Now that the housing market is finally calming down after the pandemic, buyers are facing a new challenge: Soaring mortgage rates.
In North Dakota, the average 30-year fixed mortgage rate is 5.62% — up from 2021's historic lows. This raises the average monthly mortgage payment to $1,308 (assuming a 20% down payment at the median home value).
But buying a home in North Dakota 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 North Dakota 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 North Dakota want you to contribute 20% of the purchase price as a down payment. That would be $56,826 for a $284,130 home — the typical home value in North Dakota.
However, you have options to lower your down payment amount.
Government backed loans, like VA and FHA loans, allow you to contribute 0% and 3.5% of your home's purchase price respectively. Even conventional loans allow for down payments as low as 3-5% (though the minimum varies by lender).
Minimum down payment (%)
Down payment ($)
Based on typical home values from Zillow (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 5.62% 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
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: 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 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 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
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 North Dakota 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 North Dakota home.
Step 4: Choose the right location
Currently, the typical home value in North Dakota is $284,130, 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 Fargo:
Home value appreciation in Fargo
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.
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, December gives you the fewest choices in North Dakota. Historically, there are 61.6% fewer homes for sale than during North Dakota's peak season.
Housing inventory in North Dakota by season
New listings per month
Based on data from Realtor.com (October 2022)
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 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 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 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 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!
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 $284,100 home — the typical home value in North Dakota — that's between $8,523 and $14,205!
Frequently asked questions
North Dakota does not require you to hire a real estate attorney to buy a home. However, depending on your circumstances, you might consider hiring one anyways. If you do, treat the process similarly to hiring an agent. Interview multiple attorneys and proceed with the one that best meets your needs.
- 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.
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.