What to know about buying a house in Missouri
The good news for Missouri first-time home buyers is that home prices and home price inflation are lower in the state than nationwide. But saving for a down payment and closing costs can still feel like a challenge.
Luckily, the Missouri government offers cash assistance to qualified home buyers that can help bridge the gap between their savings and down payment. It also offers special mortgages and mortgage credit certificates that could save you money in the long run. So it’s worth exploring these programs before you jump in.
In this article (Skip to...)
- MO home buyer overview
- Home loan options
- MO home buyer programs
- First-time buyer grants
- Buying in Missouri’s cities
- MO mortgage rates
Missouri home buyer overview
The median home price in Missouri was $219,300 in August 2022. That was a 3.3% decrease year-over-year, according to Redfin.
For house hunters, the good news is that average home prices are significantly lower in Missouri than in most other states. This could make Missouri’s real estate market especially attractive to those who are buying their first home.
Missouri home buyer stats
|Average Home Listing Price in MO1||$219,300|
|Minimum Down Payment in MO (3%)||$6,600|
|20% Down Payment in MO||$43,900|
|Average Credit Score in MO2||711|
|Maximum MO Home Buyer Grant3||Up to 4% of the purchase price as a forgivable second mortgage with no monthly payments. Statewide from MHDC|
Down payment amounts are based on the state's most recently available average home sale price. “Minimum” down payment assumes 3% down on a conventional mortgage with a minimum credit score of 620.
If you're eligible for a VA loan (backed by the Department of Veterans Affairs) or a USDA loan (backed by the U.S. Department of Agriculture), you may not need any down payment at all.
First-time home buyer loans in Missouri
If you’re a first-time home buyer in Missouri with a 20% down payment, you can get a conventional loan with a low interest rate. And you never have to pay for private mortgage insurance (PMI).
Of course, few first-time buyers have saved enough for 20% down. But the good news is that you don’t need that much. Not by a long shot.
Borrowers can often get into a new home with as little as 3% or even 0% down using one of these low-down-payment mortgage programs:
- Conventional 97: From Freddie Mac or Fannie Mae. 3% down payment and 620 minimum FICO score. You can usually stop paying mortgage insurance after a few years once you reach 20% home equity
- FHA loan: Backed by the Federal Housing Administration. 3.5% down and a 580 minimum credit score. But you’re on the hook for mortgage insurance premiums (MIP) until you refinance to a different type of mortgage, move, or pay off your loan
- VA loan: Only for veterans and active-duty service members. Zero down payment is required. Minimum credit score varies by lender but often 620. No ongoing mortgage insurance after closing. These are arguably the best mortgages available, so apply if you’re eligible
- USDA loan: For those on low-to-moderate incomes buying in designated rural areas. Zero down payment required. Credit score requirements vary by lender but often 640. Low mortgage insurance rates
- Missouri Housing Development Commission loans: May include below-market rates, mortgage credit certificates, and down payment assistance. More information below
Note that government loan programs (including FHA, VA, and USDA home loans) require you to buy a primary residence. That means you can’t use these loans for a vacation home or investment property.
In addition, most programs let you use gifted money or down payment assistance (DPA) to cover your down payment and closing costs. Depending on the mortgage loan you choose, you could potentially get into your new house with minimal cash out of pocket.
If you’re unsure which program to choose for your first mortgage, your lender can help you find the right match based on your finances and home buying goals.
Missouri first-time home buyer programs
First-time home buyers looking for assistance in Missouri can turn to the Missouri Housing Development Commission (MHDC). It runs several home buyer assistance programs that help renters achieve their dreams of homeownership.
MHDC First Place Loan Program
The First Place Loan Program lets you choose between two options. You could get a:
- Down payment assistance forgivable loan (details below); or
- Discount on your mortgage interest rate
Whichever you choose, you could be in line for a mortgage credit certificate (MCC) as well. Depending on your circumstances, one of these tax credits could deliver worthwhile savings on your annual income tax bill.
MHDC Next Step Loan Program
The Next Step Program offers borrowers a 30-year, fixed-rate loan. FHA, VA, USDA, and conventional loans are all allowed. Next Step also provides down payment and closing cost assistance of up to 4% of the loan amount. This is a no-interest second mortgage that is forgiven after 10 years unless you refinance or sell the property.
You can review the Next Step Program’s eligibility guidelines using its online brochure.
MHDC mortgage requirements
Inevitably, Missouri’s home buyer assistance programs come with plenty of rules. Among other things, you must:
- Buy a home within local home price caps
- Have an income within local household income limits
- Be a Missouri first-time home buyer*
- Meet minimum credit score requirements
- Use one of MHDC’s certified lenders
*Generally, you must be a first-time home buyer to use the MHDC loan program. However, there are two exceptions. If you're buying in a targeted area or are a veteran or service member, you might be able to use the MDHC program even as a repeat home buyer.
Some of those rules are pretty vague. So you should use the MHDC’s online prequalification process or contact one of its certified lenders to see whether you qualify.
Missouri first-time home buyer grants
To get down payment assistance from the MHDC, you’ll need to use one of its mortgage loans. That means you’ll have to be within household income limits and purchase price limits, among other criteria.
The MHDC doesn’t offer outright grants. But it does provide the next best thing, which is a forgivable loan. MHDC calls these Cash Assistance Loans (CALs).
MHDC Cash Assistance Loans
Via the CAL program, you can receive up to 4% of the home’s purchase price to help with your down payment and/or closing costs. You’ll have to repay some or all that money if you move, sell, or refinance the home in less than 10 years. But, at the end of year 5, MHDC begins to forgive the loan at the rate of one-sixtieth of its value each month. So, by the end of year 10, you’ll owe nothing.
This can be an attractive deal for new home buyers. Even if you sell before 10 years are up, home price inflation might allow you to repay the loan and still make a handsome profit. Although home prices fall occasionally, they do so relatively rarely and usually briefly.
Buying a home in Missouri’s major cities
Housing is generally more expensive in Missouri’s three biggest cities than elsewhere in the state. If you’re looking at pricier real estate, check whether your city or county has a down payment assistance program and compare it to the statewide one run by the MHDC.
Kansas City first-time home buyers
The median list price of homes in Kansas City was $240,000 in September 2022. That was an increase of 6.7% year-over-year according to Realtor.com.
If you want to buy a home at that median price, your down payment options might fall between:
- $7,200 for 3% down payment
- $48,000 for 20% down payment
Kansas City doesn’t appear to have an active down payment assistance program. We found references to DPA in policy documents but nothing more.
The city includes portions of four counties: Jackson, Clay, Cass, and Platte. And you could see if those have their own programs. Just ask the county government in which you are buying. Or you could call the city government at (816) 513-3600 to see if there’s a program we missed. Otherwise, the statewide MHDC program is a good alternative.
St. Louis first-time home buyers
The median home price in St. Louis was $207,600 in August 2022. That was an increase of 1.3% year-over-year, according to Redfin.
If you want to buy a home at that price, your down payment options might fall between:
- $6,200 for 3% down payment
- $41,500 for 20% down payment
Again, we could not find a down payment assistance program run by the City of St. Louis. But you could call City Hall at (314) 622-4800 to check whether we missed something. If that doesn’t work, fall back on the MHDC’s program. The city’s website says, “Since 1876, St. Louis has been an independent city, meaning it is not part of any county.”
Springfield first-time home buyers
The median list price of homes in Springfield was $225,000 in September 2022. That was an increase of 18.5% year-over-year according to Realtor.com.
If you want to buy a home at that average price, your down payment options might fall between:
- $6,800 for 3% down payment
- $45,000 for 20% down payment
The City of Springfield does have a down payment assistance program. You can download the brochure for annual income caps, which seem quite low: $39,850 for a single buyer or up to $66,050 for a six-person household in 2022. (Income limits may have changed by the time you read this.)
If you’re eligible, you can borrow up to $9,000 as a silent second mortgage. That means a 0% interest rate and no monthly payments. But you have to repay the entire sum you borrowed when the home stops being your primary residence, no matter how long you live there.
By all means, check this out. But the MHDC’s statewide down payment assistance may suit you better.
Where to find home buying help in Missouri
In addition to our selection, the U.S. Department of Housing and Urban Development (HUD) provides lists of statewide, regional, and local resources:
Statewide and regional Missouri first-time home buyer resources:
- Community Action Agency of St. Louis County: Available only in St. Louis County
- Community contacts: Find out if your community offers homeownership assistance
- Delta Area Economic Opportunity Corporation: Down payment assistance for lower-income families in Dunklin, Mississippi, New Madrid, Pemiscot, Scott and Stoddard counties
- Homeowner education programs: Learn how to purchase and maintain a home of your own
- Missouri Affiliates of Habitat for Humanity: Through volunteer labor, builds and rehabilitates houses for families in need
- Ozark Action, Inc.: Douglas, Howell, Oregon, Ozark, Texas and Wright counties
- Regional Planning Commissions: Some of Missouri’s Regional Planning Commissions administer State-funded homebuyer or home repair assistance programs
- Statewide Home Buyer Programs: First Place home loans, HERO Loans and MO-AID disaster relief loans
- U.S. Department of Agriculture Rural Housing: Homebuyer programs in rural communities
Missouri first-time home buyer programs by city/town:
- City of Joplin: Programs include new construction, acquisition with rehab, homeowner-occupied rehab and down payment assistance programs
- Kansas City: Offers several homebuyer assistance and home improvement programs
- Lee’s Summit: Up to $3,000 in homeownership assistance for first-time homebuyers who qualify
- St. Charles: Home Ownership Assistance Program
- St. Joseph
- St. Louis (City)
- St. Louis County
- St. Peters
What are today’s mortgage rates in Missouri?
Before you begin, you can experiment with a home affordability calculator to see how your interest rate and down payment will affect your monthly mortgage payment. When you’re ready to start the home-buying process, make sure you get personalized rate quotes from at least three mortgage lenders.
Don’t just look at advertised rates online; actually apply for preapproval and compare the interest rates and fees you’re offered. Because that’s the only way to know you’re getting the best deal possible on your new home loan.
1Source: Redfin.com Missouri Housing Market Report
2Source: Experian.com study of 2021 and 2020 data
3Based on a review of the state's available DPA grants at the time this was written