Buying a house in New Hampshire: A how-to
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If you’re thinking about buying a home in New Hampshire, you probably already know just how charming it is. The Granite State trades major metropolitan energy — its largest city, Manchester, has a population of around 115,000 — for small-town New England charm and the natural beauty of its many forests.
Before you start planning weekend trips to hike Mount Washington or summer beach days near Portsmouth, be aware that buying a home here isn’t exactly easy. The median sale price jumped to $440,000 in September 2022, a 10 percent increase versus the same time last year, according to data from the New Hampshire Association of Realtors. Plus, sellers are pulling back: The number of new listings declined by 18 percent.
The state has just a 1.7-month supply of homes available for sale, compared to the 5 or 6 months needed for a balanced market. Between that supply shortage and rising mortgage rates, you might be asking yourself, should I buy a house now or wait? There’s no easy way to answer that question, but if you have excellent credit and intend to stick around New Hampshire for the foreseeable future, there are still plenty of reasons to enter the market. Keep reading for tips on where to look, who to hire and how much you’ll need to spend to buy a home in New Hampshire.
How to buy a house in New Hampshire
Decide where to live in New Hampshire
New Hampshire may be small, but there are big differences in the cost you’ll pay and the lifestyle you’ll find throughout the state. If you’re looking close to the stretch of Atlantic Coast shoreline in Rockingham County, you’ll need a sizable budget: Median sale prices here were just under $550,000 in September. Opt for rural living in Coos County, in the northeast part of the state, and you can save a lot of green while living closer to the White Mountains. Median prices here were just under $204,000 in September.
As you think about where to buy a home in New Hampshire, be sure to consider what’s next for you and your family in the future. While you don’t have to commit to a forever home, you do want to find a place that will serve you well for at least the next five years. A smaller space can add up to big savings: Median sale prices on condos run nearly $100,000 cheaper than single-family homes. And if you’re looking in a small town or rural area, consider how far you’ll need to drive for access to grocery stores, healthcare and other needs.
Tips for buying a house in New Hampshire
Before you start comparing mortgage rates, it’s important to have a solid grasp on how much money you’re going to have to borrow to finance your purchase. If you need to borrow more than the maximum allowed under New Hampshire’s 2022 conforming loan limits — $647,200 in most parts of the state, and up to $770,500 in Rockingham and Strafford counties — you’ll need to look for a jumbo loan, which come with stricter credit requirements and higher down payment contributions.
Things to know about buying a house in New Hampshire
- Property taxes: New Hampshire may make headlines for the taxes it lacks — there is no state income tax or sales tax — but it has to make up for that lost revenue somewhere. You’ll feel it on your property tax bill: Tax Foundation data shows that the average New Hampshire homeowner pays an annual bill of $3,246, the second-highest rate in the entire country.
- Dual agency: Dual agency is allowed in New Hampshire, which means that your real estate agent might also represent the owner of a home you want to buy. This kind of arrangement can raise some conflicts of interest, so it’s only permissible if you give your written consent.
- Seller’s disclosure: New Hampshire’s laws pertaining to seller disclosures are fairly limited. While you’ll likely receive a standard form that includes the seller’s knowledge about the property’s water supply, sewage and insulation, it’s no substitute for a professional home inspection. New Hampshire is a buyer-beware state, and a home inspection is a must to protect your investment.
- Closing costs: New Hampshire closing costs are pretty big for such a small state. The average home purchase here included $8,183 of closing costs in 2021, according to ClosingCorp. But sellers are responsible for a portion of that cost, and buyers and sellers pay an equal amount of the state’s transfer taxes.
- Attorneys: You may not be required to hire a real estate attorney when buying a home in New Hampshire — but anytime you’re spending a large amount of cash and dealing with complicated contract language, it is smart to seek out legal advice anyway.
- Climate and weather considerations: One of the common nicknames for New Hampshire is Mother of Rivers. There are around 40 rivers in the state, and while they are beautiful, they increase the potential for flooding damage. In addition, it’s no surprise that a state that borders Canada sees its fair share of snow. In fact, according to the World Population Review, New Hampshire is the third-snowiest state in the country, behind its neighbors Vermont and Maine.
How much house can I afford in New Hampshire?
Before you start crunching numbers to determine how much you can spend to buy a house in New Hampshire, you need to answer a more basic question: Are you actually ready to become a homeowner? If your credit is in good shape — 740 and above will put you in the running for the lowest available interest rates — you’re a good candidate to apply for a mortgage. However, you should also think carefully about your long-term plans. Buying a home in New Hampshire comes with some fairly high closing costs, so you need to be confident that you will be in the home for a long enough period to justify them. At least five years is a good rule of thumb.
If you feel ready, it’s time to figure out what you should plan to spend without stretching yourself too thin. Bankrate’s new-home calculator will look at your entire financial picture to help you set a maximum amount for your monthly mortgage payment.
Saving for a down payment in New Hampshire
Thinking about the large chunk of cash you’ll need for a down payment can make you feel like giving up on your quest to be a homeowner. If you’re paying rent and dealing with all the other high costs of living right now, how can you manage to set aside money for buying a home? In New Hampshire, you don’t have to do it alone. The state has programs to help first-time homebuyers come up with the cash. For example, New Hampshire Housing’s Cash Assistance option offers eligible borrowers the chance to secure a second mortgage to cover some of their down payment and closing costs. Best of all, it’s a forgivable loan: If you don’t sell the house, refinance the mortgage or declare bankruptcy within four years, you won’t have to pay the money back.
You don’t necessarily have to be a first-time homebuyer to qualify for help, either. If you’re earning less than you would like, there are quite a few options to buy a house as a low-income borrower.
Get preapproved for a mortgage
It’s smart to get preapproved for a mortgage before you start looking at homes. Sellers will want to see your preapproval letter to feel assured that you will be able to come up with the cash to complete the deal. Some lenders can take a look at your financial information — tax returns, pay stubs, bank statements, credit report — and issue a preapproval letter in just 15 minutes.
Find the right lender
From online-only lenders to credit unions and banks with branches across the Granite State, there are plenty of choices for financing your home purchase. Make sure you compare multiple offers to find terms that fit your needs. It’s not all about money, either: Ask each lender about their average time to close, and inquire about additional savings such as interest rate discounts for existing customers or reductions on your fees. Additionally, you should aim to lock your rate. It’s a rising rate environment, so you don’t want to take the risk of getting preapproved, only to have your rate go up and your buying power go down.
Find a local real estate agent in New Hampshire
Now, it’s time to find the right person to help you navigate the New Hampshire housing market. Since there aren’t enough homes for sale, an expert agent who knows the local market and can point you toward listings that meet your needs is crucial. And if you’re buying a home from out of state, a real estate agent becomes even more essential. Since you might not be able to fly in immediately, your agent can be your trusted, on-the-ground source.
Plus, your agent will have a real understanding of what’s happening where you’re hoping to buy. Remember, you’re not just buying a house in New Hampshire; you’re buying a house in a specific part of a specific town. Buyer activity can look very different from county to county. For example, while homes were spending 20 days on the market in Rockingham in September, they were going to contract in just 8 days in Merrimack.
Start house hunting and make an offer
Now that you’re ready to start looking at houses in New Hampshire, keep an open mind. For example, might you be willing to trade downtown walkability for a bigger home 10 miles away? Or might you be OK with an outdated kitchen for now, knowing that you can renovate after you accumulate some equity down the road? When you find a place that feels like it could be home, your agent will coach you through how to make an offer.
Home inspection and appraisal
When you initially sign a contract to purchase the home, include a contingency based on the results of a home inspection. That way, if your inspection uncovers major issues that you don’t want to pay to address, you can back out of the deal.
While a home inspection is technically optional, your lender will require an appraisal. This step verifies that they are not lending you more than the home is worth. So, if you were to ever default on the loan, your lender would stand a reasonable chance of recouping their losses.
Final walk-through and closing on your New Hampshire home
Before you sign your name on the dotted line (actually, you’re going to sign your name on a lot of lines) and get the keys, it’s important to conduct a final walk-through. This is a fairly quick step that typically happens just before you close on the house. Use this checklist to make sure that any repair requests are complete and that the home is ready for your arrival.
Now, it’s time to put the final puzzle piece in place and close on the house. Ask your attorney how you will be expected to pay the closing costs (typically via a certified or cashier’s check) and do a few hand exercises before you ink your name on all the necessary documents. The title company will likely conduct the closing, and one of their attorneys will oversee the final paperwork. Then, it’s time to smile. You are a new homeowner in New Hampshire.
To get approved for a conventional loan, you’ll need a minimum credit score of 620. But you will qualify for a lower interest rate with a much higher score of 740 and above. There are government-backed options for borrowers with low credit, though. You may be able to find a FHA-backed loan with a credit score as low as 500. However, you’ll need a down payment of at least 10 percent of the purchase price.
The median down payment on a house in New Hampshire was $63,000 in March 2022, which means that half of homebuyers put down more than $63,000 and half put down less. It’s important to note that you can make a much smaller down payment to become a homeowner. If you have excellent credit, you may be able to qualify for a loan with a down payment of 3 percent of the purchase price. Based on the median sale price in New Hampshire in September 2022, which was $440,000, that would be just $13,200.