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Compare mortgage rates in North Dakota.
Key Points
• Mortgage rates in North Dakota have tended to fall below the national average.
• The cost of living in North Dakota is one of the lowest in the country.
• Mortgage rates are influenced by economic factors (inflation, unemployment, Federal Reserve policy) and consumer factors (such as credit score and down payment amount).
• North Dakota offers various mortgage types, including fixed-rate mortgages, ARMs, FHA loans, VA loans, USDA loans, and jumbo loans.
• Tips for securing a competitive mortgage rate: Compare interest rates and fees, get preapproved, lock in a good rate, explore available funding resources.
Introduction to Mortgage Interest Rates
Securing a home loan is a crucial step in the homebuying process in North Dakota. Mortgage interest rates are influenced by both the state of the economy and the borrower’s credit score, down payment, income, and assets. This guide explores factors that influence mortgage rates, popular mortgage types, and strategies for securing the best possible rate.
Where Mortgage Rates Come From
The Federal Reserve, also known as the Fed, plays a key role in shaping mortgage rates. The Fed sets the short-term interest rates that banks use as a benchmark for their lending rates. Although mortgage rates are not directly tied to Fed rates, they generally follow the same economic trends. When the Fed lowers interest rates, mortgage rates typically decrease, creating a more favorable environment for homebuyers.
An individual lender might fine-tune the rate a given homebuyer is offered based on several financial metrics, including the buyer’s credit score, income, assets, and more.
How Interest Rates Affect Home Affordability
Mortgage rates play a crucial role in determining home affordability. Even a seemingly small difference in interest rate can have a substantial impact on the affordability of a home. For instance, a 1% increase in interest rate on a $300,000 mortgage over 30 years can result in more than $70,000 in additional interest paid over the life of the loan.
Rising interest rates can contribute to middle-income Americans being priced out of the housing market. A modest increase in interest rates can make it challenging for families to qualify for a mortgage or afford the monthly payments, limiting their ability to purchase a home.
Should Homebuyers Wait for Interest Rates to Drop?
Many homebuyers grapple with the dilemma of whether to purchase a home immediately or delay in hope that mortgage rates will decrease. Those who qualify as a first-time homebuyer might be especially likely to hesitate because they typically have tighter budgets.
The bottom line? It is impossible to predict future interest rate movements with certainty, and there are several factors to consider when making this decision. First, delaying might give home prices time to rise. Second, postponing ownership also postpones your ability to build equity in a home.
Remember that you always have the option to undertake a mortgage refinance in the future if interest rates decline significantly or if your financial profile improves to the degree that you might qualify for a better rate.
North Dakota Mortgage Rate Trends
Understanding historical mortgage rate trends in North Dakota can provide valuable insights, especially if you have never shopped for a home in North Dakota before. Current mortgage rates in North Dakota remain below historical highs. The cost of living in the state is one of the lowest in the U.S., and average mortgage rates in the state have tended to fall below the U.S. average too.
| Year | North Dakota Rate | U.S. Rate |
|---|---|---|
| 2000 | 8.04 | 8.14 |
| 2001 | 6.88 | 7.03 |
| 2002 | 6.44 | 6.62 |
| 2003 | 5.58 | 5.83 |
| 2004 | 5.58 | 5.95 |
| 2005 | 5.55 | 6.00 |
| 2006 | 6.12 | 6.60 |
| 2007 | 5.97 | 6.44 |
| 2008 | 5.63 | 6.09 |
| 2009 | 4.79 | 5.06 |
| 2010 | 4.58 | 4.84 |
| 2011 | 4.29 | 4.66 |
| 2012 | 3.63 | 3.74 |
| 2013 | 3.87 | 3.92 |
| 2014 | 4.21 | 4.24 |
| 2015 | 3.89 | 3.91 |
| 2016 | 3.70 | 3.72 |
| 2017 | 3.91 | 4.03 |
| 2018 | 4.32 | 4.57 |
Historical U.S. Mortgage Rates
To gain an even broader perspective, it is beneficial to examine historical U.S. mortgage rates. Whatever a homebuyer might hear about current mortgage rates in North Dakota, they are still far below the double-digit numbers of the 1980s.
Factors Affecting Mortgage Rates in North Dakota
Numerous factors influence mortgage rates in North Dakota and across the nation. These factors can be broadly categorized into economic factors and consumer factors, each playing a role in shaping the mortgage rate landscape.
Economic Factors
• The Fed: As noted above, the federal funds rate, set by the Federal Reserve, serves as a benchmark for other interest rates, including mortgage rates. When the federal funds rate increases, consumers may see higher mortgage rates.
• Inflation: An increase in the general price level of goods and services impacts mortgage rates. When the purchasing power of money decreases it becomes more expensive for lenders to lend money and they may increase interest rates to maintain profit margins.
• Unemployment: A high unemployment rate may prompt the Fed to lower its rate, so unemployment has an indirect effect on mortgage rates.
Consumer Factors
• Credit score: Lenders view borrowers with higher credit scores as less likely to default on their loans, making a lender more willing to offer lower interest rates.
• Down payment: Lenders may offer lower interest rates to borrowers who make larger down payments. These buyers have a greater ownership stake in their home from Day One, lowering risk for the lender.
• Income and assets: A steady income and sufficient assets provide assurance to lenders that the borrower has the financial capacity to repay the loan.
• Type of mortgage loan: The type of mortgage loan selected can also impact the interest rate. For example, adjustable-rate mortgages (ARMs) often have lower initial rates compared to fixed-rate mortgages. Additionally, government-backed loans, such as VA mortgages, may offer more favorable rates.
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Types of Mortgages Available in North Dakota
North Dakota offers a diverse range of mortgage types to cater to the varying needs of homebuyers. These include fixed-rate mortgages, adjustable-rate mortgages, FHA loans, VA loans, USDA loans, and jumbo loans. Would-be homeowners in North Dakota might want to take a close look at their options.
Fixed-Rate Mortgage
Fixed-rate mortgages offer stability and predictability by locking in the interest rate for the entire loan term. This ensures that the principal and interest payments remain constant throughout the life of the loan. Fixed-rate mortgages are commonly available in terms of 10, 15, 20, or 30 years. The choice of loan term depends on the borrower’s financial situation and preferences. Shorter loan terms generally come with lower interest rates but higher monthly payments, while longer loan terms offer lower monthly payments but higher overall interest costs.
Adjustable-Rate Mortgage (ARM)
Adjustable-rate mortgages (ARMs) provide initial lower interest rates compared to fixed-rate mortgages. However, these rates can adjust periodically after a fixed introductory period, based on prevailing market conditions.
The initial lower interest rate of ARMs can provide significant savings for borrowers who plan to sell their property or refinance before the fixed introductory period concludes. However, borrowers should carefully consider the potential for future interest rate increases and ensure that the long-term financial implications align with their plans.
FHA Loans
FHA loans, insured by the Federal Housing Administration, are designed to make homeownership more accessible to borrowers with limited financial resources. They typically have more lenient eligibility requirements and allow for lower down payments compared to conventional loans. The federal government’s backing of the loans provides lenders with a safety net in case of borrower default. This allows lenders to offer more flexible eligibility criteria.
VA Loans
VA loans are exclusively available to eligible veterans, active-duty military members, Reserve and National Guard members, and surviving spouses. These loans offer competitive interest rates and do not require a down payment, making them an attractive option for borrowers who request the VA’s certificate of eligibility and qualify for the loan.
USDA Loans
USDA loans are specifically designed for borrowers whose income falls beneath a certain ceiling to purchase a home in a rural area. These loans are backed by the U.S. Department of Agriculture (USDA) and offer favorable terms, including no down payment requirement and competitive interest rates.
Jumbo Loan
A jumbo loan is designed for borrowers seeking to finance a home that exceeds the conforming loan limit set by Fannie Mae and Freddie Mac for its specific geographic location. These loans typically require a larger down payment and may have stricter credit score requirements compared to conventional loans. In most places in the U.S., and throughout North Dakota, the conforming loan limit for a single-family home is $806,500.
Popular Places to Get a Mortgage in North Dakota
Securing a mortgage often hinges on choosing the right location, where home prices are affordable. Here are some popular places in North Dakota to obtain a mortgage.
Least Expensive Locations
The following locations in North Dakota are some of the least expensive places to obtain a mortgage, based on how local costs compare to the cost of living in the U.S. See more options in SoFi’s list of best affordable places in the U.S.:
• Bismarck: This is one of the state’s larger cities and has a cost of living slightly below the state average which, as noted above, is already one of the lower cost of living ratings for the U.S.
• Valley City: This small city of fewer than 10,000 people has a cost of living profile similar to that of Bismarck. It’s about an hour’s drive from Fargo.
• West Fargo: This is an especially family-friendly city and has a cost of living rating that is five points lower than the overall North Dakota number.
Most Expensive Locations
North Dakota is so relatively affordable overall that even Williston, one of its more expensive cities based on cost of living, is still seven points below the U.S. average.
Tips for Securing a Competitive Mortgage Rate in North Dakota
Obtaining a competitive mortgage rate can lead to significant savings over the life of a loan. Take these steps for best results.
Compare Interest Rates and Fees
Shopping around and comparing interest rates from multiple lenders is essential to securing the best mortgage deal. It is also important to inquire about any upfront costs or closing fees associated with the loan. It may take some time to compare interest rates and fees from various lenders to reveal the full picture, but it can yield significant savings.
Get Preapproved
Obtaining preapproval for a mortgage strengthens your position with sellers as a serious buyer. Going through the mortgage preapproval process means sharing fairly comprehensive financial information with a potential lender, but once you’ve done so and been preapproved, you can take swift action when you find your dream home. Additionally, some lenders offer the option to lock in the interest rate for a certain period, providing protection against possible rate increases.
Recommended: Mortgage Prequalification vs. Preapproval
North Dakota Mortgage Resources
North Dakota has several programs to assist homebuyers, particularly if you are buying your first home, have limited financial resources, or both.
First-Time Homebuyer Programs
The state’s FirstHome program is for those who have not owned a principal residence in the last three years (a common way that programs in many states define first-time homebuyers). There are both income and home purchase price limits for eligibility. Other programs are directed at single parents with at least one dependent living at home, military members, or people with a permanent disability. Find all the details on the North Dakota Housing Finance Agency (NDHFA) site .
Down Payment Assistance
A down payment assistance program can make all the difference for homebuyers who have limited funds. Through its DCA (Down Payment and Closing Cost Assistance) program, NDHFA provides low-income buyers with mortgage loans to cover down payment and closing costs up to three percent of the first mortgage loan amount. The funds come in the form of a credit toward the homebuyer’s out-of-pocket cash needs. Again, there is an income ceiling. The home must also be a primary residence.
Tools & Calculators
Online tools and calculators can help would-be homeowners in North Dakota run the numbers on mortgage scenarios, home prices, and see how different down payment amounts might affect their costs.
Run the numbers on your home loan.
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Mortgage calculator
Punch in your home loan amount and a new interest rate, and we’ll estimate your payoff date.
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Down payment calculator
Enter a few details about your home loan and we’ll provide your monthly mortgage payment.
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Home affordability calculator
Provide us with a few details and see how much you can afford to spend on a home purchase.
Using the free calculators is for informational purposes only, does not constitute an offer to receive a loan, and will not solicit a loan offer. Any payments shown depend on the accuracy of the information provided.
Refinancing Options in North Dakota
Homeowners in North Dakota, like others nationwide, can seek out a refinance of their mortgage from a bank or other mortgage lender. Those with certain government-backed loans also have the opportunity to refinance their existing mortgage. The FHA Streamline Refinance program, for example, is designed for homeowners with FHA-insured mortgages. It offers a simplified refinancing process with minimal documentation requirements, making it easier for homeowners to obtain a lower interest rate.
VA Interest-Rate Reduction Refinance Loans (IRRRL) provide an opportunity for veterans and other VA loan holders to refinance their loans and potentially lower their monthly payments. This program allows for a streamlined refinancing process without the need for a new appraisal.
Closing Costs, Taxes, and Fees in North Dakota
Closing costs and fees are additional expenses associated with purchasing a home. In North Dakota, buyers can expect to pay between 3% and 6% of the home’s purchase price in closing costs. Higher-priced homes and properties in certain areas may incur higher closing costs.
The Takeaway
North Dakota’s mortgage landscape offers any option a would-be homebuyer might need. By staying informed about current mortgage rates, exploring the state’s assistance programs, and paying close attention to personal financial metrics such as credit score, individuals can make the right moves and achieve successful homeownership in North Dakota.
Looking for an affordable option for a home mortgage loan? SoFi can help: We offer low down payments (as little as 3% - 5%*) with our competitive and flexible home mortgage loans. Plus, applying is extra convenient: It's online, with access to one-on-one help.FAQ
This section addresses frequently asked questions related to mortgage rates in North Dakota.
Will mortgage rates drop in North Dakota?
It’s hard to say with certainty if mortgage rates will drop in North Dakota because there are so many things that contribute to rate increases and decreases.
Will mortgage rates ever go back to normal?
The definition of “normal” mortgage rates can vary greatly over time. Mortgage rates are influenced by a complex interplay of economic factors and personal financial metrics, and one generation’s normal might be another generation’s high or low.
Will North Dakota home prices ever drop?
Real estate market trends are influenced by supply and demand, economic conditions, and local market dynamics. Predicting future home price movements with certainty is challenging, and your best bet for insight is to ask a real estate professional who specializes in the specific market area you’re wondering about.
Is it a good time to buy a house in North Dakota?
The decision of whether it is a good time to buy a house in North Dakota depends on individual circumstances, financial readiness, and market conditions. Using a home affordability calculator to determine what your budget would be, and then looking at real estate web sites to see if any homes in your chosen area fit that budget, would be a good way to assess whether it might be time to buy.
How do I lock in a mortgage rate?
Some lenders offer the option to lock in the interest rate for a certain period, typically ranging from 30 to 90 days. This often requires paying a fee to the lender. Locking in the interest rate provides protection against potential rate increases during the property search and purchase process.
How do mortgage interest rates work?
Mortgage interest rates are determined by a combination of factors, including the prevailing federal funds rate set by the Federal Reserve, inflation, and unemployment rate, as well as the borrower’s credit score, down payment amount, income, assets, and type of mortgage loan.
SoFi Mortgages
Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility-criteria for more information.
SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.
*SoFi requires Private Mortgage Insurance (PMI) for conforming home loans with a loan-to-value (LTV) ratio greater than 80%. As little as 3% down payments are for qualifying first-time homebuyers only. 5% minimum applies to other borrowers. Other loan types may require different fees or insurance (e.g., VA funding fee, FHA Mortgage Insurance Premiums, etc.). Loan requirements may vary depending on your down payment amount, and minimum down payment varies by loan type.
†Veterans, Service members, and members of the National Guard or Reserve may be eligible for a loan guaranteed by the U.S. Department of Veterans Affairs. VA loans are subject to unique terms and conditions established by VA and SoFi. Ask your SoFi loan officer for details about eligibility, documentation, and other requirements. VA loans typically require a one-time funding fee except as may be exempted by VA guidelines. The fee may be financed or paid at closing. The amount of the fee depends on the type of loan, the total amount of the loan, and, depending on loan type, prior use of VA eligibility and down payment amount. The VA funding fee is typically non-refundable. SoFi is not affiliated with any government agency.
¹FHA loans are subject to unique terms and conditions established by FHA and SoFi. Ask your SoFi loan officer for details about eligibility, documentation, and other requirements. FHA loans require an Upfront Mortgage Insurance Premium (UFMIP), which may be financed or paid at closing, in addition to monthly Mortgage Insurance Premiums (MIP). Maximum loan amounts vary by county. The minimum FHA mortgage down payment is 3.5% for those who qualify financially for a primary purchase. SoFi is not affiliated with any government agency.
Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article. Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
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More home loan resources.
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First-Time Homebuyer Guide
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First-Time Homebuyer Programs and Loans
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Mortgage Preapproval Process