What are the current Mortgage Programs and Loan Options in Iowa?
If you’re thinking about buying a home in Iowa, you’re likely wondering:
What are the best mortgage programs available? Do I qualify? And how do I get help with a down payment?
Whether you’re a first-time homebuyer or just looking to understand your options, here’s a complete guide to Iowa’s most common home loan programs—including FHA, VA, USDA, and IFA’s FirstHome Program—plus what you need to know to get started.
FHA Loans: Flexible Loans for First-Time Buyers
What is an FHA loan?
An FHA loan is a government-backed mortgage insured by the Federal Housing Administration. It’s designed to make homeownership more accessible—especially for first-time buyers or those with lower credit scores.
Who is eligible?
Minimum credit score: 580 (with 3.5% down)
Down payment: 3.5% minimum
Debt-to-income ratio: Typically under 43%
Property must be the primary residence
Why consider it?
Lower credit and down payment requirements
Competitive interest rates
Can pair with Iowa’s down payment assistance programs
VA Loans: Zero Down for Veterans & Active Military
What is a VA loan?
VA loans are backed by the U.S. Department of Veterans Affairs and offer zero down payment and no private mortgage insurance (PMI) for eligible service members, veterans, and some surviving spouses.
Who is eligible?
Must meet service requirements (active duty, veteran, reserves, or National Guard)
Credit score: Typically 620+
Must plan to live in the home
Why consider it?
No down payment required
No PMI
Competitive rates and flexible credit requirements
USDA Loans: Rural Living, Zero Down
What is a USDA loan?
USDA loans are backed by the U.S. Department of Agriculture and are available to buyers purchasing in eligible rural areas.
Who is eligible?
Must buy in a USDA-eligible rural area (many parts of Iowa qualify)
Income must fall within USDA limits (based on county and household size)
Credit score: Typically 640+
Why consider it?
Zero down payment
Low interest rates
Available to moderate-income households in rural zones
IFA FirstHome Program: Iowa’s Flagship Mortgage Assistance
What is the FirstHome Program?
Offered by the Iowa Finance Authority (IFA), the FirstHome Program is a state-sponsored mortgage option for eligible first-time homebuyers. It includes affordable fixed-rate loans and optional down payment and closing cost assistance.
Who is eligible?
Must be a first-time homebuyer (or not owned a home in the last 3 years)
Minimum credit score: 640
Income limits: Vary by county (generally $100k–$150k depending on household size)
Purchase price limits apply (often $350k–$450k+ depending on location)
Key features:
Can be used with FHA, VA, USDA, or conventional loans
Optional down payment assistance:
Grant: $2,500 (doesn’t need to be repaid)
2nd Loan: Up to 5% of purchase price, 0% interest, repaid when you sell/refinance
Must complete a homebuyer education course
Common Questions About Loan Eligibility in Iowa
1.
Do I have to be a first-time homebuyer for these programs?
IFA’s FirstHome Program: Yes—unless you’re buying in a targeted area or are a qualified veteran.
FHA, VA, USDA: No—you can use these as a repeat buyer too.
2.
Can I combine down payment assistance with a government loan?
Yes! The IFA’s FirstHome and Homes for Iowans programs can be layered on top of FHA, VA, or USDA loans to cover down payment or closing costs.
3.
What credit score do I need to buy a home in Iowa?
FHA: 580+
VA: 620+ (lender dependent)
USDA: 640+
IFA Programs: 640 minimum
4.
Are there income limits for these programs?
Yes, for USDA and IFA programs—limits vary by county and household size.
FHA/VA loans don’t have income caps, but you must prove sufficient income to qualify.
Final Thoughts: Which Loan Is Right for You?
Choosing the right mortgage program in Iowa depends on your:
Credit score
Income
Military service
Location (urban vs. rural)
Whether you’re a first-time buyer
But no matter your background, Iowa has a range of programs to help you afford your first (or next) home—often with little or no down payment required.
Want Help Getting Started?
Your next steps:
Get pre-qualified by a lender that participates in IFA programs
Look up USDA eligibility for your dream neighborhood
Take a free homebuyer education course (required for IFA assistance)
Need help finding an IFA-approved lender or calculating what you qualify for? Reach out, we’re happy to guide you through the process.