, you will need a credit score of at least 620 and a 20% downpayment. New Hampshire’s cost of living is well above the national average, and to buy a house there, you will need to save up at least $100,000 on average.

A home in New Hampshire comes with a high price tag, which isn’t surprising since New Hampshire is consistently voted the best place to live in the United States. New Hampshire offers an idyllic living experience—as long as you don’t mind harsh winters. It is easy to see why buying a home there is a dream for so many people.

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Figure out your finances

The first step in buying a home anywhere is to take a deep dive into your finances. Before you even consider buying a home, take a look at your credit score, debt-to-income ratio, and budget so you know what you can afford.

Check your credit score

The very first thing you will want to do is request your credit report from the three major reporting agencies. To qualify for a conventional home loan, you will need a score of 620 or better.

Even if you meet the minimum requirement, it doesn’t hurt to clean up your credit as much as possible before you start looking to buy.

Here are some ways to improve your score:

Dispute incorrect information or fraudulent accounts. Look over your credit reports for any sketchy information and follow the process outlined in the report to have errors corrected or removed.

Pay down credit cards so that they have low balances. Lenders look at the amount of credit you have access to and compare that to your balances to find your credit utilization ratio. Credit utilization counts for about 30% of your credit score, and people with the best scores are only using 7%-30% of their available credit. You can also boost your utilization score by asking for increased credit limits on established accounts.

Pay on time. Payment history is the number one factor impacting your credit score. Make sure you budget correctly so that any credit, loans, or other finance payments are made on time, every time. Using autopay is a great way to boost your payment history.

Take action on collection accounts. If you have any accounts in collections, it is time to make a plan and pay them off. Collection accounts affect your credit score for 7.5 years, so reach out to your debtors. Often, you can request a lower settlement or a payment plan. Make sure to request that the account be removed or marked as satisfied when it is paid off.

You may be eligible for a loan through the Federal Housing Administration (FHA) and Veterans Administration (VA) with credit scores as low as 523 and 500, respectively. However, a VA loan is only available to veterans and active service members.

MORE: How does your credit score impact car insurance?

Calculate your debt-to-income (DTI) ratio

Your debt-to-income ratio tells lenders how much of your income currently goes to paying off debts that include housing costs, car payments, personal or installment loans, and credit cards. To qualify for a loan, your lender will be looking for a DTI of 36% or lower. They will also want to see that your mortgage payment would equal less than 28% of your gross income.

To figure your DTI, take your monthly payments and divide them by your monthly wages (before taxes are taken out). So if you make $5,000 a month, and your expenses are $1,500 it would look like this:

1500/5000= .3 or 30%

If you need to improve your DTI, work on paying off credit cards, car loans, and other debts, and make sure not to finance any big purchases for at least a year leading up to applying for your home loan.

To figure out what mortgage payment you can afford monthly, multiply your gross income by .28. If we use the same example as above, it looks like this:

5000 x 0.28= 1400

This means you will need to keep your mortgage under $1400 per month if your gross monthly wage is $5,000.

Determine your down payment

For a conventional loan in New Hampshire, you will need a down payment that is equal to 20% of the cost of your home. The average home value in New Hampshire is between $315,000 and $400,000 and is adjusted seasonally based on the market. If you purchase a $350,000 home, your down payment will be about $70,000 before closing costs or other fees.

In some instances, you can put less money down, especially if you qualify for a government-backed loan, such as a Federal Housing Administration (FHA) loan or Veterans Administration (VA) home loan. Here’s the difference:

FHA loan: A mortgage insured by the Federal Housing Administration for low- and moderate-income homebuyers (especially first-time homeowners)

VA home loan: A mortgage insured by the Veterans Administration for servicemembers, veterans, and eligible surviving spouses

FHA loans allow you to make a down payment as low as 3.5% if your credit score is good enough (usually around 580). VA loans, meanwhile, also offer competitively low interest rates and lower closing costs, and you may not need to put any money down.

Prepare for closing costs and other fees

In addition to the down payment, the buyer is responsible for some of the closing costs and fees associated with the home buying process. Closing costs are often shared in some way between the buyer and the seller, but on average, expect to pay another 2%-5% of the home’s value in closing costs. In NH, this usually ranges from $6,000 to $16,000.

In general, your closing costs will cover the following:

Home appraisal

Credit report fee

Home inspection fee

Mortgage origination fee

Earnest money

Mortgage insurance

Property taxes

Homeowners insurance

While New Hampshire has no state income tax or sales tax, its property taxes—at 2.2%—are much higher than the national average. Plan on paying upwards of $5,500 per year.

MORE: How to make a counteroffer after a home inspection

Key Takeaway New Hampshire home buyers need to prepare by knowing their financial situation and saving for upfront costs.

Look for homeowners insurance

Part of your closing costs include your first-year home insurance premium, and most lenders will require you to have insurance before you sign your loan.

It’s a good idea to compare rates from multiple providers when looking for an insurance policy so you know you’re getting the best price. You also may want to start with your

car insurance

company—you can save money by bundling both policies.

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MORE: Does home insurance cover flooded basements?

Get preapproved for a mortgage

Once all of the financials are in place, your next step is to get preapproved for a mortgage. Getting pre-approved gives you a stronger position for negotiating with a seller as many sellers won’t show you the property until they know you’ve been approved for a loan.

Here’s how to get preapproved for a mortgage:

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

Once you have your preapproval letter, the clock is ticking! Most preapprovals are valid 60-90 days from when they are issued.

How to pick the right mortgage in New Hampshire

Once you’ve been approved for a loan, you’ll need to figure out your mortgage term and interest rate. If you have a conventional loan, you will need to choose between a fixed interest rate and an adjustable interest rate.

If you choose a fixed interest loan, your interest rate is locked in for the life of your loan. So if market rates fluctuate, your mortgage payment won’t. You will also need to choose the length of your loan repayment.

Fixed interest loans typically offer a 15 or 30-year repayment option. A longer repayment means lower monthly payments, but a shorter repayment term will save you thousands in interest over the life of your loan.

An adjustable-rate loan offers a lower introductory rate for the first few years but then fluctuates to match the market annually. This can work in your favor when interest rates lower, but it is just as likely that they will increase. If you are only planning on owning your home for a few years, this can be a good option.

Key Takeaway When you are deciding on a mortgage, keep in mind the term of the loan. Longer terms may have shorter payments, but you’ll end up paying more in the long run with higher interest rates.

Look for a house

Now for the fun part! Start looking for your New Hampshire home!

Pick your city or neighborhood

Overall, New Hampshire is not the most affordable place to live, although some would argue that it is worth the hefty price tag. New Hampshire offers beautiful mountains and coastline, low crime rates, economic growth, and one of the highest-rated education systems in the country.

Within the state, check out Somersworth, Newport, Franklin, and Rochester for the most affordable homes.

Buyer’s market vs. seller’s market

If you have the opportunity, wait for a buyer’s market to purchase your new home. When the supply of properties outpaces buyer interest, the market favors the buyer. This means there is more room to negotiate, and lenders will compete more for your business.

Conversely, in a seller’s market, everyone is looking to buy, driving up home prices, and creating a situation where you have to move fast—and may need to sweeten the deal with a bigger down payment and fewer contingencies.

While New Hampshire’s market may be pricey, it is a great time to start looking. As of spring 2022, New Hampshire real estate is operating in a buyer’s market.

Find a real estate agent

Once you have narrowed it down to a city, find a local agent that will represent you during the buying process. While it’s not a requirement, working with a qualified real estate agent can help you tremendously throughout the home buying process.

A local real estate agent will know the market and areas well, so they can offer suggestions—especially if you’re moving from out of state. It’s important to have a good rapport with your agent so they can represent your interests as you look for a property.

Make an offer

Your agent will help you draw up an offer that includes all of the details of the property you are interested in and the terms you are offering. Your offer should include your preapproval letter, a copy of your escrow (down payment deposit) check, and any contingencies required of you or the seller.

MORE:

How to choose the right kind of home insurance for you

How to save on homeowners insurance

While many of the costs of home buying are out of your control, your home insurance is one expense over which you have some say—especially if you shop around. Many insurers offer incentives and bundling discounts—and the cost of your premium can vary widely from insurer to insurer.

Luckily, the insurance shopping process is quick and easy when you’ve got

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FAQs

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

While the exact price will depend on the value of the home you choose, looking at new Hampshire averages, your initial investment with a traditional lender will be $80,000 to $100,000.

What credit score is needed to buy a house in New Hampshire?

You need a credit score of at least 620 to buy a house in New Hampshire. But if your score is lower, you may still qualify for an FHA loan, an RD loan, or a VA mortgage.

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