Understanding the Oklahoma Mortgage Process

Buying a home in Oklahoma City may seem like a daunting task, especially for first-time homebuyers. It’s typically the most expensive purchase that most people will ever make, and it’s a considerable investment.

That’s why we’ve broken the entire process down into these eight steps for buying a home in Oklahoma City and the surrounding area. It all starts with your credit score.

1.  Check Your Credit Score

The first step to buying a home is to check your credit score, and to do what you can to improve your credit rating before you apply for a loan.

The easiest way to do check your credit is through AnnualCreditReport.com. You can also do this by contacting the three credit reporting bureaus in the United States: Equifax, Experian, and TransUnion.

If you request a report from each of these bureaus directly, you’ll have to create an account with them but you can do so for free. They may offer to sell you credit monitoring services. Whether you subscribe these services is up to you, but you’re not required to pay for anything just to check your credit report.

Take a close look at each of your credit reports. If any of the information there is inaccurate, you can dispute it by contacting the bureau that issued the report. You’ll need to do this in writing, by email or snail mail, and include copies of any documents that support your claim.

Each bureau will give you a FICO credit score. Don’t be surprised of each bureau gives you a different number, because they each calculate credit scores in slightly different ways.

The higher your credit score, the easier it will be for you to qualify for a mortgage and the lower your interest rate is likely to be.

The minimum credit scores for obtaining a home loan are typically in the 620-640 range, although you might qualify for a government-backed loan if you have a credit score of at least 580.

For more information on credit scores and how to improve them, please see our blog post “Credit Score 101.”

2.  Calculate How Much You Can Afford

Take a close look at your income and debts while considering your long-term financial goals. A general rule of thumb, known as the 28% rule, says that you shouldn’t spend more than 28% of your monthly gross income on mortgage payments.

Your gross income is how much you’re paid before taxes and other deductions are subtracted from your paycheck.

For example, if your gross monthly income is $3,000 per month, you would multiply this by 0.28 to get $840. Based on this, your monthly mortgage payment should be no more than $840.

Our simple loan calculator, makes it easy for you to estimate your monthly mortgage payment based on how much you need to borrow, the interest rate, and the term (how long you have to pay off the loan).

You should also determine how much you can save up for a down payment, as this will have a direct impact on your ability to qualify for mortgage and how much your monthly payments will be.

Of course, you’ll also have to take a look at the housing market and what homes are going for in the neighborhoods where you’d like to live.

How Much Does It Cost to Buy a Home in Oklahoma City?

According to the real estate company Zillow, the median sale price for a home in Oklahoma City was $212,750 in late 2024. The median home value was $199,271 which is a 1.7% increase from the previous year. The median list price was $270,000. There were 23.4% of homes that sold above the list price and 53.4% that sold below the list price.

3.  Save up for a down Payment

Your down payment will depend on what kind of mortgage you can qualify for. In the private mortgage market, it’s generally recommended to have a down payment of at least 20% of the closing price.

If you can accomplish this, you’ll be able to avoid paying private mortgage insurance (PMI). It’s an insurance policy that protects the lender in case you default on your mortgage. If your lender requires PMI, it will add this cost to your monthly mortgage payment.

For those required to have PMI, the only way you have it removed from your mortgage is if you reach 20% equity in your home. If your home increases in value, because of rising property values, you could refinance your mortgage to eliminate PMI.

If you qualify for a government-backed loan, you could obtain a mortgage that requires little to no down payment.

4.  Consider Your Mortgage Options

Depending on your situation, you might obtain a conventional mortgage with F&M Bank, or a federally-backed loan. Fortunately, we can help you consider your mortgage options and figure out what you could qualify for.

There are two types of conventional mortgages available in Oklahoma City, fixed rate and adjustable rate mortgages (ARM).

Fixed Rate Mortgages

Your interest rate stays the same for the duration of the mortgage, which are available in 15 and 30-year terms. Your mortgage payments will remain the same, apart from property taxes and insurance premiums.

Adjustable Rate Mortgages (ARM)

These typically start with a fixed introductory rate for a few years. After that, the interest rate can rise or fall, based on market rates.

ARM mortgages often start with a lower introductory rate than a fixed-rate mortgage, but that can change as interest rates tend to fluctuate over time.

Some homebuyers opt for a fixed rate mortgage for its predictability. Others prefer an adjustable-rate mortgage while hoping that interest rates will decline before their first adjustment. Some opt for a variable rate because they plan to sell their home during the introductory period, before their interest rate changes.

There are also government-backed loans available to qualified applicants. These include:

FHA/OHFA

The Oklahoma Housing Finance Agency (OHFA) offers federally-backed mortgages provided by the Federal Housing Administration (FHA). Those who qualify can receive a loan that includes 3.5% of their total mortgage amount that they can use in two ways:

• Apply it to their mortgage, thereby reducing their total mortgage costs and monthly payments.

• Reduce their down payment to 3.5% of their mortgage.

To qualify, applicants must:

• Buy a home that will be your primary residence.

• Have a minimum credit score of 620.

• Have an income that does not exceed $150,000 per year.

• Your total debt to income ratio must not exceed 45%.

FHA mortgages require mortgage insurance premiums (MIP) which is based on how much you have pay off on your mortgage and how long you have to do it. New FHA mortgages start with an MIP of 1.75% of the entire loan.

For more information, please see our webpage on FHA Home Loans.

VA Loans

Active-duty military service members and veterans with honorable discharges can obtain a mortgage backed by the U.S. Department of Veterans Affairs with up to 100% financing, no down payment required, and no mortgage insurance required. In some cases, surviving spouses could be eligible as well.

The VA does charge a fee for each mortgage that ranges from 0.5% to 3.3% of a loan. Borrowers can either pay this up front, or add the fee to their loan amount.

Veterans can verify their status and obtain a Certificate of Eligibility (COA) through the VA’s eBenefits portal. You will need this document to start the loan application process.

USDA Home Loans in Oklahoma

The U.S. Department of Agriculture’s Rural Development Guaranteed Housing Loan Program offers home mortgages with no down payment for low and moderate-income families in rural and suburban areas.

To qualify, your income must be between 50% and 80% of an area’s median income. The home you want to purchase must be in a rural or low population area. You can check out the USDA Home Loan Eligibility Map to see which areas qualify in and around Oklahoma City.

The property must be used for the buyer’s primary residence and applicants must have a credit score of at least 640.

Mortgage insurance is required. It amounts to 1% of the total loan, paid upfront, plus an annual fee that could be up to 0.35% of the total loan amount.

A home must also be considered “modest, but also decent, safe, and sanitary” as determined by the USDA.

If you have any questions about USDA home loans in Oklahoma City, please check out the USDA loan page on our website.

Mortgages for First-Time Homebuyers in Oklahoma City

F&M Bank's first-time homebuyer program, Open Door, can help individuals and families in Oklahoma, Canadian, Logan, and Kingfisher counties who may face financial obstacles buying their first home, or have not owned a home within the past three years.

We offer 100% financing with no money down, and a grant of up to $6,000 for closing costs*. These mortgages are available for homes costing up to $250,000.

A credit score of at least 620 is required in your total gross annual income must not exceed 120% of the Area Median Income.

5. Find a Realtor and Reach an Agreement

There are many ways to find a licensed realtor in Oklahoma City. You can always search for one online and check out any reviews they may have. Of course, you could also ask friends and colleagues to recommend someone.

Licensed realtors can be a huge asset when looking for a home. They know what the housing market is like and can walk you through the process of buying a home. They can also negotiate on your behalf.

A lawsuit against the National Association of Realtors earlier this year changed the relationship between realtors and their customers. The result is, anyone looking to buy a home must sign a written agreement with a realtor before the agent can show them a home, and this includes virtual tours.

The agreement must stipulate the compensation rate that the agent will receive and how the agent will be paid.

You wouldn’t have to sign an agreement to attend an open house or speak with the agent who is showing the home.

6. Search for a Home

While a licensed realtor may help you find the home of your dreams, you can also do a little searching on your own. This can be especially helpful if you’re still saving up for a down payment, want to get an idea of what the market is like and what you might be able to afford.

Houzo lets you search for homes that are for sale by owner in Oklahoma. Real estate companies, such as Zillow and Redfin let you search for homes for sale in Oklahoma City, as well as open houses where you can check out different homes, learn about different neighborhoods, and get a feel for the housing market in your area.

7. Make an Offer

Making an offer to buy a property is about much more than a verbal commitment and a handshake. Your offer should be in written form that spells out the price you’re willing to pay and the terms, plus any contingencies.

A realtor can be a huge help in this process, by recommending how much to bid on a home and what kind of contingencies you might need.

You might include a contingency such as the home being examined and approved by a certified home inspector. This step is important, as a home inspector should be able to spot any potential problems with the home that you would need to know about before closing the deal.

If a property relies on well water, you might add a contingency that the well must be tested and approved as being suitable and safe for the property.

Your lender will probably require an appraisal on the home by a licensed appraiser, to make sure the property is worth what you want to buy it for.

8. Close the Deal

If your offer is accepted, that’s great. A few days before the closing date, your lender will give you your mortgage documentation that spells out the terms of the loan, monthly payments, and closing costs. You can count on the closing costs to be around 2% to 5% of the purchase price.

Before you close the deal, you’ll do a final walk-through with your realtor to make sure the property is in suitable condition and that no damage was done by the owner moving out.

When you close on the property, you’ll sign the paperwork to formalize your mortgage and transfer the deed.

We Can Help You Find the Right Mortgage in Oklahoma City

If you have any questions about how to buy a home in Oklahoma City or which type of mortgage might be right for you, please contact us online or connect with one of our branches in Oklahoma City and the surrounding area.

_Footnote:

_{*Subject to credit approval and all eligibility requirements including but not limited to: Certificate of completion of (in person or by phone) Pre-Purchase Counseling must be received from one borrow and provided prior to entering into sales contract. Homebuyer Education Course (in-person or virtual) must be completed within current or previous calendar year of the purchase closing date. Required program courses and counseling through NHS/NFO. 1st Lien - F&M 1st Mortgage, Max LTV 80% and Max CLTV 100%. 2nd Lien - NHS/NFO 2nd Mortgage (Community Seconds/Affordable Seconds), Max LTV 20% of sales price.  A 2nd Mortgage Lien will be filed at closing. Grant funds will be table funded at closing. 3rd Lien - F&M Bank Grant subsidy up to $6,000 available to eligible borrowers on a first-come, first-serve basis until funds run out. Borrower will be required to sign a 5-year Real-Estate Retention Agreement at closing and will be filed as a third lien. Borrowers must escrow for taxes and insurance for the term of the loan. Eligibility guidelines subject to change. Refer to Fannie Mae and/or investor’s most up-to-date guidelines.}