Oregon’s diverse and breathtaking geographical features make it a stunning place to buy a home. Homeowners in Oregon enjoy beautiful hikes, world-class skiing, and the added perk of no sales tax. It is certainly the place for an adventure.

If you’re new to the Oregon real estate market—or new to the home buying process in general—you may not know where to start.

No need to panic.

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Figure out your finances

The first step to securing your dream home in Oregon is to settle in and take a good look at your finances. Your credit score and debt-to-income (DTI) ratio will clarify what sort of house you can afford in Oregon and will be needed when you make an offer or close on a property.

There are several categories of payments and fees involved in purchasing a home. Breaking out your bank statements and other financial records will help you determine how to pay them.

Check your credit score

Go ahead and check your credit score right now. Your credit score is a crucial number, as it plays an important role in how lenders will evaluate you during the mortgage process.

To buy a home in Oregon, you will need a credit score of at least 620. While this is not an absolute rule, it is true if you want to qualify for most conventional loans.

If your credit score is under 620, there are a few paths you can take:

One option is to start building your credit. This is a great option for those still saving up for a down payment and without an immediate need to relocate.

The Federal Housing Administration (FHA) and the Veterans Association (VA) offer loans to those who have a credit score of 500 and above. To qualify for a VA loan, you must be an eligible active service member, veteran, or spouse.

Calculate your debt-to-income (DTI) ratio

The next important number to know is your debt-to-income ratio or DTI. Your DTI is listed in a percentage format and indicates what percentage of your income you spend on debt each month.

To determine your DTI, add up your monthly debt expenses and divide them by your pre-tax income. These should include:

Credit card payments

Rent or house payments

Car payments

Student loan payments

Child support or alimony

To procure a conventional mortgage, you should plan to spend no more than 36% of your income on debt each month, including future mortgage payments. If your DTI is above 50% it may be more difficult to buy a home in Oregon.

Determine your down payment

The amount of money you are able and willing to pay upfront—your down payment—is a huge factor in determining which house in Oregon fits your budget. With a conventional mortgage, you should be prepared to make a down payment of at least 20%.

If you cannot afford a down payment of 20%, there are a few options:

The Federal Housing Administration (FHA) offers loans to lower-income individuals, especially first-time homebuyers. With an FHA mortgage, those with good credit scores (typically above 580) may only have to pay as little as 3.5%.

The Veterans Association offers loans to qualified active servicemembers and veterans. Those who qualify for a VA loan may not need to make a down payment at all and also benefit from low closing costs and interest rates.

If you are a first-time, low-income home buyer, the Oregon Housing and Community Services Department offers assistance of up to $15,000. Because this assistance is distributed through multiple agencies across the state, eligibility may vary.

Prepare for closing costs and other fees

Closing costs are the fees you pay your lender when you close on your mortgage. This is a separate payment from the down deposit and also must be paid out of pocket. It’s a good idea to keep closing costs in mind when looking at your savings.

Generally, homebuyers must pay 2-5% of the house’s total cost as the closing cost. However, according to data from ClosingCorp, homebuyers in Oregon typically pay only 0.98% to 1.3% at closing, with the state average at $3,910.88.

Since homes throughout the state are typically priced between $300,000 and $400,000, you can expect to pay between $2,933.16 and$5,214.51 in closing costs.

Closing costs typically include:

Credit report fee

Home appraisal fee (required by most lenders)

Home inspection fee

Mortgage origination fee

Earnest money (a deposit that will go towards your down payment)

Mortgage insurance

Homeowners insurance

Property taxes

The average property tax rate in Oregon is .87% but varies by location. For instance, homeowners in one of the more expensive cities, like

Portland

, can expect a higher property tax rate than buyers in Milton-Freewater.

Key Takeaway Closing costs will add up. Don’t forget to include property taxes, insurance, and other fees in your final calculation.

More: How to make a counteroffer after a home inspection

Look for homeowners insurance

Homeowners insurance

is a big consideration. Not only is it a part of initial closing costs—it is an ongoing expense for every homeowner. Homeowners in the U.S. pay an average of $1,387 per year or $115 per month in homeowners insurance. The average cost in Oregon is slightly below the national average—between $700-$1,100 as opposed to $1,249—but once again, depends on location and climate.

When purchasing homeowners insurance, do your research. Make sure to compare rates from at least three insurance companies to make sure you’re getting the best deal and appropriate coverage. Many companies offer bundled rates for auto and home insurance, so take a look at your current

car insurance

company.

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Key Takeaway Considering your finances is the first step to buying a house in Oregon. You should first check your credit score and calculate your debt-to-income (DTI) ratio. Then, take a look at your savings and make sure you have enough for a down payment and closing costs.

More:

Home insurance liability coverage

Get preapproved for a mortgage

Before you start looking at houses, you should prequalify for a mortgage. This not only sets you up for financial success—it makes you a competitive buyer. Some sellers will not even show their property without seeing a preapproval letter.

To prequalify you must provide a lender with your Social Security number, and a list of all assets, debts, employment history, and banking information. Then you fill out a mortgage application.

Quick note: Do not start this step until you are ready to buy. Your lender will perform a hard credit check and look at your DTI, so you want to be sure you are financially ready.

How to pick the right mortgage in Oregon

To pick your mortgage, consider your desired mortgage term and interest rate.

Most mortgages offer either a 15 or 30-year term. With a 30-year mortgage, you can expect to pay around 3.5% in interest. With a 15-year mortgage, your interest rates could be as low as 2.5% but you will have to pay higher amounts monthly.

Do your research and compare options from several lenders before choosing.

Look for a house

Now that you’ve evaluated your finances, you can start looking for your dream house.

Pick your city or neighborhood

There are a few key things to consider when choosing a neighborhood. Cost of living, culture, and climate are all important factors.

If you have children, you’ll want to look into school districts. Students in Oregon typically have lower test scores than the national average. However, they are more likely to graduate high school and attend college than the average U.S. student.

If you’re looking to live in Western Oregon, you’ll want to purchase some quality rain gear. You should also consider available transportation and the cost of

car insurance

Oregon’s booming cities like

Corvallis

, Portland, and

Bend

offer competitive job markets, bike lanes galore, and easy access to hikes and other outdoor adventures. However, the cost of living in these cities is no small feat. Oregon’s most affordable city,

Milton-Freewater

, is known for its wine and beautiful scenic views.

More: How to settle into a new house

Buyer’s market vs. seller’s market

In a buyer’s market, the supply of houses outweighs demand, meaning buyers may have the power to negotiate prices down. A seller’s market is the opposite. There are more prospective buyers than there are houses available.

Knowing which type of market you are dealing with will help you think smart and land the best deal. Here are a couple of questions to consider:

How long are houses in this area typically on the market? In a seller’s market houses go quickly, but in a buyer’s market houses may not sell for weeks or even months.

What are the typical asking prices vs. selling prices on recently sold homes in this area? If the asking prices are overwhelmingly higher than the selling prices, you’re looking at a buyer’s market. If the asking prices are lower than the selling prices, it’s a seller’s market.

Currently, Oregon is a seller’s market which means if you find your perfect house you should act fast. Oregon’s home values have gone up 19.7% within the past year. However, markets can shift quickly, so continue to do your research throughout your buying process.

Find a real estate agent

At this point you may be thinking—this is a lot of work for just one or two people. This is why it can be extremely helpful to bring in a professional. Hire a real estate agent—especially if you are relocating from out of state, or are unfamiliar with an area.

Look for an agent with extensive experience within the area you plan to buy. Someone clear, communicative, and knowledgeable will help you find the perfect home within your budget.

Make an offer

Congratulations! You’ve found the Oregon home of your dreams. Now it's time to make an offer. Your real estate agent will look at the current market and help you determine the right offer for your area. You’ll fill out paperwork, and then it's up to you to make the necessary payments. Next stop: Homeownership.

More:

How to change your address when moving

How to save on homeowners insurance

Let’s face it. The process of buying a home is no simple task. You’ve got a lot on your plate and you may not have even begun to think about homeowners insurance. But if you skimp on research, chances are you’ll end up paying way more than you have to.

This is why

Jerry

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FAQs

How much money do I need to buy a house in Oregon?

The exact price depends on the neighborhood, the amount of money you plan to use for the down payment, and whether or not you qualify for a mortgage. The average value of a home in Oregon is $486,642.

What credit score is needed to buy a house in Oregon?

For a conventional mortgage in Oregon, you should have a credit score of at least 620. However, if you qualify for an FHA or VA loan, you may be able to get by with a credit score of 500 or above.

What is the best place to buy a house in Oregon?

Where to live depends on individual factors such as what you are looking for in terms of cost of living, climate, and culture. The most competitive real estate markets include the cities of Ashland, Corvallis, and Portland. There are also plenty of more affordable cities such as Milton-Freewater and Ontario.

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