What to know about buying a house in Wisconsin

Wisconsin first-time home buyers have a leg up over buyers in some other states. Both home prices and home price inflation are well below national averages.

Of course, saving for your down payment and getting a home loan can still be a challenge. But Wisconsin has programs to help.

The Badger State offers special mortgages and education to first-time buyers in Wisconsin. And it has several down payment assistance programs that can help you meet your down payment and closing cost needs.

In this article (Skip to …)

• WI home buyer overview
• Home loan options
• WI home buyer programs
• First-time buyer grants
• Buying in Wisconsin’s cities
• Resources
• WI mortgage rates

That was up from $229,900 in September 2020. And it represented a 6.6% raise, which was much lower than the national average increase of 18% over the same period.

Of course, that’s great news if you’re a Wisconsin first-time home buyer. Because lower home price inflation makes it easier to save for a down payment.

But some buyers will still come up short on cash. And that’s where Wisconsin’s first-time home buyer programs can help.

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If you’re a first-time home buyer in Wisconsin 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 percent down. But the good news is, 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 credit score. You can usually stop paying mortgage insurance after a few years
• FHA loan — Backed by the Federal Housing Administration. 3.5% down and a 580 minimum credit score. But you’re typically on the hook for mortgage insurance until you refinance to a different type of mortgage, move, or pay off your loan
• VA loan — Only for veterans, active military members, reservists, and National Guard. 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
• WHEDA loans — May include competitive interest rates and can be used with down payment assistance. More information below

Note that most of these programs require you to buy a primary residence. That’s a home you’ll live in full-time, not a vacation home or investment property.

Depending on the mortgage loan you choose, you could potentially get into your new house with minimal cash out of pocket.

These programs even let you use gifted money or down payment assistance (DPA) to cover the down payment and closing costs.

If you’re not sure which program to choose for your first mortgage loan, your lender can help you find the right match based on your finances and home buying goals.

The Wisconsin Housing and Economic Development Authority (WHEDA) has two main types of mortgages:

• WHEDA Advantage Conventional — A a type of conventional mortgage conforming with Fannie Mae’s rules. Minimum credit score 620
• WHEDA Advantage FHA — A mortgage backed by the Federal Housing Administration (FHA). Minimum credit score 640

WHEDA’s website lets you compare the two loans side-by-side to see which suits you better. And, if you’re eligible for down payment assistance, both loans may be available with a zero down payment. There’s also a rehabilitation program if you wish to buy a home that requires renovation.

Note that you must choose a mortgage lender from a WHEDA-approved list.

You must also undergo a home buyer education course to qualify. And you must occupy the home for the duration of the mortgage, so this isn’t an opportunity for landlords or vacation home buyers.

If you wish to buy a home in one of the 15 counties that make up Wisconsin’s rural target areas, you may get a lower mortgage rate. Read WHEDA’s flyer about these areas.

WHEDA runs regular online webinars for Wisconsin first-time home buyers. And those could provide a great opportunity for you to learn more and ask questions. So check when the next one is scheduled. It promises: “If you never thought you could become a homeowner, you absolutely can — and WHEDA can show you how!”

Housing Resources Inc. lists several down payment assistance programs open to Milwaukeeans. Some are restricted to current residents of the city but others may be open to anyone who wishes to buy there.

All or most have income limits and are mainly intended for those with low or moderate earnings.

For example, one program is “provided by the City of Milwaukee [and] offers forgivable grants of $5,000 for a purchase in the City of Milwaukee or $7,000 if you purchase in the Community Development Block Grant Area …” Providing you remain in the home for five years, that loan is forgiven.

Madison first-time home buyers

The median list price in Madison was $332,700 in September 2021, according to Realtor.com. That was up 7.3% year over year.

At that median price, your down payment options might fall between:

• $9,980 for 3% down payment
• $66,540 for 20% down payment

The City of Madison has a DPA program that offers up to $20,000 to eligible borrowers. Income caps vary by the size of the household but you’ll need modest or moderate earnings. Your first mortgage must last 30 years and you must contribute 1% of the purchase price from your own resources.

This is a loan and you have to repay it upon “sale, cash-out refinance for other than property improvements, the property is transferred or ceases to be the primary residence of the home buyer.” So, in some ways, it’s similar to WHEDA’s offer.

But there’s one important difference. You may have to repay the amount you borrowed plus a “proportional share of appreciation based on the percentage of assistance provided by the City.” In other words, the city might want a share of the amount by which your home’s value has risen since you bought it.

Green Bay first-time home buyers

The median list price in Green Bay was $219,900 in September 2021, according to Realtor.com. That was up 18.9% year over year.

At that median price, your down payment options might fall between:

• $6,600 for 3% down payment
• $43,980 for 20% down payment

NeighborWorks Green Bay has a DPA program that offers first-time buyers loans that “tend to range from $3,000-$8,000.”

Like others we’ve covered in Wisconsin, this DPA has to be repaid if you cease to be the owner-occupier or when you refinance or repay your main mortgage. And as always, there are various eligibility criteria and conditions that have to be met. So click the link for details.

• The Wisconsin Housing and Economic Development Authority (WHEDA) — Offers a variety of programs to help you become a homeowner
• Wisconsin Rural Development
• Homeownership education — Learn how to purchase and maintain a home of your own

First-time home buyer programs by city/town:

• Beloit
• Green Bay
• Madison
• Milwaukee — Housing Resources, Inc.
• Richland County

You can see today’s live mortgage rates in Wisconsin here.

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. That’s the only way to know you’re getting the best deal possible on your new home loan.

Verify your new rate (Nov 24th, 2021)