Buying a Home
- Paying for the home
- Making an offer
- Common contingencies buyers include in the offer
- Seller’s required disclosures
- Closing
Paying for the home
A home is the most expensive purchase most people will ever make. Many home buyers finance their home purchase with a loan from a bank or other lender, called a mortgage. Most lenders require a down payment from the borrower, typically between 5-20% of the loan amount, in exchange for loaning the rest of the money to buy the home. 
Mortgage pre-approval
A mortgage pre-approval letter is an offer to lend you up to a certain amount of money to buy a home, before you’ve actually made an offer to buy a home. It shows sellers that you are a serious buyer who is financially qualified to make an offer on a home. Many sellers in Iowa will want to see a pre-approval letter before taking your purchase offer seriously. To get a mortgage pre-approval letter, you need to fill out a lender’s mortgage application, where you will give details to the lender about your financial situation.
Home buying assistance programs
Several programs exist to help home buyers. The exact programs available to you will depend on things like income or location, depending on the program.
The Iowa Finance Authority (IFA) has several programs to give financial help to Iowa homebuyers, including the FirstHome program and the Homes for Iowans program. The U.S. Department of Housing and Urban Development (HUD) lists more home purchase programs in Iowa here.
At the federal level, HUD offers several programs, including FHA loans, Good Neighbor Next Door, and the Indian Home Loan Guarantee Program.
The U.S. Department of Agriculture also offers home buying programs through its Rural Development department.
Buying a house on contract (sometimes called “rent to own”)
For information on buying a home on contract, visit Iowa Legal Aid’s page Buying a Home on Contract.
Making an offer
Whether you work with a real estate agent or house hunt on your own, when you find a home you would like to buy, you will need to make a written offer to buy the home. Many forms of offer agreements exist, and if you are working with a real estate agent or a lawyer, they will have a form agreement that they typically use. Even when you are working with a real estate agent or lawyer, make sure to read the offer carefully before signing it.
You will also want to be clear about what contingencies you want to include in the offer. A “contingency” means that unless a particular event happens, you do not have to go through with the purchase. An example of a contingency is if you are not able to get a loan to buy the home at a certain interest rate, you do not need to go through with the purchase.
You will want to include in the offer how much time the seller has to accept the offer. To accept your written offer to buy the home, the seller must sign the offer.
When making an offer, home buyers often also provide “earnest money,” which is usually 1-3 percent of the purchase price. If the offer is not accepted, the money is returned. If the offer is accepted, the money is held in a trust account and then applied to the purchase of the home. If the seller accepts the offer and the buyer backs out of buying the home for a reason that isn’t included in the offer agreement, the buyer may have to give up the earnest money to the seller. You will find more information about holding and returning earnest money in Iowa Administrative Code 193E, chapter 13.
Common contingencies buyers include in the offer
Financing. The offer can be contingent on you getting a written loan commitment from a bank or lender within a specified time, often at a certain interest rate. Banks will require that homes appraise for at least the purchase price, so you will want to include appraisal in your contingency as well if you are relying on a loan to buy the home.
Title condition. When buying a home, you do not want any issues with the title, which is the document that provides the right of ownership to the home. Determining the title's condition will involve the search by a professional of the abstract (the legal history of the home's title).
Home inspection. The offer can require a home inspection and can give you the choice to withdraw or renegotiate your offer if the inspection report reveals certain problems with the house. A pest inspection and sewer inspection are other inspections that you can include in the offer. An inspection contingency in the offer should describe what happens if the inspection reveals one or more problems.
Sale of current home. You can make your offer contingent on the sale of another house, such as the house you currently own.
Seller’s required disclosures
In Iowa, sellers must tell the potential buyer, in writing, certain information about the property. Iowa Code chapter 558A covers these required disclosures. The Iowa Real Estate Commission created a Residential Property Seller Disclosure Statement form that meets the requirements of chapter 558A. This form can be found in Iowa Administrative Rule 193E-14.1. Sellers must make these disclosures prior to accepting an offer from the buyers. If the house was built before 1978, a lead paint disclosure is also required. 
Remember, sellers only have to tell you about problems they know (or in good faith should know) about. The home could have problems that the seller does not know about. This is why an inspection can be a helpful contingency to include in your offer.
Closing
If all the contingencies are met, closing is the last step of a home purchase. At closing, the parties, with certain representatives, meet to sign required paperwork and exchange documents to complete the purchase. The sellers are not always present at the closing, as they may send their realtor as their representative. The Iowa State Bar Association has detailed information on the closing process in their article Buying a Home.
You can also find more information about real estate sales in Iowa, as well as about real estate brokers, on the Iowa Professional Licensing Bureau website.