How to Buy a House in Oregon: 6 Steps

Purchasing a house is one of the major financial decisions you'll make. Oregon's average home value is $502,498, much higher than the national average of $362,481, making financial planning key when buying a home in the state.

Understanding down payment assistance programs, mortgage types and state regulations can make homebuying smoother in the Beaver 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.

Oregon's homeowner vacancy rate for the second quarter of 2024 was 0.6%, according to the U.S. Census Bureau. This rate measures the percentage of vacant homes available for sale.

A 0.6% vacancy rate indicates a shortage of available homes to meet buyer demand. Limited housing options may increase prices and make it harder for buyers to find affordable homes. A stable vacancy rate is around 2%, offering buyers more flexibility and choice.

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. In the third quarter of 2023, the average credit score in Oregon was 732, 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. Oregon's average mortgage debt was $279,907 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 can lead to financial strain and stress. To avoid this mistake, consider using the 28% rule, which suggests that you shouldn't spend more than 28% of your gross monthly income on your mortgage payment. This helps ensure your housing costs remain manageable within your overall budget.

Oregon's median annual income in April 2024 was $50,010, according to the U.S. Bureau of Labor Statistics. That’s a gross monthly income of $4,168 before taxes. Applying the 28% rule, aim to spend no more than $1,167 monthly on your mortgage.

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

A down payment is the initial payment made when purchasing a house, typically 20% of the home's total cost. This requirement can be a big hurdle for many homebuyers. Oregon's average home value is $502,498, which means a 20% down payment would be about $100,500. For homes above the average value, such as $545,000, the down payment would increase to $109,000.

Fortunately, a 20% down payment isn't always required. Government-backed loans like VA and FHA loans require down payments of 0% and 3.5%, respectively.

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.

Oregon offers several down payment assistance programs that make homeownership more accessible. Oregon Housing and Community Services (OHCS) provides financial support to cover initial costs, reducing barriers for potential buyers.

Finding the right location in Oregon involves considering several factors based on your lifestyle and financial goals. House prices vary significantly across the state, making it crucial to assess your budget. Proximity to family, friends, work and school can influence your daily routine and quality of life. Access to public transportation, parks, restaurants and shopping centers enhances convenience and overall living experience.

The cost of living is another critical aspect when choosing your new home. According to the Missouri Economic Research and Information Center (MERIC), Oregon's cost of living index was 114.1 in the first quarter of 2024, above 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 Oregon 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 accelerate your house hunt in Oregon. 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 Oregon Real Estate Agency'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 Oregon, options include conventional, jumbo, FHA, VA and USDA loans. You can select from 10-year, 15-year, 20-year or 30-year terms and choose between a fixed-rate mortgage and an adjustable-rate mortgage (ARM). Opting for the right financing option enhances your approval chances and saves money in the long run.

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 October 2024, the APR for a 30-year fixed conforming loan in Oregon is 5.95%, while the APR for a 30-year fixed rate FHA loan is 7.30%. Check the table below to see the current rates in the state by mortgage type.

Getting pre-approved for a mortgage in Oregon can simplify your homebuying process. It helps you understand how much you can borrow, giving you a clear budget range. Lenders typically issue a pre-approval letter outlining the loan amount, interest rate and terms you qualify for. This letter is usually valid for 60 to 90 days, giving you time to search for a suitable home.

To get pre-approved for a mortgage, you need to submit several documents:

• Proof of income, such as pay stubs and tax returns
• Credit history, including credit report and scores
• Proof of assets, like bank statements
• Identification, such as a driver's license or passport
• Employment verification, like a letter from your employer

Distinguishing between mortgage pre-approval and prequalification is crucial. Pre-approval is more detailed and involves a thorough review of your financial history, providing a more accurate picture of your borrowing capacity. Prequalification is a preliminary step that estimates what you might afford based on self-reported information.

Home inspections are important when buying a house in Oregon. Inspectors check the structure, electrical systems, plumbing, HVAC and roof. The inspection report shows any problems and needed repairs, helping buyers make informed decisions and negotiate repairs or price adjustments with sellers.

If major issues like a faulty foundation or old wiring are found, it can lower the home's value. Buyers may withdraw their offer if the repair costs are too high or the seller won't fix the problems.

The Oregon Construction Contractors Board (CCB) regulates home inspections in the state. Licensed home inspectors must follow standards of practice, which include conducting comprehensive evaluations of most home systems and components. They must also carry errors and omissions insurance along with general liability insurance, ensuring accountability and protection for the inspector and the client.

If you're seeking a home inspector in Oregon, ensure they hold a valid license. Checking what previous clients have said, reviewing online feedback and asking for references can provide additional insights into their reliability and work quality. You can verify a home inspector's license using the CCB's home inspector license search tool.

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).

While inspections and appraisals are part of the homebuying process, an appraisal focuses on determining the home's value. Lenders require appraisals to confirm that the loan amount aligns with the property's value, protecting their financial interest in the transaction. An inspection assesses the home's condition, identifying potential issues.

Closing is the final step in buying a house in Oregon when the ownership transfer occurs and you receive the keys. Your lender will provide a closing disclosure document three days before closing. This document details your loan terms, projected 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.

Closing day involves reviewing and completing 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 Oregon can protect you financially against risks such as natural disasters or theft.

Closing costs are fees paid at the end of a real estate transaction. Oregon's average closing costs are $5,660, according to NAR. These costs include:

• Appraisal fee: Covers the cost of having a professional appraiser evaluate the property's value.
• Title search and insurance fee: Ensures the property's title is clear of any liens or disputes. Title insurance protects against future claims.
• Escrow deposit: Covers future property taxes and insurance premiums.
• Prepaid costs: Upfront payments for homeowner's insurance and property taxes.
• Other closing costs: Include various administrative fees, such as recording and attorney fees.

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

Buying a house is a long-term financial commitment. To help you kickstart your homebuyer journey, we answered frequently asked questions about buying a house in Oregon.