Buying a house in North Dakota is an exciting milestone, but the process can take some time. Several factors, like your financial situation, market conditions, and the local economy can affect both how long it takes you to find a home and how much it costs you.
For example, homes in Wahpeton are hitting the market at $175,000 and selling within 53 days — 26 days faster than the state average! — so you'll need to move quickly if you want to beat out the competition.
However, homes typically stay on the market longer in Dickinson, so you'll be able to take your time and potentially find a better deal.
The more you know about the steps to buying a house and North Dakota's current real estate trends, the more prepared you'll be to navigate this complicated process as quickly and smoothly as possible.
No matter where you are in your home buying journey, Clever's concierge team can connect you with local real estate pros who will help you purchase your North Dakota dream home!
The best part? When you buy with a Clever real estate agent, you could earn a cash-back refund worth up to 0.5% of the home price. On a qualifying $300,000 purchase, you'd get $1,500. That's real money back in your pocket!
Step 1: Save for a down payment
Your down payment is the initial portion of your home's purchase price that you pay at closing. Your mortgage lender will pay the remaining balance.
Typically, mortgage lenders in North Dakota want you to contribute 20% of the purchase price as a down payment. That would be $53,180 for a $265,901 home — the typical home value in North Dakota.
However, you have options to lower your down payment amount.
Government backed loans, like VA and FHA loans, allow you to contribute 0% and 3.5% of your home's purchase price respectively. Even conventional loans allow for down payments as low as 3-5% (though the minimum varies by lender).
Minimum Down Payment (%)
Down Payment ($)
Based on typical home values from Zillow (February 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 a $265,901 home, the typical home value in North Dakota (Zillow, February 2022) with a 3.02% 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.
North Dakota down payment assistance programs
Are you having trouble saving up for a down payment on a North Dakota home?
North Dakota residents can choose from several down payment assistance (DPA) programs to help them afford a house. Through these programs, eligible participants can receive a loan or second mortgage to cover closing costs or a down payment.
Check out the following programs to find out if you qualify for financial assistance:
NDHFA Start Program
The North Dakota Housing Finance Agency (NDHFA) provides low- to moderate-income homebuyers a second mortgage of up to 3% of the first mortgage loan. These funds can be used to pay for closing costs or a down payment.
This program can only be used to purchase single-family homes or two-unit properties, and buyers must invest at least $500 to participate in the program. Purchase price and household income limits apply and vary based on the county you live in.
NDHFA DCA Program
The NDHFA DCA Program is designed to help low-income buyers pay for closing costs or a down payment. Financial aid comes as a second mortgage of up to 3% of the first mortgage loan.
Participants must invest at least $500 to qualify for the program, meet household income limits, and complete a homebuyer education program.
U.S. Department of Housing and Urban Development
You can find additional resources on North Dakota's HUD page here.
Step 2: Get pre-approved for a mortgage
A mortgage pre-approval 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 North Dakota will require pre-approval before showing you their home.
You don't have to decide on one lender right now. In fact, you should compare interest rates and pre-approval amounts from several lenders to make sure you're getting the absolute best terms when you buy your North Dakota home.
Get Pre-approved Today!
Get matched with a lender who can tell you how much house you can afford. To get started, where do you plan on buying?
To get a pre-approved for a mortgage, you'll fill out a mortgage application and provide details about your financial situation. They'll look at the following information to determine your mortgage pre-approval amount:
Lenders need to know that you earn enough to make your mortgage payments each month. Most lenders want your monthly housing costs to be less than 28% of your monthly income.
Lenders also consider your other debts, including credit cards, student loans, auto loans, and personal loans. They use this information to calculate your debt to income ratio (DTI) — or your total debt (including future mortgage) divided by your total income.
While some lenders will approve mortgages for buyers with DTI as high as 43%, it's best to keep your DTI under 36%.
Because of this, you might consider paying off some of your other debts before applying for a mortgage in North Dakota.
Mortgage lenders in North Dakota want to see that you have enough cash in the bank to cover your down payment and closing costs without completely draining your cash reserves.
While this requirement varies by lender, most want you to keep at least enough to cover two mortgage payments including insurance and taxes.
Step 3: Choose the right location
A house's neighborhood can be just as important as its layout and features. In general, you should consider the following factors when deciding which neighborhood is best for you:
What's your home buying budget?
Once you know your budget (a pre-approval letter will tell you the most you can expect to borrow), you can narrow your search to neighborhoods where homes are selling within your price range.
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. You want to choose a neighborhood that's in your budget, but could also lead to a big return when you decide to sell.
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 Fargo:
Home value appreciation in Fargo
Once you have a list of neighborhoods with homes in your budget, you should evaluate how well each one meets your personal needs and preferences. To finalize your list of target areas, consider factors like:
- School districts
- Your daily commute
- Crime rates
- Restaurants and amenities
- Transportation options
Step 4: Find a great real estate agent in North Dakota
Your real estate agent will be your main ally during the home buying process. Besides finding and showing you properties, your agent should be an expert on buying a home in North Dakota.
They'll 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 North Dakota.
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
Ask each of them questions about your target neighborhoods, how they prefer to communicate, and their strategy for helping you find and close on your new home. You should feel comfortable with the agent's knowledge, experience, and process before committing to an agent.
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Step 5: Start house hunting in North Dakota
Searching for homes in North Dakota 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.
Prioritize your needs vs. wants when buying a home in North Dakota
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 North Dakota can have a big impact on your number of options. For example, in North Dakota, May 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, November gives you the fewest choices in North Dakota. Historically, there are 48.2%) fewer homes for sale than during North Dakota's peak season.
Housing inventory in North Dakota by season
New Listings per Month
Based on January 2022 data from Realtor.com
Step 6: Make an offer
Once you find a North Dakota 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 North Dakota, homes stay on the market for 75 days before going under contract. However, every market goes through seasonal changes. During busier months, homes get snatched up more quickly than others.
Historically, North Dakota homes sell fastest in June, where the average property is only on the market for 57. 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 January, you have a bit more time to search. Homes typically stay on the market 26 days longer than North Dakota's annual average.
Average time homes spend on market in North Dakota
Based on January 2022 data from Realtor.com
What should your offer include?
Your real estate agent can help you decide which of these common options you should include in your offer:
- Seller concessions: You'll have to pay for most of your closing costs out of pocket when you buy a home, but you may be able to ask the seller to cover some of those costs for you. This option may allow you to offer a higher purchase price and essentially include your closing costs in your mortgage.
- Repair credits: If the home is in need of repair, you could ask for credits instead of having the seller make and pay for the repairs. The seller avoids the hassle of waiting for contractors to complete the job, and you get to oversee the repairs in the future to make sure they meet your expectations.
- Inspection contingencies: Most purchase agreements have inspection contingencies that allow you to change your offer (or back out all together) if the inspection turns up major problems. If you have a high degree of certainty about the house's condition (like if the seller can show you a recent inspection report), you can forgo this contingency to give the seller a higher sense of confidence.
- Letter to the seller: Many sellers have a personal attachment to the home. They've lived there for years and want to know the next owner will take care of the property. Writing a letter to the seller can show them how you picture your life in the house and appeal to their sentimental side.
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 North Dakota
Having your North Dakota 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.
North Dakota-specific inspections
As a “buyer beware” state, homebuyers in North Dakota have to be extra careful when inspecting a property. In addition to a general home inspection, buyers are strongly advised to have the following inspections and tests done before closing:
Radon testing: Certain areas in North Dakota are prone to elevated levels of radon, which can have negative effects on your health. If the seller hasn't conducted a radon test in the past year, consider doing a test as soon as possible. You can order an inexpensive radon test kit from the North Dakota Department of Environmental Quality website.
Pest inspection: Termites and other pests can spread throughout a property without detection, so it's a good idea to have a professional inspect a house before you move in. Catching and treating an infestation early will help you avoid health hazards and more expensive repairs in the future.
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!
Once you finish your inspections and your lender approves your financing, you'll be ready for closing! Closing is the process of finalizing your mortgage and transferring ownership of the property.
The closing process in North Dakota requires you to meet at the title company to finalize your paperwork and settle your closing costs.
Prepare to spend about an hour reviewing and signing important legal documents on closing day. These papers are essential for transferring the title to your name, so it's vital to ensure all the information is correct.
Pay special attention to these key documents:
- Your final loan application
- The deed
- The mortgage promissory note
- The disclosure statements
After the paperwork is finished, you'll have to pay your closing costs. The title company will collect the total amount you owe to all your service providers and distribute the funds to them on your behalf.
As a homebuyer, your closing costs will usually be divided into four different categories:
- Lender fees: Fees paid to your mortgage lender for originating and underwriting your loan. Other costs related to your loan may be added here as well, such as appraisal fees and survey fees.
- Title and escrow charges: Charges for the title company's services. These fees pay for the title search, title insurance, and the facilitation of the closing process.
- Prepaid costs: Ongoing costs of homeownership. New homeowners are often required by their lenders to pay for certain expenses up front, such as property taxes and homeowners insurance.
- Other closing costs: Miscellaneous expenses that can vary based on each unique buyer. Some common closing costs can include natural disaster certification fees or real estate attorney fees.
Buyers in North Dakota typically pay 3-5% of the purchase price in closing costs. For a $265,900 home — the typical home value in North Dakota — that's between $7,977 and $13,295!
Frequently asked questions
- Save for down payment
- Get pre-approved for a mortgage
- Choose your preferred North Dakota neighborhoods
- Partner with the right real estate agent in North Dakota
- Go house hunting
- Make a strong offer
- Inspections and appraisals
- Do a final walkthrough and close
Yes, the North Dakota Housing Finance Agency offers first-time buyers an affordable loan and down payment assistance through its FirstHome program.
To qualify, your household’s income and home purchase price must be within the limits set for your county. You must be using the newly-purchased home as a primary residence and contribute at least $500 towards the down payment.