can tell you everything you need to know about buying a house in Idaho. Here, we’ll take you through the home buying process and tell you everything a future Idahoan needs to know.

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Figure out your finances

The first step to buying a house in Idaho is the same as it would be for any other state: figuring out your personal finances. You need to determine your credit score, debt-to-income (DTI) ratio, and budget out the necessary payments and fees involved in buying a house before starting your search.

Don’t call your realtor until you’ve taken a good look at your bank statements and financial records to determine what kind of house you can afford in Idaho.

Check your credit score

The most important number involved in the home buying process is your credit score. Buying a house in Idaho typically requires a credit score of 620 or higher, particularly if you plan to take out a conventional mortgage.

If your credit score is below 620, you still have a few options:

Wait until you increase your credit score. This might be preferable if you also need to save for a while before you can make a 20% down payment.

Qualify for a government-backed mortgage with your current credit score. The Federal Housing Administration (FHA) offers mortgages for home buyers with credit scores of 523 or higher. Military members and their spouses can take advantage of Veterans Association (VA) loans with scores as low as 500.

Calculate your debt-to-income (DTI) ratio

Your debt-to-income ratio (DTI) is another critical financial figure to factor into your decision. You can calculate your DTI ratio by adding up all your monthly debt payments and dividing them by your pre-tax income. Relevant DTI payments include:

Rent or current mortgage payments

Credit card payments

Car loan payments

Student loan payments

Alimony or child support

A DTI above 50% will typically prevent you from buying a house in Idaho. Shoot for a DTI of 36% or lower, particularly if you’re planning on getting a traditional mortgage.

Lenders may factor your potential mortgage payments into your DTI when evaluating your candidacy.

Determine your down payment

As you decide what kind of home you would like to purchase, the size of the down payment you can afford is a major constraint.

The down payment amount you need depends on what kind of mortgage you are looking for. A conventional mortgage usually calls for a down payment of at least 20%.

If you can’t swing a full 20% down payment, again consider a Federal Housing Administration (FHA) loan or Veterans Administration (VA) home loan.

FHA mortgages allow you to make a down payment as low as 3.5% if your credit score is high enough (around 580). If you’re able to get a VA loan, you might not have to make a down payment at all! Furthermore, VA loans offer competitively low interest rates and lower closing costs.

Key Takeaway Figure out your financial situation (credit score, debt-to-income ratio, and loan eligibility) before starting your house hunt.

Prepare for closing costs and other fees

Your down payment isn’t the only upfront cost you should expect when purchasing your home. You’ll also have to pay what’s known as “closing costs.”

In Idaho, closing costs will equate to 2-5% of your home’s total value. With an average home value of between $300,000 and $400,000 in the Gem State, you can typically expect to pay between $2,657 and $4,724 in closing costs.

These expenses usually have to be paid out of pocket, so make sure you have enough set aside to cover them.

“Closing costs” typically encompass the following:

Home inspection fee

Home appraisal fee (required by most lenders)

Credit report fee

Mortgage origination fee

Mortgage insurance

Property taxes

Homeowners insurance

Earnest money (a deposit made in good faith that goes toward your down payment)

Note that property taxes in urban areas of Idaho ranged from 1.13%-1.54% over the last five years. Rates were lower in rural counties, from 0.80% to 1.01% over the same span.

MORE: How to make a counteroffer after a home inspection

Key Takeaway Remember to factor in closing costs and check the property tax rate in your prospective county when creating your budget for purchasing a home.

Look for homeowners insurance

Homeowners insurance is an important expense that you’ll need to pay even after the home-buying process is complete. It costs the average US homeowner about $115 per month, or $1387 per year, to insure their home.

You don’t need to settle for the first homeowners policy you find, either. Instead, use the insurance super broker app

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MORE: What to look for in a home insurance company

Get preapproved for a mortgage

We’ve covered a lot of ground so far, but don’t start looking for your house just yet. The next step is to prequalify for a mortgage.

This will put you in a good financial position when you go into negotiations—not to mention the fact that many sellers won’t even let you see the property until you show them a preapproval letter.

To get preapproved for a mortgage, follow these steps:

Provide the lender with your Social Security number

Create a list of all banking information, employment history, assets, and debts

Fill out a mortgage application

The preapproval process is not a difficult one, but make sure you don’t start until you are certain you’re ready to buy! Your lender will use the information you give them to verify your DTI and ability to pay for the loan, then perform a hard credit check.

Hard credit checks can cause your credit score to dip, so it’s important not to undergo too many of them.

How to pick the right mortgage in Idaho

When deciding what mortgage you’re looking for, your two main considerations should be mortgage term and interest rate. The most common mortgage terms are 15 years and 30 years.

Longer mortgage terms offer lower monthly payments, but you’ll have a higher interest rate (around 3.5% on average). Conversely, the shorter 15-year mortgage offers interest rates at 2.5% or lower, but you’ll have to make higher monthly payments in exchange.

Before making your decision, get opinions from a few lenders to find the best loan terms for your needs.

Look for a house

Now that your finances are all squared away and you’ve prequalified for a mortgage, it’s time to start looking for a house.

Choose your location

Try to pick a city or neighborhood that fits your needs and interests when it comes to culture, climate, and cost of living. Boise, Moscow, and Coeur d’Alene are all popular locations, but do the research to find the best place in Idaho for you.

If you already know where you want to live, take a look at some of the different housing markets and consider what you want most out of your neighborhood. Do you want access to good schools or top bars and restaurants? Would you rather live in the city limits or a bit further out in the country?

Take a look at the area’s crime statistics and keep the cost of additional expenses, like

car insurance

, in mind.

MORE:

Idaho electric vehicle incentives

Buyer’s market vs. seller’s market

When looking for a home, you should find out whether you’re competing in a buyer’s or seller’s market so you can make strategic offers.

A buyer’s market indicates that supply outweighs demand, meaning that there are more homes for sale than buyers and you may be able to negotiate a lower selling price

A seller’s market means that the market has more prospective buyers than houses. You’ll often have to offer more than the asking price to secure a house

You can determine whether you’re in a buyer’s market or seller’s market by checking recent home sales and comparing the asking price against the final price. If buyers consistently paid lower than the initial asking price, it’s a buyer’s market.

The time spent on the market is another sign. Houses tend to go quickly in a seller’s market, but listings in a buyer’s market can stick around for weeks or months on end.

As of the end of 2021, the majority of Idaho cities are seller’s markets. Idaho is one of the fastest-growing states in the country. The real estate market is hot, especially if you plan to move to an area like Boise or Idaho Falls.

You should be ready to move fast and bid high. If you find a house you like, make sure you submit an offer quickly so you don’t miss out.

Markets can shift in an instant, so keep doing the research even after you start your house hunt.

Find a real estate agent

Buying a house can be a lot of work, and hiring a realtor can help make the process easier. It’s not required, but having a real estate agent will make the process much simpler, particularly if you are moving to a new state or are a first-time buyer.

Try to find a local agent with experience selling homes in the area you’re considering. Whoever you choose, make sure they maintain a clear and open line of communication with you. If they won’t pick up the phone or call you back, find someone else.

Make an offer

You put in the work and finally found the house of your dreams—it’s time to make an offer. When it comes to paperwork, your real estate agent can assist you in filling everything out and calculating an appropriate offer based on the market conditions.

MORE:

How to choose the right kind of home insurance for you

How to save on homeowners insurance

The home buying process is exciting, and insurance is probably the last thing you want to think about right now. The fact is, though, that you’ll need to get homeowners insurance to protect your new property.

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FAQs

How much money do I need to buy a house in Idaho?

The location of the home you’re buying, your down payment, and the mortgage you qualify for will affect the exact amount of money you need.

The average Idaho home value is $451,830, meaning that you should have at least $90,366 in savings.

What credit score is needed to buy a house in Idaho?

An optimal credit score to buy a house in Idaho is 620 or above. You may qualify for an FHA or a VA mortgage if your credit score is at least 500.

What is the best place to buy a house in Idaho?

If you want to experience the excitement and connectivity of one of the fastest-growing cities in the country, look at houses in Boise. Another city on the rise is Idaho Falls, where prices tend to be a bit cheaper than in Boise.

If you enjoy beautiful scenery and outdoor activities, check out Coeur d’Alene. If you want to save money, check out the housing markets in the rural central part of the state.

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