Overview
Iowa is one of the most affordable housing markets in the country, with a statewide median home price around $245,000 in 2026. Steady, modest price growth and a strong supply of starter homes mean first-time buyers face far less competition than on the coasts. The Iowa Finance Authority (IFA) runs the homebuyer programs, pairing below-market 30-year mortgages with down payment help. The advantage here is reach: you can buy almost anywhere in the state and still find an affordable, eligible home.
IFA's flagship is the FirstHome program, a below-market fixed-rate first mortgage that comes with a choice of down payment help. You can take a flat $2,500 grant that never has to be repaid, or a Second Loan worth up to 5% of the sale price (no dollar cap) structured as a deferred second mortgage. That Second Loan carries no monthly payments; you repay it only when you sell, refinance, or pay off the first mortgage. FirstHome requires first-time buyer status (no ownership in the last three years), military service, or buying in a targeted area, and you must stay within IFA's county income limits.
State Programs
FirstHome Program
Below-market mortgage with grant or deferred second loanHomes for Iowans Program
Below-market mortgage with deferred second loanMilitary Homeownership Assistance Program
Down payment grantFederal Programs Available in Iowa
These nationwide programs can be combined with Iowa state assistance for maximum benefit.
FHA Loan Program
Low down payment mortgageVA Home Loan
Zero down payment mortgageUSDA Rural Development Loan
Zero down payment mortgageTips for First-Time Buyers in Iowa
Repeat buyers aren't left out. The Homes for Iowans program offers the same up-to-5% deferred Second Loan but is open to first-time and repeat buyers alike, with a single statewide income ceiling. One catch worth knowing: you can pick the grant or the Second Loan, but not both, and you can't mix FirstHome and Homes for Iowans assistance. Service members and veterans have a dedicated perk too. The Military Homeownership Assistance program adds a $5,000 grant toward down payment and closing costs, which can layer on top of an IFA mortgage for a meaningful boost.
Iowa's tax picture got dramatically simpler. As of 2026 the state runs a flat 3.8% income tax, the end of a multi-year phase-down from a graduated system that once topped 8.98%, and retirement income is now fully exempt. Property taxes are the trade-off: the effective rate averages roughly 1.5% of value, so on a $245,000 home you'd budget somewhere around $3,500 a year before credits. The Homestead Tax Credit reduces taxable value on your primary residence, and honorably discharged veterans can claim a military service property tax exemption.
Local programs can sweeten the deal further, especially in Des Moines, Cedar Rapids, Davenport, and Iowa City, where city and county offices periodically run their own down payment or rehab assistance. Iowa has no large active-duty installation, so VA-eligible buyers will mostly compare a zero-down VA loan against stacking IFA help. Your best first move is a free HUD-approved housing counselor, then an IFA-participating lender. Homebuyer education is required for IFA assistance, so build that into your timeline early.
Frequently Asked Questions
For educational purposes only -- not financial or tax advice. Program details, eligibility requirements, and benefit amounts are subject to change. Verify all information directly with the administering agency before applying. Last verified: June 15, 2026.