Buying a first home in Iowa wasn’t what it used to be. From 2020 to 2025, first-time buyers faced a rollercoaster of rising prices, interest rate jumps, and shifting expectations. In cities, bidding wars drove up competition. In rural areas, demand outpaced inventory. More buyers than ever had to rethink what they wanted—and what they could afford. Whether they were trading space for location, skipping starter homes, or turning to creative financing, Iowa’s first-time homeowners learned to adapt fast.
Statewide Homebuying Trends (2020–2025)
Iowa stands out as an affordable homeownership state. As of 2023, about 71.8% of Iowa households owned their homes – well above the national homeownership rate (~65.9%). This high ownership rate is partly due to Iowa’s lower home prices. In 2020, the typical home value in Iowa was around $150,000–$160,000, compared to a U.S. median around $230,000 at that time. By early 2025, Iowa’s median home price had climbed to roughly $228,000. While that is a sharp increase in just five years, Iowa homes remain much cheaper than in many states (less than half the price of the U.S. West region, for example). Overall, Iowa is ranked among the most affordable housing markets in the nation. On average, it takes an Iowa family about 3.4 years of income to afford a median-priced home, the best affordability ratio of any state.
Several factors drove Iowa’s housing trends in 2020–2025. Record-low mortgage rates in 2020–2021 (dropping near 3%) spurred a surge of home sales and bidding wars, including many first-time buyers entering the market. Home values soared during this period, as an influx of buyer demand met a limited supply of homes. However, starting in 2022, the situation flipped: mortgage rates shot up rapidly (approaching 7%–8% by 2023), dramatically raising monthly payments for new buyers. This “near tripling” of interest rates within three years priced out many would-be homeowners. Iowa was no exception to these national forces – buyers here also felt the squeeze of higher borrowing costs and continued price appreciation (Iowa home values rose about 4.7% from 2024 to 2025 alone).
First-time buyers in Iowa faced especially tough conditions in the early 2020s. The combination of rising prices and rising rates meant higher income requirements and bigger down payments were needed to buy a starter home. In fact, the share of homes going to first-time owners hit a historic low nationally by 2022. According to the National Association of Realtors (NAR), only 26% of recent homebuyers in 2022 were first-timers – down from around 33% in more typical years. In Iowa, which traditionally has a high homeownership culture, first-time buyer activity also fluctuated. Many millennials and young families rushed to buy in 2020–2021 when rates were low, but by 2022 the pace slowed due to affordability challenges. By 2023, there were signs of a rebound: first-time buyers made up about 32% of home purchases nationwide that year, as some sellers stayed put (reducing competition from repeat buyers) and creative financing options emerged. Zillow’s research similarly found that first-timers comprised about half of buyers in 2023, up from a low point in 2021. In short, first-time homebuying in Iowa surged, then dipped, then began recovering toward the end of the 2020–2025 period, mirroring national trends.
Urban vs. Rural: Differences Across Iowa
To understand Iowa’s homebuying trends, it’s important to give equal attention to urban and rural areas. About 63% of Iowa’s population now lives in urban areas (cities and towns), while a sizable 37% remains in rural counties. The state has been gradually urbanizing – Iowa’s urban population grew ~3% from 2010 to 2020 – yet many communities are still small towns or farming areas. This urban-rural mix creates different experiences for first-time homebuyers.
Urban markets (like Des Moines, Cedar Rapids, Davenport, Iowa City, and Sioux City) tend to have more housing options but also stiffer competition. In city centers and suburbs, first-time buyers can find condos, townhomes, and single-family houses, including newly built homes in growing suburbs. However, urban buyers often face higher prices and bidding wars, especially during the 2020–2021 boom. For instance, the Des Moines metro median sale price hit around $200,000 in 2025, which is affordable compared to big U.S. cities but higher than most rural areas. Urban first-timers also contend with a lot of other buyers (including investors and move-up buyers), which in recent years meant some had to act fast or even pay above asking price to win a home. Nationally, about 25% of homes sold in 2023 went for over the asking price – a trend that was common in desirable Iowa neighborhoods as well. On the plus side, cities have seen growing inventory by 2024–2025 as more homes come on the market, giving buyers a bit more choice after the scarce supply of the pandemic years.
Rural areas present a different challenge: limited housing stock. In many small Iowa towns and rural counties, very few new houses have been built in recent years. The existing homes are often older (many Iowa farmhouses and small-town homes are decades old), and there may simply be a shortage of homes for sale at any given time. According to Debi Durham, director of the Iowa Finance Authority, a lack of available housing has become “an impediment to growth, particularly in rural Iowa”. In these communities, employers sometimes struggle to attract workers because there aren’t enough homes nearby. First-time buyers searching in rural Iowa might have to compromise by purchasing an aging house that needs repairs, or else commute from a farther town where housing is available.
What Types of Properties Are First-Time Buyers Purchasing?
The types of homes Iowa’s first-timers purchase can vary, but single-family houses are by far the most common choice. Iowa is a state of homeowners and traditional houses – roughly 75%–80% of all housing units in Iowa are single-family detached homes (houses built on their own lot). First-time buyers tend to mirror the available stock. Most buy a stand-alone house with a yard, often with 2–3 bedrooms. These include older houses in established neighborhoods as well as some newly built starter homes on the outskirts of cities. Even in Iowa’s cities, single-family homes remain popular for first-time buyers, since they often seek the space and privacy that renting didn’t afford them. For example, the typical home purchased recently in the U.S. has been about 1,860 square feet with three bedrooms and two baths – a good description of a starter house in Iowa. The majority of first-time owners choose existing houses (not new construction) because they are cheaper; nationally about 85%–89% of home purchases are for previously-owned homes rather than brand-new builds. Iowa follows this pattern – brand new homes are relatively scarce in the entry-level price range, so most first-timers buy older, resale homes.
While houses dominate, some first-time buyers opt for condos or townhomes, especially in more urbanized areas. Condominiums (where you own an apartment unit and share a building) and townhouses (attached row-style houses) can be attractive to young professionals or smaller households, since they typically require less maintenance (yard work, etc.) and often cost less than a detached house in the same city. In downtown Des Moines, for instance, there are condo developments where prices might be within reach for first-time buyers who enjoy city living. That said, condos and townhomes make up a relatively small slice of Iowa’s market – multi-unit housing comprises roughly 15–20% of the state’s housing units, and many of those are rentals rather than for sale. Thus, only a minority of first-time buyers (perhaps around 10% or so) choose a condo or townhouse. Those who do are usually in metro areas like Des Moines or Iowa City, where such properties exist.
Another segment to note is manufactured homes (mobile homes). In some rural parts of Iowa, manufactured homes provide an affordable alternative for first-time buyers. These are factory-built houses, often located in mobile home parks or on leased land, which can cost significantly less than a site-built house. A first-time buyer with a limited budget might purchase a mobile home for well under $100,000. However, financing can be trickier (mobile homes may not qualify for standard mortgages), and owners often don’t own the land underneath. Because of these factors, mobile homes are not the top choice for most first-time buyers, but they are an important option for some lower-income families in Iowa.
In summary, starter single-family houses remain the primary property type for first-time buyers statewide. Iowa’s first-timers are generally purchasing modest, existing houses – the kind that offer a couple of bedrooms, a garage, maybe a small yard – rather than luxury homes or high-rise condos.
Upsizing, Downsizing, or Lateral Moves?
When first-time buyers purchase a home, it’s often a big change from their previous living situation. Many are moving out of a rented apartment or their parents’ house, so buying a home can feel like a major “upsize” in space and responsibility. In Iowa, this is frequently true: a young couple moving from a small apartment in Des Moines might upgrade to a 3-bedroom house in a quiet neighborhood, gaining extra rooms and a yard. Similarly, someone coming from a crowded multi-generational household might finally have their own space after buying a home. The data reflects this tendency to upsize – the typical home that recent buyers purchased is significantly larger than the apartments many rented before (again ~1,860 sq. ft. on average, with three bedrooms). For most first-time buyers in their 20s or 30s, buying a home means more space and amenities (like a garage, backyard, or extra bedroom) than they had as renters. In that sense, it’s an upward move in quality of life.
However, not all first-time buyers are upsizing; some are essentially making a lateral move, and a few could even be considered “downsizing” relative to prior living arrangements. For example, consider an older individual or couple in their 50s who have always rented a large suburban house – when they decide to finally buy a home, they might choose a smaller townhouse or a condo that’s easier to maintain. In their case, the first home purchase might actually be smaller than the place they had been renting, which is a kind of downsizing. This scenario is not the norm, but it does happen. The average age of first-time buyers has been rising (more on that below), so there are indeed some first-time owners in their 40s, 50s, or beyond who may not need a big family home.
Overall, the majority of Iowa’s first-time buyers are “upsizing” in the sense of gaining more space or stability. After all, owning often allows people to spread out compared to a cramped rental or shared living. Surveys find that many first-time buyers are motivated by life changes like marriage or expecting children, which lead them to seek larger housing. That said, first-timers also try to be practical. They typically don’t buy more house than they can afford, and with recent high prices, many have had to moderate their expectations. A common strategy is to buy a “starter home” – maybe it’s not the dream home, but it’s affordable and can be improved over time.
Demographic Trends: Who Are Iowa’s First-Time Buyers?
The profile of first-time homebuyers in Iowa has been evolving. Demographically, this group’s age, income, and household characteristics have all seen shifts in recent years.
Age: First-time buyers are getting older on average. Nationwide, the median age of first-time homebuyers hit 38 years in 2023 – an all-time high, up from age 35 just a year before. (For context, the median age was around 30 in the 1980s, so this is a big generational change.) Iowa reflects this aging trend, though perhaps not quite as extreme. Thanks to Iowa’s affordability, many young adults here become homeowners in their 20s. In fact, Iowa led all states in the share of home purchases by buyers under 25 (nearly 12% of loans). It’s not uncommon in rural Iowa for a 23-year-old to buy a starter home, which is something you’d hardly see in, say, California. That said, plenty of Iowa buyers are waiting longer due to later marriage, student debt, or saving up for a down payment. The result is a mix – some first-time buyers are still quite young (20s), while others are middle-aged folks finally taking the plunge. Overall, the typical first-time buyer in Iowa is likely in their early-to-mid 30s, slightly younger than the national median of 38 but older than first-timers of previous decades.
Income: First-time buyers today earn higher incomes than earlier generations (partly because home prices and qualification requirements have increased). Nationally, the median household income of first-time homebuyers was about $97,000 in 2023, a record high. That’s up dramatically – by about $26,000 – from just two years prior, showing how new buyers now need much more income to afford current home prices and interest rates. In Iowa, incomes are lower than the national median, but so are home prices. The median household income in Iowa is around $71,000. Many first-time buyers here have incomes in that ballpark or a bit above it. For example, Iowa Finance Authority programs for first-time buyers often serve households earning in the $60k–$100k range (with income limits up to ~$96,500 for a two-person household for certain aid). A couple each making $35,000 a year (so $70k combined) might reasonably afford a $180,000 starter home in Iowa with the help of a low-down-payment loan.
Household size and composition: The makeup of first-time buyer households is also changing. Marriage is still common among homebuyers – in 2023, 62% of all home buyers were married couples. First-time buyers historically included many young married couples purchasing their first house to start a family. That is still a core group in Iowa: a married pair in their 20s or 30s, possibly with a baby on the way, buying a home in a neighborhood with good schools. However, there’s a notable rise in single individuals and unmarried partners buying homes. Single women in particular have become a larger share of first-time buyers. National data show single female buyers made up about 20% of home purchasers in 2023 and their share among first-timers jumped by 5% that year. Single men buy homes too (around 8% of buyers), but they have trailed behind single women in recent years. Additionally, about 6% of buyers are unmarried couples purchasing together (this could be engaged couples or partners) – a trend that’s grown as people marry later but still want to own a home together first.
Financing Trends: Down Payments and Loans
Financing a first home in 2020–2025 has required creativity and careful planning. The days of zero-down easy mortgages of the mid-2000s are gone, but there are still many programs and loan options helping Iowa’s first-timers buy homes.
Down payments for first-time buyers, while still relatively low, have edged up in recent years. According to NAR, the median down payment for first-time homebuyers in 2023 was 9% of the purchase price. This is higher than the historical norm of around 5%–6% for first-timers. On a $200,000 house, a 9% down payment is $18,000. Many Iowa buyers actually put down less than that by using specialized low-down-payment loans. FHA loans, insured by HUD’s Federal Housing Administration, are popular for first-timers and require as little as 3.5% down. USDA Rural Development loans allow 0% down for qualifying rural purchases, and VA loans (for veterans and active-duty military) also offer 0% down with no private mortgage insurance. These federal loan programs have been critical: historically, over 80% of FHA’s purchase loans are made to first-time buyers, and in the past year FHA alone served about 498,000 first-time homebuyers nationwide. Iowa’s first-time buyers make ample use of FHA and USDA loans – for example, a young family in a town of 5,000 might use a USDA loan to buy with no down payment, something that’s relatively common in our state’s small communities.
Even when using these loans, many first-timers still need to cover closing costs or a small down payment, and this is where assistance programs and personal savings come into play. The Iowa Finance Authority (IFA) administers programs specifically to help first-time and low-to-moderate income buyers. In 2024 alone, IFA’s mortgage programs helped 2,660 Iowans purchase homes with competitive-rate loans and down payment assistance. IFA offers down payment grants of up to $2,500 or low-interest second loans up to 5% of the sale price to help with down payments and closing costs. The vast majority of participants use these aids – in one recent fiscal year, nearly 91% of IFA-assisted homebuyers received some form of down payment or closing cost assistance. Essentially, almost everyone using the state program needed a little boost to cover upfront costs.
Family assistance is another huge piece of the puzzle. It’s become common for first-time buyers to get help from the “Bank of Mom and Dad” or other relatives. A Zillow survey found that about 49% of first-time buyers used a gift or loan from friends/family to fund at least part of their down payment. We see this in Iowa anecdotally: parents might gift a few thousand dollars for closing costs or co-sign on a loan, or grandparents might leave an inheritance that goes toward a house. With higher home prices, these intergenerational transfers are often key in making homeownership achievable for young adults.
In terms of loan types, besides FHA/USDA, many Iowa first-time buyers use conventional mortgages as well. Some conventional loans offer 3% down options (HomeReady and Home Possible programs, for example) which compete with FHA. The advantage of conventional loans for a strong credit buyer is potentially lower long-term costs (no upfront mortgage insurance fee like FHA has, and you can cancel PMI later). The IFA FirstHome program even offers conventional loans with reduced mortgage insurance premiums for those under certain income limits. We also saw interest rate buydowns and adjustable-rate mortgages (ARMs) regain a bit of popularity in 2022–2023 among first-timers trying to cope with high rates.
Another trend: Many first-time buyers are stretching their debt-to-income (DTI) ratios to the max allowed in order to afford homes, given the price increases. Lenders often allow up to around 45%–50% DTI for FHA and some conventional loans, and some buyers are indeed at those upper limits. This can be risky because it leaves less room in the budget for other needs, but it shows how determined people are to own a home – willing to devote a large chunk of monthly income to the mortgage.
How 2020–2025 Differs from 2010–2019
Finally, it’s illuminating to compare the recent five-year period with the previous decade. The 2010s vs. the early 2020s have notable differences in first-time homebuyer trends in Iowa (and nationally):
Market Share of First-Timers: During 2010–2019, first-time buyers typically made up about one-third of home sales in a given year – a fairly steady norm around 30%–40%. In fact, coming out of the 2008–09 recession, there were years (2010) where first-timers spiked to nearly 50% of sales due to special incentives (like the first-time homebuyer tax credit). In contrast, 2020–2025 saw the first-time buyer share first hold around one-third, then drop steeply to only 24–26% of sales in 2022–2024 – the lowest on record. This drop was driven by intense competition (many first-timers kept getting outbid by cash-rich repeat buyers or investors) and by affordability problems. By 2025, the share has started to climb back up slightly as the market adjusts, but it’s still lower than the averages seen in the 2010s.
Age of Buyers: First-time buyers in the 2010s were younger on average than those in the early 2020s. A decade ago, the typical first-time buyer was in their early 30s (around 31–32 years old). Now, as noted, the median first-time age has jumped to the mid/upper 30s. For example, NAR’s data show a leap from age 32 in 2019 to age 38 by 2023 for first-time buyers. That’s a significant demographic shift in just a few years. In Iowa, while many can buy young, the overall trend still holds: more buyers are older millennials or Gen X now, whereas the 2010s had more in their twenties.
Home Prices and Affordability: The 2010–2019 decade began with very low home prices (the market was recovering from the housing crash). In Iowa, that meant great affordability – median home prices in 2010 were perhaps around $120,000–$130,000 in many areas. Prices did rise through the 2010s, but gradually. By 2019, Iowa’s median sale price was roughly in the $150k–$160k range. First-time buyers in that decade benefited from stable or gently rising prices and low interest rates (usually 3.5%–5% mortgage rates through the 2010s). In contrast, 2020–2025 featured rapid price escalation (with Iowa’s median jumping to ~$228k) and a whipsaw in interest rates (from ~3% in 2020 to ~7% in 2023). A new buyer in 2015 might have gotten a 4% loan on a $150k house; a similar buyer in 2023 faced maybe a 6.5% loan on a $220k house, which could be nearly double the monthly payment.
Inventory and Choice: The 2010s were a period of housing recovery where there was actually an abundance of homes for sale in the early years (due to foreclosures and turnover from the recession). First-time buyers often had the advantage of plentiful inventory around 2010–2014, including many foreclosed homes that were more affordable. Iowa’s market in those years was buyer-friendly in many locations. By the late 2010s, inventory tightened, but nothing like the shortage seen in 2021–2022. In the early 2020s, housing inventory hit record lows. This was much less of an issue in the early 2010s. So, a big difference is that 2010s first-time buyers had more options to choose from, whereas 2020s buyers often had to grab whatever they could find.
In essence, buying a first home became harder in 2020–2025 compared to 2010–2019 on several fronts: higher prices, older age, lower market share, and tougher competition. The earlier decade had its challenges too (the hangover from the housing bust made some lenders strict and some potential buyers cautious), but overall the barrier to entry was lower when homes cost less and interest rates were friendly.
As we move beyond 2025, these trends will continue to evolve. First-time buyers remain a vital part of Iowa’s housing market, forming the foundation of new homeownership. The last five years tested them with unprecedented conditions, but many persevered and achieved their goal of buying a home. With ongoing efforts to expand housing supply and assist new buyers, Iowa aims to keep the door to homeownership open for the next generation, both in its vibrant cities and its rural heartland.
References
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- Corridor Business Journal – Iowa residents among most likely in U.S. to own their homes
- Bankrate – Iowa First-Time Homebuyer Assistance Programs
- Yahoo Finance – Half of Zillow’s top cities for first-time homebuyers are in the Midwest
- Common Sense Institute – Housing Affordability in Iowa: Q1 2025
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- Common Sense Institute – Iowa Housing Competitiveness Index
- Bankrate – Homeowner Data, Facts And Statistics 2024
- Zillow Research – Buyers: Results from the Zillow Consumer Housing Trends Report 2023
- Iowa State University Extension – Navigating Demographic Shifts
- Redfin – Des Moines, IA Housing Market
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- DSM Partnership – Boosting Iowa Rural Housing Through Partnerships and Innovation
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- AI Home Design – NAR’s 5-Year Research on Home Buyers & Sellers: Key Insights
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- HUD – Financial Status of the FHA Mutual Mortgage Insurance Fund Reports (2023 & 2024)
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- Iowa Department of Management – Agency Performance Plan Results
