Even with the highest mortgage rates in decades and record high home prices, prospective first-time homebuyers in Oklahoma are at an advantage compared to many buyers in other states.
Though prices have increased 17.5% over the past year, as of May 2022, the average home price in Oklahoma was less than $179,000, among the lowest in the entire country. Plus, the state offers a number of first-time home buyer programs and grants designed to spur homeownership statewide.
Buying a home in Oklahoma
Though Oklahoma is currently ranked as the fourth-cheapest state to buy a home in, it is by no means easy. It takes lots of advance preparation and saving as you build a down payment and prepare to pay for your closing costs.
Here are some estimated costs as you consider purchasing your first home in OK:
Average home price | $179,000 |
3.5% down payment (FHA loan min) | $6,265 |
10% down payment | $17,900 |
20% down payment | $35,800 |
There are a few different types of homeownership programs available to prospective buyers in Oklahoma, most of which are offered by The Oklahoma Housing Finance Agency (OHFA). Among these programs are:
Loans
Home Buyer Programs
Grants
Let's take these categories one by one.
Related: A Guide for First-Time Home Buyers
Oklahoma first-time home buyer loans
Depending on your financial situation, you may qualify for a conventional mortgage outright, especially if you have close to 20% of a home's purchase price saved up to use as your down payment. But you definitely do not need to have this much cash on hand to get a home loan.
Remember to consider the below as potential mortgage loans to pursue.
More: Learn about closing costs in Oklahoma
1. FHA loans in Oklahoma
The U.S. Federal Housing Administration (FHA) offers federally backed loans for those that have never purchased a home before. They typically require you to put at least 3.5% down and have a credit score of 580, meaning those that have declared bankruptcy in the not too distant past may even qualify. If your credit score is below 580, you can still be approved, though it will require a heftier down payment.
You'll also need to demonstrate that you:
Have a debt-to-income ratio under 43%
Have steady income and employment
FHA loans can be found through approved lenders in Oklahoma.
2. VA loans
VA home loans are only an option for Veterans, service members, and surviving spouses, and contain a number of added benefits, including:
No down payments required
No need for private mortgage insurance (PMI)
Competitive interest rates
Low closing costs
VA home loans are also lifetime benefits - you do not need to be buying your first-home to qualify.
3. USDA loans
The United States Department of Agriculture provides home mortgage loans to low and moderate income Americans buying homes in USDA designated rural areas.
Much of Oklahoma qualifies, and you may even qualify for a zero down payment mortgage if you meet the following requirements:
Be a U.S. citizen or non-citizen national
Occupy the purchased home as your primary residence
Meet income requirements in your area (cannot exceed 115% of the median household income in your area)
4. Conventional 97 loans
Conventional 97 loans are another option for Oklahoma buyers, and they require just a 3% down payment. An alternative to FHA loans, Conventional 97 loans are beneficial since they carry the possibility of cancellable PMI once you reach 20% equity.
They also carry less upfront fees than FHA loans, and carry the following terms and program guidelines:
Fixed-interest rates
Loan amounts below $647,200
The property must be used as a primary residence
On top of these four loan types, future buyers in Oklahoma should consider OHFA's two mortgage programs.
OHFA first-time buyer mortgages
The Oklahoma Housing Finance Agency offers two different unique mortgage programs for Oklahomans. They are the Gold Program and the Dream Program.
An option only for first-time home buyers, the Gold loan is an option for homes with a purchase price up to $349,525 (in a non-targeted area) or $427,198 (in a designated targeted area).
The Gold program is compatible with both government and conventional mortgages, and there are income requirements for each type of mortgage that are established on the county level.
The Dream Program is available to first-time and repeat buyers, and can also be used with both government and conventional mortgage types. Remember to check your eligibility for the Gold and Dream programs by using OHFA's eligibility tool.
Those working in certain careers, like teaching, law enforcement, EMS, and the state, also may qualify for reduced interest rate loans, as well as the following special programs:
OHFA 4Teacher - offers special interest rates for teachers in OK
OHFA Shield - reduced rate mortgages for police, firefighters, EMS, including volunteers
Oklahoma State Employee - low interest mortgages for those working for Oklahoma state agencies
Other qualification criteria for all of these programs are as follows:
Must use an OFHA approved lender
Have a credit score of at least 640
Occupy your new home within 60 days of close (as your primary residence)
OHFA mortgage credit certificates (MCC)
OHFA also offers a unique feature known as mortgage credit certificates, which are pretty similar to a program offered in North Carolina. An MCC will directly limit your federal tax liability by offering you a federal income tax credit equal to 50% of the mortgage interest paid on the first $40,000 in loan principal. The program has a maximum benefit of $2,000 per year.
Since the program allows a dollar-for-dollar reduction in your taxes, it is like putting another $167 in your pocket each month if you can take the full $2,000 credit.
We are oftentimes asked whether this program then excludes you from deducting the remainder of your mortgage interest, and it does not. There are income limitations and other requirements, and the program is currently being offered in the following counties:
Adair
Brian
Canadian
Cherokee
Cleveland
LeFlore
Pittsburg
Pottawatomie
Muskogee
First-time home buyer grants in Oklahoma
The Oklahoma Housing Finance Agency also offers first-time grants that can be worth up to 3.5% of the home's purchase price to aid in making your first down payment. To qualify for this grant, you'll need to use OHFA's Gold or Dream mortgage programs.
If you're looking for more information on the program, you can reach OHFA directly via the following channels:
Phone: (405) 848-1144
Mail: P.O. Box 26720, Oklahoma City, OK 73126-0720
In Person: 205 NW 63rd Street, Suite 140, Oklahoma City, OK 73116
REI Home100
Another organization, the nonprofit REI Oklahoma, also offers grants. When you use the REI Home100 mortgage program, which offers 30-year conventional and government mortgages, you may also gain eligibility to receive money towards your down payment.
The REI program offers up to 5% of your loan, and it is structured as either a gift or a second mortgage, with a forgivable seven year term.
Those that qualify for down payment assistance will have:
A credit score of at least 640
A debt-to-income ratio below 45%
Must meet income thresholds
You'll also need to work with an REI approved mortgage lender and take a first-time homebuyer course if using an HFA Advantage or HFA Preferred mortgage loan.
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