Your Guide to Buying a Home in Missouri

The Missouri Buying Process: A Summary

• In Missouri, the purchase is completed by a summary agent or closing agent. This can either be an attorney, a representative from the title company, or a lending professional. 
• Buyers and sellers generally complete the transaction together at a closing meeting. 
• Before the contract is finalized, there are adjustments and repairs to be negotiated. (See Phase 1.)
• Most buyers will need a mortgage, which requires significant documentation from the borrower. (See Phase 2.)
• The final closing will be scheduled with both parties usually coming together to sign all papers. 
• All of Missouri is under the base loan limits for conforming loans.

Buying a Home in Missouri, Phase 1: Negotiating Repairs and Updates

Although you have come to an agreement on purchase price, there are still many details that need to be settled. This will include having inspections done to the property, finalizing repairs, and could even mean changes to the final purchase price. 

1. An offer is first accepted and a contract between you and the seller is signed. This effectively removes the property from the open sales market. 
2. At the same time, you will pay “earnest money,” which shows your full intention and commitment to making the purchase.
3. The contract will be signed and sent to the title company or attorney. They will begin transferring the title to the new owners, although the documents will not be official until the transaction is completed and the papers are signed by everyone involved.
4. You will receive a list of disclosures from the seller. These are statements of known issues with the property, including damage, environmental issues, and past repairs. 
5. Although you have received disclosures, you will want to complete a variety of inspections. In Missouri, this should include a general home inspection, a termite inspection, and possibly a mold inspection. Missouri law allows sellers to indicate if certain aspects are exempt from inspection issues. 
6. Based on the inspection results, you can request changes to the contract, such as a lower price. You may also request that the seller repair the issues before finalizing the deal. The seller can offer a negotiated settlement to complete the transaction. If no agreement can be reached, the purchase can be ended without penalty to either party. 
7. A home warranty may also be requested. This can cover repairs to appliances for a certain period, usually about a year. 

Phase 2: The Missouri Mortgage Process

While you are negotiating with the seller, you will need to begin working with your lending professional to finalize the mortgage. This phase usually takes the longest and requires the most effort on your part, so its best to gather documents as early as possible. 

1. First you will have to submit a formal application for the loan. This can be done independently, but many prefer the assistance of a lending professional. 
2. In roughly three days, you should receive a “good faith estimate.” This is the estimated costs for closing the purchase, and while lenders try to make it as accurate as possible, the final cost may vary slightly. 
3. Now you will need to send a variety of documents to the lender. The exact documents for each application will be different, but you can expect requests for: 

• Pay stubs: This will help the lender establish your base income.
• Tax returns: This gives lenders a strong understanding for your long-term earnings.
• Bank statements: These documents show how much you have in savings, an important factor for many loans.
• Loan documents: Lenders want to know how much you have in other debts. 
• Financial disclosures: This can include anything that impacts your income and financial situation, such as child support, alimony, legal judgements, disability payments, divorce decrees, and more. 
• Explanation on any credit inquiries: Recent inquiries increase your statistical chances of default, so lenders may request information if you have multiple, rapid inquiries. 
• Information on any large deposits: If there is a large cash deposit that is not part of your regular income, lenders may require information about this money.
• Gift letters: If a gift will be used for the downpayment, a “gift letter” may be required. 
• Repeat or updated information: Lenders want as much information as possible, and they may request repeat, duplicate, or up-to-date information. This could include more paystubs, tax returns, or recent bank statements. This may seem repetitive, but it helps lenders feel more comfortable making the loan. 

4. The lender will eventually deliver a decision.  Assuming you are approved, they will issue a loan commitment letter, which states their willingness to support your purchase. There will, however, be conditions that need to be met. These conditions will likely include a home appraisal. 

5. An appraisal will be ordered by the lender or mortgage team. This helps verify the value of the home. If the appraisal comes back low, the lending official may request changes to the purchase price or the downpayment. (Essentially, they don’t want to lend more than the home is worth.) 

6. Most Missouri contracts will have a loan contingency date. This contingency can now be removed, as the buyer has been approved for the mortgage and the purchase can proceed as planned. 

7. Homeowner’s insurance is now ordered and you must submit proof of this insurance to the lender. 

Phase 3: Buying a Home in Missouri, the Final Closing

In Missouri, the closing usually takes place at one table with all parties present at the same time. The buyer and seller will gather together, sign all the appropriate documents, and the transaction will be recorded. 

But first, there are a few details that need to be addressed…

1. The attorney overseeing the transaction will perform a title search. This ensures that the property is free and clear of ownership disputes and the owner has a legal right to sell the property. 
2. A final date for closing the deal is scheduled.
3. A cash figure for completing the transaction is calculated. This will include agent fees, closing costs, the downpayment, and other expenses. 
4. A final walkthrough of the property is completed. This will ensure the property is still in a high-quality condition, just as it was when it was last seen. 
5. The buyer and seller, as well the attorney or professional overseeing the transaction, will meet together to sign all documents. 
6. You will pay the remaining funds, usually with a cashier’s check. 
7. The transaction will be recorded with the appropriate city or county if it’s a rural property. 
8. You’ll get your keys and can move into your new Missouri property!

Conforming Loan Limits in Pennsylvania

Across the country, loan limits are set by the Federal Housing Finance Agency (FHFA). This government organization determines the limits, which are then applied to numerous government-backed loans, including FHA, VA, and USDA loans. Loans supported by Fannie Mae and Freddie Mac are also impacted by these limits. 

The base loan limits are used in the entire state of Missouri. This mean the limit for a single-family home is $647,200. Buyers of a two-unit property can use conforming loans up to $828,700, while three unit properties have a limit of $1,001,650. For a four unit property (the most you can buy with a conforming loan), the limit is $1,244,850

These are the limits from Atchison County in the northwest to Clark County on the border of Illinois and Iowa. They apply to all counties down the Mississippi River to Pemiscot County on the border of Arkansas and Tennessee and west to McDonald County, which touches Oklahoma. 

However, these are only the limits for conforming loans. If you need financing above these amounts, talk to our team about jumbo loans in Missouri. 

Note: Loan limits are constantly changing and numbers may not reflect current pricing. 

Downpayment Assistance (DPA) Programs in Missouri

Saving for a downpayment can be difficult, but Missouri residents have access to a variety of programs that help ease this burden.

If you live in the Show Me State, we’d like to show you a few examples of top-quality downpayment assistance programs available to Missouri buyers!

Statewide DPA Programs for Missouri Buyers

The Missouri Housing Development Commission is a part of the state government. It serves residents all across the state, providing services that encourage safe, affordable housing. Some of their most important work comes by providing downpayment support, which is administered through two programs…

First Place Loan Program
If you have not owned a home in the past three years, you may be eligible for a First Place Loan. This support comes as a cash assistance loan that can be used to pay for the down payment and closing costs. Eligible buyers can receive up to 4% of the first mortgage amount. Best of all, this loan can be forgiven if you stay in the home for ten years or more.

Next Step Program
First-time and repeat buyers who don’t meet the income limits of the First Place program but still struggle with a downpayment can take advantage of the Next Step program, which also offers 4% of the purchase price but comes with a few different details. Like the First Place program, it is also forgivable.

Major Local Programs in Missouri

Depending on where you live, you can also find support from city and county governments, as well as non-profit organizations.

Columbia Downpayment Assistance
Buyers in Columbia can take advantage of a downpayment assistance program that offers as much as $10,000 in funding. This comes as a ten-year forgivable loan with 0% interest. The money can be used for a downpayment, but could also go towards closing costs or to reduce the original loan balance.

Community Action Agency of St. Louis County
If you live in St. Louis County, you might be eligible for support through the Community Action Agency. This program allows buyers to receive as much as $5,000 depending on the location of their purchase.

St. Charles
The Homeownership Assistance Program from St. Charles offers a 0% loan to first-time buyers. Buyers can get up to $10,000, there is no monthly payment, and the loan could be forgiven after five years.

Common Requirements for Downpayment Support in Missouri

Each program will have different requirements, but you can expect limits on income and restrictions on overall purchase price. Essentially, you (probably) can’t be a high-income buyer purchasing a top-end home.

Some programs also have requirements for credit scores, and you may have to complete homebuyer education, especially if you are a first-time buyer.

Programs are changing constantly. For up-to-date information on current DPA programs in Missouri, contact our team today!