Iowa Mortgage and Refinance Rates

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 Thursday, October 31, 2024, current interest rates in Iowa are 6.73% for a 30-year fixed mortgage and 6.14% for a 15-year fixed mortgage.

Though they’re still on par with historical averages, mortgage rates have effectively doubled since the lows of 2020 and 2021. Aspiring homebuyers’ budgets might be limited by these higher rates and increased home prices: For instance, Des Moines’ median home sales price was up 17.6 percent year-over-year in February 2024, according to ATTOM. Overall, though, the median sale price of $220,000 is one of the lowest in the U.S.

Refinance rates in Iowa

Refinance rates are now much higher than the rock-bottom levels of the past few years. Still, you might consider a cash-out refinance on your Iowa home to pay for renovations or other expenses — or to explore a home equity loan or home equity line of credit (HELOC). The rise in home values has increased the equity stakes many homeowners have. 

Iowa mortgage rate trends

While mortgage rates are difficult to predict, the current consensus is for rates to remain well above historical lows for the foreseeable future, including in Iowa.

National mortgage rates by loan type

Mortgage statistics for Iowa

Iowa has seen median home prices climb in recent years, but they’re still well below the national median home price. Here are more statistics about housing in the state:

• Most popular cities: Des Moines, Cedar Rapids, Davenport, Waterloo, Sioux City
• Most affordable counties, Jan. 2024: Appanoose, Wayne, Decatur, Ida, Van Buren
• Median home sales price, Feb. 2024: $220,000
• Median down payment, Feb. 2024: $20,900
• Median home value, Feb. 2024:  $195,750
• Homeownership rate, Q4 2023: 71.8% 

Sources: ATTOM, U.S. Census Bureau

Mortgage options in Iowa

Like elsewhere in the U.S., there are a variety of mortgage options in Iowa to suit a range of needs and financial circumstances. Here are some of the most common:

• Iowa conventional mortgages: To qualify for a conventional mortgage, you’ll need a minimum credit score of 620 and a debt-to-income (DTI) ratio no more than 45 percent. With a down payment of less than 20 percent, you’ll need to pay private mortgage insurance (PMI) premiums, as well.
• Iowa FHA loans: If your credit history disqualifies you from a conventional mortgage, you might be able to obtain a loan insured by the Federal Housing Administration (FHA). If you have a down payment of at least 3.5 percent, you could qualify for this type of loan with a credit score as low as 580.
• Iowa VA loans: If you’re a veteran or active-duty member of the military, you might qualify for a mortgage guaranteed by the Department of Veterans Affairs (VA). A VA loan doesn’t require a down payment or mortgage insurance, but you do need to pay a funding fee, which ranges from 1.25 percent to 2.15 percent.
• Iowa USDA loans: If you’re buying a rural property in Iowa, you might be eligible for a mortgage guaranteed by the U.S. Department of Agriculture (USDA). These loans don’t require a down payment, but you’ll need to purchase in a designated rural area and meet the area’s income limits.

First-time homebuyer programs in Iowa

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. 

FirstHome Program

Called the FirstHome program, qualified homebuyers can obtain a mortgage with a below-market interest rate 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 $95,200 – $115,400). The maximum purchase price limit is $481,000, unless you’re buying in a targeted area, where the purchase price limit is $588,000.

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

Homes for Iowans

For both repeat buyers and first-time home buyers with higher incomes than what First Home allows, Homes for Iowans offers a lower interest rate mortgage with fewer fees. There’s a household income limit of $161,560 and a home purchase limit of $588,000. You may also be eligible for closing cost and down payment assistance.

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.

How to find the best mortgage rate in Iowa for you

• Step 1: Strengthen your credit score - Long before you start looking for a mortgage lender or applying for a loan, give your finances a checkup, and improve your credit score if needed.
• Step 2: Determine your budget - To find the right mortgage, you’ll need a good handle on how much house you can afford.
• Step 3: Know your mortgage options - There are a few different types of mortgages.
• Step 4: Compare rates and terms from several lenders - Rate-shop with at least three different banks or mortgage companies.
• Step 5: Get preapproved for a mortgage - Getting a mortgage preapproval is the only way to get accurate loan pricing for your specific situation.

Additional Iowa mortgage resources

• Iowa loan limits by county: Learn the conforming and FHA loan limits for your city or county.
• Iowa mortgage lenders: Explore home loan lenders in your state.
• Iowa homeowners insurance: Compare policies from a variety of providers.

Meet our Bankrate experts

Written by: Andrew Dehan, Writer, Home Lending

I’ve covered mortgages, real estate and personal finance since 2020. At Bankrate, I’m focused on all of the factors that affect mortgage rates and home equity. I enjoy distilling data and expert advice into takeaways borrowers can use. Prior to Bankrate, I wrote and edited for Rocket Mortgage/Quicken Loans. My work has been published by Business Insider, Forbes Advisor, SmartAsset, Crain’s Business and more.

Read more from Andrew Dehan

Edited by: Troy Segal, Senior Editor, Home Lending

I’ve been writing and editing stories in the personal finance sphere for two decades, for publications like Business Week and Investopedia, covering everything from entrepreneurs to taxes. Since coming to Bankrate, I’ve concentrated on real estate, mortgages, renovations and other financial aspects of homeownership — helping people understand how a home isn’t just a place to live, but an investment that’s important to building and bequeathing wealth. 

Read more from Troy Segal