Connecticut housing market
Connecticut is a hot real estate market — home values have increased in the past year. Currently, the state has some of the most expensive homes in the country. That’s no surprise considering its proximity to New York City and Massachusetts.
This can create affordability challenges for buyers, especially for first-time home buyers and those who are downsizing their homes. Median home values are $262,600, according to Zillow. That means Connecticut residents are paying slightly more than the national median of $252,178. As a result, the average mortgage payment in Connecticut is higher than other areas, too.
Most of the population lives within the cities of Bridgeport, New Haven, Hartford, Stamford, and Waterbury. Homeowners will find that these areas may have a mix of listing prices. For example, Stamford (close to New York City) has a median listing price of $447,838. On the other hand, Hartford (further up the coast) has a much lower median listing price: $117,440.
How much does this difference in home cost affect your monthly mortgage payment? Our mortgage calculator for Connecticut can help you estimate your monthly mortgage payments for higher-priced metropolitan areas as well as more affordable suburban homes. Experiment with different numbers to pinpoint housing costs that fit your budget and lifestyle.
How do I calculate my mortgage payment?
We recommend using a mortgage calculator for Connecticut. The formula to calculate by hand can be quite complex. It looks like this:
On top of the principal and interest calculated in this formula, you’ll need to add monthly insurance costs and taxes. Property taxes and homeowners insurance are normally paid monthly to your lender. You lender sets these aside in a separate escrow account, then pays them to the appropriate organizations once a year. Our Connecticut mortgage calculator allows you to add taxes and insurance to your monthly payment.
When you use our mortgage calculator for Connecticut, remember that state property tax rates in this state average 1.63%. That’s among the highest in the country. In fact, residents spend around 5.5% of their income each year on property taxes alone, according to TaxRates.org.
The mortgage calculator for Connecticut also has an option to enter your down payment amount. If you save up for a higher down payment, you won’t need to borrow as much and your monthly mortgage costs will be lower.
Don’t forget: If you make a down payment that’s less than 20% of the home’s final selling price, you’ll need to pay for private mortgage insurance (PMI). This typically costs between 0.5% to 1% of your loan amount each year. You can also add PMI costs to the above calculator.
The many, varied costs of a monthly mortgage payment can be difficult to calculate by hand. Our Connecticut mortgage calculator takes all these factors into account to give you a comprehensive estimate of your monthly mortgage payment. It’ll also help you compare various scenarios (such as different interest rates and home prices).
To enter these additional costs into the above mortgage calculator for Connecticut, just click “Additional inputs” (below “Mortgage type”).
Things to know before buying a house in Connecticut
Buying a home is a major undertaking. Here are a few things you’ll want to remember when purchasing a house in Connecticut:
- Home inspection costs
- Closing costs
- Appraisal costs
- Title insurance costs
- And more
Check out our guide on home loans to make sure you have all the information you need before getting started. Below, we’ll go into these factors in more detail.
First, you’ll want to pay for your own home inspection. This typically ranges from $275 to $399. The final amount depends on the size of the home and whether you want additional tests conducted. Sellers in Connecticut are required to provide a property disclosure, but that’s not always as reliable as paying for an official inspection. Wouldn’t you want to find out about any potential issues in your future home?
Another added expense is closing costs. You’ll pay these when you sign the final paperwork. Residents of Connecticut can expect to pay 2% to 5% of the home price in closing costs. You’ll need to pay fees to various parties, such as a real estate attorney, mortgage lender, your county, and your state. These can include origination fees, administration fees, and underwriting fees. Note that origination fees differ from lender to lender, which is one of the reasons it’s crucial to shop around for the best mortgage lender.
There are other costs to prepare for. These can include a home appraisal, mortgage points, title insurance credit reports, flood certification, and surveys. Title insurance is mandatory — it protects you against financial loss from easements, undisclosed liens, or other types of future title disputes. Finally, don’t forget taxes. Home buyers in Connecticut need to pay a conveyance tax to transfer property titles.
Tips for first-time home buyers in Connecticut
If you are a first-time buyer in Connecticut, there are several steps you should take before you apply for a mortgage. Some of the ways to boost your chances of mortgage approval include:
The credit score needed for a mortgage varies by lender. If you don’t need to move immediately, it’s helpful to wait until you have a good credit score. Buyers with high credit usually qualify for lower interest rates. That can save you thousands of dollars over the life of your home loan.
If your credit score is low but you need to move now, check out our list of best mortgage lenders for poor credit. We also have a guide on how to boost your credit score.
There are a few first-time home buyer programs in Connecticut. These are also open to people who haven’t owned a home in the past three years. If you qualify, you can receive assistance on things like your down payment. In some cases, these programs offer lower interest rates.
The Connecticut Housing Finance Authority (CHFA) has three programs with different eligibility requirements:
- Homebuyer Mortgage Program: This program offers below-market interest rates on mortgages. Home buyers need to meet the eligibility requirements and complete an education class before closing. CHFA-approved lenders can help you start the process.
- CHFA Down Payment Assistance Program: This is a low-interest loan that goes toward your home’s down payment. Applicants must first qualify for a mortgage with a CHFA-approved lender.
- HFA Advantage® and HFA Preferred™ Loan Programs: These mortgages avoid both upfront and monthly insurance costs. Home buyers need to complete an education course before the closing.
Even if you don’t qualify for any of the above programs, there are plenty of ways to save on your monthly mortgage payments. The best place to start is by rate shopping at different lenders. By looking at various mortgage offers, you can build an idea of the average mortgage payment in Connecticut — and find out which lenders offer the best terms and rates.