How to Buy a House in Oklahoma: 6 Steps

Buying a house is a major financial decision that involves weighing multiple factors. Oklahoma's average home value is $208,910, much lower than the national average of $362,481. This difference makes homebuying more affordable in the state.

Understanding down payment assistance programs, mortgage types and state regulations can make homebuying smoother in the Sooner State. MoneyGeek offers tips to guide you, from saving for a down payment and picking the right location to finding the best loan for your needs and credit score.

Oklahoma's homeowner vacancy rate for the second quarter of 2024 was 1.3%, according to the U.S. Census Bureau. This rate measures the percentage of vacant homes available for sale.

A 1.3% vacancy rate suggests there aren't enough homes to meet demand, leading to increased competition, higher prices and challenges in finding suitable properties. A stable rate of 2% allows buyers more choice and flexibility.

Review your financial and credit history before buying a home in the state. A solid financial profile can boost your chances of approval when applying for a mortgage.

Your credit score impacts the mortgage loans and interest rates you qualify for. A higher score improves your chances of getting a better rate. Oklahoma’s average credit score in the third quarter of 2023 was 696, according to Experian.

If you have a bad credit score (below 580 on the FICO scale), you can still buy a house, but it may be harder to get mortgage approval. Check the table below for options based on minimum credit score requirements.

Source: Experian

Your DTI ratio shows how much of your monthly income goes to debt payments, helping lenders decide how much mortgage debt you can handle. Oklahoma's average mortgage debt was $163,070 in the third quarter of 2023, according to Experian, highlighting the added financial responsibility of owning a home in the state.

Monthly debt payments factored into your DTI include your mortgage, student loans, car loans, credit card payments and other debts. Use our debt-to-income ratio calculator below to find your front-end DTI (housing expenses) and back-end DTI (all debts). This tool also shows your total monthly debt payments.

Buying a house you can't afford is a common pitfall that can lead to financial strain. To avoid this, use the 28% rule, which suggests that your monthly mortgage payment should not exceed 28% of your gross monthly income. This helps ensure your housing costs remain manageable within your overall budget.

Oklahoma's median annual income in April 2024 was $41,480, according to the U.S. Bureau of Labor Statistics. That’s a gross monthly income of $3,457 before taxes. Applying the 28% rule, aim to spend no more than $968 monthly on your mortgage.

Use our mortgage calculator below to estimate your monthly payment in Oklahoma.

A down payment is an upfront payment made when purchasing a house, often set at 20% of the home's price. This standard can be a significant hurdle for many homebuyers. Oklahoma's average home value is $208,910, which means a 20% down payment would be $41,782. For homes above the average value, such as $220,000, the 20% down payment would rise to $44,000.

Fortunately, a 20% down payment isn't always required. For instance, government-backed loans like VA loans require no down payment, while FHA loans need only 3.5%.

If you put down less than 20%, your lender may require you to get private mortgage insurance. Use our PMI calculator to estimate your monthly PMI premium based on your credit score and down payment.

Several down payment assistance programs in Oklahoma make homeownership possible. The Oklahoma Housing Finance Agency (OHFA) offers various resources to assist potential homebuyers.

See the table below for details on the state's down payment assistance program.

Finding the right location in Oklahoma involves considering several factors. The average house price is a primary concern, as it directly affects your budget. Proximity to family, friends, workplace and school also matters for convenience and support. Access to public transportation, parks, restaurants and shopping centers enhances your quality of life and should be factored into your decision.

The cost of living significantly impacts your choice of a new home. According to the Missouri Economic Research and Information Center (MERIC), Oklahoma's cost of living index in the first quarter of 2024 was 86.4, below the national average of 100.

Consider these expenses when choosing the right location:

• Food
• Health care
• Clothing
• Utilities
• Education
• Transportation
• Entertainment

Check the table below for average home values in some Oklahoma cities. You can also use our cost of living calculator to estimate expenses in different areas.

Source: Zillow

Working with a real estate agent can speed up your house hunt in Oklahoma. They give advice, handle paperwork and offer an expanded list of property options you wouldn't access alone. Real estate agents can also recommend other service providers, like title companies and inspectors, to help you buy a home.

When finding a real estate agent, do your due diligence by interviewing agents with experience in the neighborhoods you're interested in. Consider the following tips:

• Find someone who matches your needs and personality.
• Verify the agent's credentials, training and license.
• Ensure they have in-depth knowledge of the area.
• Shop around for agents and compare their rates.

You can also use the Oklahoma Real Estate Commission's license holder search tool to find or verify real estate agents in the state.

Finding the best mortgage you can afford is a critical step in homebuying. In Oklahoma, options include conventional, jumbo, FHA, VA and USDA loans. You can choose from 10-year, 15-year, 20-year or 30-year terms and decide between a fixed-rate mortgage and an adjustable-rate mortgage (ARM). Selecting the optimal financing option can enhance your approval chances and result in long-term savings.

Mortgage interest rates can change daily due to factors like the type of mortgage, the lender and the economy. While the interest rate is the percentage charged on the loan amount, the annual percentage rate (APR) reflects the actual cost of borrowing by including additional fees and costs associated with the loan.

As of December 2024, the APR for a 30-year fixed conforming loan in Oklahoma is 6.44%, while the APR for a 30-year fixed rate FHA loan is 7.81%. Check the table below to see the current rates in the state by mortgage type.

Getting pre-approved for a mortgage in Oklahoma can simplify your homebuying process by clarifying how much you can borrow. This step shows sellers that you're a serious buyer. Lenders provide a pre-approval letter indicating the loan amount you qualify for based on your financial situation. This letter typically lasts 60 to 90 days, giving you time to search for a suitable home.

To secure a mortgage pre-approval, you need to submit several documents:

• Proof of income (e.g., W-2 forms, pay stubs)
• Employment verification
• Credit history
• Bank statements
• Tax returns
• Identification (e.g., driver's license)

Understanding the difference between pre-approval and prequalification is crucial. Pre-approval involves a more detailed examination of your financial status, while prequalification provides a rough estimate of what you might afford based on self-reported information. This makes pre-approval a more reliable indicator of your borrowing capacity.

Home inspections are highly recommended in the homebuying process in Oklahoma, as they help identify potential issues that could affect the property's value and safety. Inspectors examine structural components, roofing, plumbing, electrical systems and HVAC. The inspection report typically includes findings on the condition of these areas and any necessary repairs.

If an inspection uncovers major issues like a faulty roof or outdated electrical systems, the appraisal may factor in these problems, potentially lowering the home’s value. This could cause the buyer to reconsider or even rescind their offer, especially if the repairs are too costly or difficult to manage.

The Oklahoma Construction Industries Board (CIB) regulates home inspections in the state. This regulation ensures that inspections meet a certain standard of quality and safety. All licensed home inspectors must carry general liability insurance and adhere to the state's standards of practice. These standards outline the minimum requirements for a legally sufficient inspection, ensuring that homebuyers receive thorough evaluations of their prospective properties.

If you're looking for a home inspector in Oklahoma, ensure they're licensed. This can be verified using CIB's verify licensee search tool. Also, find out what other clients have said about the inspector's reliability and work quality by checking online reviews and asking for references.

Home appraisals provide an unbiased estimate of a property's market value, helping buyers and lenders ensure the agreed-upon price reflects the property's worth. The median appraisal cost was $500 in 2023, according to the 2023 Appraisal Survey from the National Association of Realtors (NAR).

Inspections and appraisals serve different purposes. An inspection evaluates the property's condition, identifying any potential issues. An appraisal determines the property's value, which lenders use to verify that the loan amount is justified. Lenders require appraisals to ensure the property's value adequately supports the loan.

Closing is the final step in buying a house in Oklahoma when the ownership transfer occurs, and you receive the keys. Your lender will provide a closing disclosure document three days before the closing. This document outlines your loan terms, monthly payments and closing costs. Plan a final walk-through with your real estate agent near the closing day to ensure the property remains in the expected condition.

During the closing day, you'll review and complete various paperwork to finalize your home purchase. Here are some documents you need to sign:

• Final loan application: Confirms your mortgage terms, including the interest rate and payment schedule. It ensures that you and the lender agree before the loan is finalized.
• Deed transfer: Transfers property ownership from the seller to you. It's recorded publicly to officially recognize you as the new owner.
• Promissory mortgage note: A legal promise to repay the loan according to the agreed terms. It outlines the loan amount, interest rate and repayment schedule and is a binding agreement between you and the lender.
• Homeowners insurance: Covers repair costs or replacement if your property is damaged. Homeowners insurance in Oklahoma protects against risks specific to the region, such as tornadoes and hailstorms.

Closing costs are the expenses required to finalize a real estate transaction. In Oklahoma, the average closing costs are $3,278, according to NAR. These costs include:

• Appraisal fee: A charge for evaluating the property's value to ensure it matches the loan amount.
• Title search and insurance fee: Covers the cost of verifying the property's legal ownership and protecting against future claims.
• Escrow deposit: Funds held by a third party to cover property taxes and insurance premiums.
• Prepaid costs: Costs paid in advance, such as homeowners insurance and property taxes.
• Other closing costs: Miscellaneous expenses like recording fees and attorney charges.

Learning the different first-time homebuyer programs in Oklahoma can also help you own a home faster.

Buying a house is a long-term financial commitment. To help you start your homebuyer journey, we answered frequently asked questions about purchasing a home in Oklahoma.