Now that the housing market is finally calming down after the pandemic, buyers are facing a new challenge: Soaring mortgage rates.
In Missouri, the average 30-year fixed mortgage rate is 5.59% — up from 2021's historic lows. This raises the average monthly mortgage payment to $1,078 (assuming a 20% down payment at the median home value).
But buying a home in Missouri is still possible, even for first-time home buyers. Many markets are seeing frequent price drops and fewer offers, giving motivated buyers the upper hand in negotiating for the best price.
In this guide, you’ll learn how to buy a house in Missouri with confidence no matter what the market brings. Learn why you can trust our advice.
Whether you're actively house hunting or just starting to browse homes on Zillow, it's never too early to find a great local realtor to guide you on your search. An experienced agent can help you navigate a tricky housing market, explore your financial options, and negotiate the best deal possible.
Best of all, hiring a real estate agent comes at no extra cost to you — since the seller typically pays both their listing agent and your buyer's agent.
Ready to find a great local realtor, but not sure where to start? The best (and easiest!) option is to try a free agent matching service like Clever Real Estate. Answer a few simple questions about your home buying goals, and Clever will match you with hand-picked agents from Keller Williams, RE/MAX, and other top brokerages in your area. Find a top local agent and make your home buying dreams a reality today!
Step 1: Save for a down payment
Your down payment is the first part of your home's purchase price that you pay at closing. Your mortgage lender will pay the remaining balance.
Typically, mortgage lenders in Missouri want you to contribute 20% of the purchase price as a down payment. That would be $46,985 for a $234,924 home — the typical home value in Missouri.
However, you have options to lower your down payment amount.
Government backed loans, like VA and FHA loans, allow you to contribute 0% and 3.5% of your home's purchase price respectively. Even conventional loans allow for down payments as low as 3-5% (though the minimum varies by lender).
Minimum down payment (%)
Down payment ($)
Based on typical home values from Zillow (August 2022)
But making a down payment of less than 20% comes with some risks.
First, because you're borrowing more money, you'll have a higher monthly payment and pay more in interest over the life of your loan.
Based on home values from Zillow (August 2022) and a 5.59% interest rate for a 30-year loan.
Second, you may have to purchase mortgage insurance.
Conventional loans require private mortgage insurance (PMI) until your loan balance reaches 80% of the purchase price. FHA loans, on the other hand, require a mortgage insurance premium (MIP) for the life of your loans.
Mortgage insurance costs around 1% of your mortgage balance annually. However, rates vary based on your down payment and credit score. Typically, your mortgage insurance payment is added to your mortgage payment each month.
VA loans don't charge mortgage insurance. Instead, you'll pay a VA loan funding fee at closing, which can range from 1.4% to 3.6% of the purchase price.
Missouri down payment assistance programs
Missouri offers numerous down payment assistance (DPA) programs that can help first-time and low-income buyers afford a house. Eligible participants may be able to receive a government grant or a second mortgage with deferred or forgiven payments.
Check out the following DPA resources to see which ones you qualify for:
MHDC First Place Loan
The Missouri Housing Development Commission (MHDC) offers cash assistance for first-time homebuyers participating in the First Place Loan program.
Financial aid comes as a second mortgage of up to 4% of the first mortgage. The loan is forgiven after 10 years if you don’t move, refinance, or pay off your first mortgage during that time.
Eligible buyers must meet the income and home purchase limits for their county.
MHDC Next Step Program
MHDC's Next Step Program offers cash assistance for both first-time and repeat homebuyers. The financial aid is available as a second mortgage loan of up to 4% of the first mortgage. After 10 years, the loan will be forgiven if you don't resell, refinance, or pay off your first mortgage.
Purchase and income limits apply, but they vary by county.
U.S. Department of Housing and Urban Development
Missouri's HUD page provides a list of additional DPA programs here.
Step 2: Find a great real estate agent in Missouri
Your real estate agent will be your main ally during the home buying process. Besides finding and showing you properties, your agent will help you make offers, negotiate contracts, and navigate the closing process. Plus, they can recommend other service providers like title companies and inspectors to help you buy your home in Missouri.
Don't rush into choosing an agent. Instead, take the time to research and interview multiple real estate agents who have experience in the neighborhoods you're interested in. You should pay attention to a realtor's:
- Years of experience
- Number of transactions in the last year (the more the better!)
- Experience in your price range
- Overall review score
- Individual reviews and complaints
Step 3: Get preapproved for a mortgage
A mortgage preapproval letter is an offer to lend you up to a certain amount of money to purchase a home. It shows sellers that you are a serious buyer who is financially qualified to make an offer on a home.
Most sellers in Missouri will require preapproval before showing you their home.
You don't have to decide on one lender right now. In fact, you should compare interest rates and preapproval amounts from several lenders to make sure you're getting the absolute best terms when you buy your Missouri home.
Step 4: Choose the right location
Currently, the typical home value in Missouri is $234,924, but don't worry if that doesn't perfectly match your budget. Home prices vary dramatically from city to city and even from neighborhood to neighborhood!
Also, look at past home value trends. This will give you an idea of how much your home's value could go up over the next few years.
To give you an idea of how appreciation could impact what your house is worth in the future, consider these examples from three neighborhoods in Saint Louis:
Home value appreciation in Saint Louis
Central West End
Tower Grove South
Step 5: Start house hunting in Missouri
Searching for homes in Missouri is the fun part of the home buying process! You'll get to look at a variety of homes and discover what you really want in a home.
Make a list of everything you want in a home and prioritize them. At the top of the list should be the items that are most important to you. This will help you separate your "must-haves" from your "nice-to-haves."
Your agent can help you understand if your wants are realistic for your budget and favorite neighborhoods or if you need to rethink what you're looking for.
Look at current housing inventory
The timing of your house hunt in Missouri can have a big impact on your number of options. For example, in Missouri, June has historically seen the most homes for sale. Searching in this season could give you more options and a greater likelihood of finding your dream home.
On the other hand, December gives you the fewest choices in Missouri. Historically, there are 48.3% fewer homes for sale than during Missouri's peak season.
Housing inventory in Missouri by season
New listings per month
Based on data from Realtor.com (October 2022)
Step 6: Make an offer
Once you find a Missouri house you love, it's time to make an offer. Your real estate agent will help you write a compelling offer that gives you the best shot of convincing the homeowner to sell to you.
Currently, in Missouri, homes stay on the market for 70 days before going under contract. However, every market goes through seasonal changes. During busier months, homes get snatched up more quickly than others.
Historically, Missouri homes sell fastest in August, where the average property is only on the market for 59 days. If your home search falls around this time, you should be prepared to move quickly and potentially make offers on several homes before yours is accepted.
On the other hand, if you buy in February, you have a bit more time to search. Homes typically stay on the market 22 days longer than Missouri's annual average.
Average time homes spend on market in Missouri
Based on data from Realtor.com (October 2022)
» LEARN MORE: What should an offer include?
Step 7: Inspections and appraisals
Inspections and appraisals are an opportunity for you to better evaluate the home's condition and value before officially purchasing it. You may have an opportunity after this step to renegotiate the terms of your contract with the seller if something unexpected pops up.
Home inspections in Missouri
Having your Missouri home inspected by a licensed inspector gives you peace of mind about the condition of the property before you commit thousands of dollars to purchase it.
Your inspector should check out the following parts of the property:
- Electrical system
- HVAC system
If the home has a septic system, you should also pay for a septic inspection to make sure it doesn't have any problems that wouldn't be covered in a typical home inspection.
Some Missouri sellers may include a "caveat emptor" clause in their purchasing agreement, which means that they don't have to disclose all known issues with a property to interested buyers. As a "buyer beware" state, it's important to take extra precautions to ensure that a Missouri property doesn't have hidden damages or health hazards.
In addition to getting a general home inspection, it's strongly recommended to complete the following tests before closing on a home:
- Radon testing: Many areas in Missouri have elevated levels of radon, so it's a good idea to conduct a test annually. You can get a free radon test kit from Missouri’s Department of Health here.
- Termite inspection: Some lenders require pest inspections, but it's a good idea to get one done regardless. Catching a potential infestation before you move in will help you avoid expensive repairs and treatments later.
Appraisals determine the value of the property. If you're using a mortgage to buy your new home, your lender will order an appraisal to make sure the home is worth the money that it's loaning you.
Step 8: Close on your new home!
On the closing date, you'll meet at the title company to complete the title transfer of your Missouri home. Expect to spend a few hours reviewing legal documentation and settling your closing costs.
There will be several important documents for you to read and sign in order to finalize the purchase. Take your time and ask your escrow agent for clarification if you don't understand something.
A few essential documents to look out for will include:
- Your final loan application
- The deed
- The mortgage promissory note
- The disclosure statements
After the paperwork is finished, you’ll need to pay your closing costs. The title company will collect the total amount you owe to all your service providers, and then they'll distribute the funds to each party on your behalf.
As a homebuyer, you should be able to divide your closing costs into four categories:
- Lender fees: Fees paid to your mortgage lender for originating and underwriting your loan. These fees can also cover other costs related to your loan, such as appraisal fees and survey fees.
- Title and escrow charges: Fees paid to your title company for research and documentation. These charges can also cover the costs of the title search, title insurance, and facilitating the closing.
- Prepaid costs: Ongoing costs of homeownership, such as property taxes and homeowners insurance. Lenders sometimes require new homeowners to pay for these predictable expenses up front.
- Other closing costs: Miscellaneous expenses that vary from buyer to buyer. These expenses may cover natural disaster certification fees or real estate attorney fees.
Buyers in Missouri typically pay 3–5% of the purchase price in closing costs. For a $234,900 home — the typical home value in Missouri — that's between $7,047 and $11,745!
Frequently asked questions
In Missouri it's required for a real estate attorney to be part of every home sale. While your agent can make recommendations, remember you get to make the final decision. Interview lawyers before hiring them to make sure they have the experience you need.
- Save for down payment
- Get pre-approved for a mortgage
- Choose your preferred Missouri neighborhoods
- Partner with the right real estate agent in Missouri
- Go house hunting
- Make a strong offer
- Inspections and appraisals
- Do a final walkthrough and close
Yes! The Missouri Housing Development Commission offers its First Place Loan Program to first-time buyers and veterans. Eligible buyers can receive a competitive, fixed-rate loan with an option for down payment assistance. If you choose not to get down payment assistance, you'll receive a lower interest rate on your loan.
To qualify, you must not exceed the household income limit set for your county. Purchase price limits also apply, but they vary according to what type of property you're buying.
Federal Reserve. "Housing Market Tightness During COVID-19: Increased Demand or Reduced Supply?." Accessed October 11, 2022. Updated July 08, 2021.
Consumer Protection Financial Bureau. "The Fed is raising interest rates. What does that mean for borrowers and savers?." Accessed October 11, 2022. Updated March 17, 2022.