different from the interest rate, with the APR accounting for the total cost of the loan in fees and any points. Note you might notice slight variations in rates depending on location.

Mortgage options in Iowa

Consider these options for a mortgage in Iowa:

• Iowa conventional mortgages: With conventional mortgages in Iowa, you’ll generally need a debt-to-income (DTI) ratio of no more than 45 percent and a credit score of at least 620. The minimum down payment is typically 3 percent. At that level, you’ll be required to pay private mortgage insurance (PMI).
• Iowa FHA loans: If you have a lower credit score, a loan insured by the Federal Housing Administration (FHA) might be a better option. You can get an FHA loan with 3.5 percent down and a credit score of 580.
• Iowa VA loans: You can get a mortgage guaranteed by the Department of Veterans Affairs (VA) if you’re a qualifying veteran, an active-duty member of the military or a surviving spouse. VA loans don't require a down payment or mortgage insurance, but you do need to pay a funding fee.
• Iowa USDA loans: Many parts of Iowa are considered rural, so your property might be eligible for a loan backed by the U.S. Department of Agriculture (USDA). USDA loans don’t require a down payment, but you must meet area-specific income requirements.

First-time homebuyer programs in Iowa

FirstHome Program

The state of Iowa’s first-time homebuyer program is operated by the Iowa Finance Authority (IFA) and provides buyers assistance with the down payment and closing costs. Called the FirstHome program, qualified homebuyers can obtain a mortgage as well as either a: 

• FirstHome grant, a $2,500 grant to put toward the down payment and closing costs
• 2nd Loan, a no-monthly-payment loan of up to 5 percent of the sale price of the home, repaid when you pay off or refinance the mortgage or when you sell the home

To be eligible for the FirstHome program, you’ll need to be within household income limits, which depend on the location of the home and size of the household (the income limit for a two-person household ranges from $86,900 to $109,000). The maximum purchase price limit is $349,000, unless you’re buying in a targeted area, where the purchase price limit is $427,000.

The FirstHome program also has a minimum credit score requirement of 640, although alternative credit history might be considered, and the maximum DTI ratio is 45 percent.

The program is open to:

• First-time homebuyers (those who have not owned a home in the past three years)
• Members of the military who were honorably discharged and have not already participated in the program 
• Those buying a home in a targeted area

Military Homeownership Assistance Program

Iowa’s Military Homeownership Assistance Program is a $5,000 grant for service members, veterans and surviving spouses that can be used toward the down payment and closing costs. The money can be used together with the FirstHome program. There are certain eligibility requirements, including length of service, and you must work with an IFA-approved lender to qualify.

Additional Iowa mortgage resources

• Iowa first-time homebuyer resources
• Iowa loan limits by county
• Iowa mortgage lenders