Iowa mortgages: Title Guaranty, the new homestead exemption and FirstHome

#Iowa Title Guaranty instead of title insurance

Iowa handles title coverage its own way. Iowa Title Guaranty, a state program, is Iowa’s exclusive provider of title coverage, so the lender’s and owner’s protection you would buy as title insurance elsewhere comes as title guaranty coverage here.

For buyers, owner coverage is often available at no additional cost when the lender’s coverage is issued — ask your lender or closing agent to confirm it is included rather than assuming it. Iowa Title Guaranty describes its coverage as low-cost and has added protection aimed at title theft for homeowners. The Loan Estimate guide shows where title charges appear on your disclosures.

#Iowa’s new homestead exemption

A 2026 law (SF 2472) replaced Iowa’s homestead tax credit with a homestead exemption, starting with assessment year 2026. Instead of a credit worth the tax on a fixed slice of value, the exemption removes 10% of a homestead’s taxable value, with a floor and a ceiling:

The maximum is indexed to inflation from assessment year 2027. Owners who already had the homestead credit don’t need to refile; as a new buyer, ask your city or county assessor how and when to apply, because the exemption doesn’t carry over from the seller.

#Property tax on an Iowa home

Iowa’s effective property tax rate of 1.29% is above the national ratio of 0.89% — the 9th-highest of the 50 states and DC. On a lower-priced home that still adds up:

Iowa’s housing is also older than in most states — the 11th-oldest by median build year — so set money aside for repairs as well as taxes. The payment calculator opens with these inputs.

#FirstHome, Homes for Iowans and the military grant

The Iowa Finance Authority (IFA) offers two purchase programs through participating lenders, both with a 640 minimum credit score and required homebuyer education:

The second loans have no monthly payment; they are repaid when you sell, refinance or pay off the first mortgage. FirstHome’s purchase price limit is $566,000 outside targeted areas, and income limits vary by county and household size. IFA has announced changes for reservations made on or after November 2, 2026: the 5% loan will be capped at $15,000, a new, smaller second-loan option will be added and the Plus grant will end. Ask a participating lender which terms apply on the day you reserve.

On the median $227,300 home, 5% is $11,365, under the $15,000 cap. With a 3% down conventional loan, that covers the $6,819 down payment and leaves $4,546 for closing costs; a veteran using the military grant would have $5,000 more. The first-time buyer programs guide compares this with national options.

#Iowa prices and paychecks

The median Iowa home costs 3.0 times the median household income, against 4.4 nationally — the 2nd-lowest ratio in the country. On the median income of $75,501, Freddie Mac’s 30% guideline allows $1,888 a month, enough for about $234,000 with 10% down at today’s average rate — $6,700 more than the median home value. Check your own figures in the affordability calculator.

Rent matters too: the median rent of $981 a month is the 3rd-lowest in the country, and owning the median home costs $853 more than that each month. Whether buying pays off depends on how long you stay; the rent vs buy calculator runs the comparison.

#Iowa’s transfer tax at closing

Iowa charges a real estate transfer tax of about 0.16% of the price — roughly $364 on the median home. With lender fees, the title guaranty, recording and prepaid items, the CFPB’s typical 2%–5% range comes to $4,546–$11,365 on the median home. The closing cost estimator applies the Iowa tax for you.