Now that the housing market is finally calming down after the pandemic, buyers are facing a new challenge: Soaring mortgage rates.
In Connecticut, the average 30-year fixed mortgage rate is 5.48% — up from 2021's historic lows. This raises the average monthly mortgage payment to $1,635 (assuming a 20% down payment at the median home value).
But buying a home in Connecticut is still possible, even for first-time home buyers. Many markets are seeing frequent price drops and fewer offers, giving motivated buyers the upper hand in negotiating for the best price.
In this guide, you’ll learn how to buy a house in Connecticut with confidence no matter what the market brings. Learn why you can trust our advice.
Whether you're actively house hunting or just starting to browse homes on Zillow, it's never too early to find a great local realtor to guide you on your search. An experienced agent can help you navigate a tricky housing market, explore your financial options, and negotiate the best deal possible.
Best of all, hiring a real estate agent comes at no extra cost to you — since the seller typically pays both their listing agent and your buyer's agent.
Ready to find a great local realtor, but not sure where to start? The best (and easiest!) option is to try a free agent matching service like Clever Real Estate. Answer a few simple questions about your home buying goals, and Clever will match you with hand-picked agents from Keller Williams, RE/MAX, and other top brokerages in your area. Find a top local agent and make your home buying dreams a reality today!
Step 1: Save for a down payment
Your down payment is the first part of your home's purchase price that you pay at closing. Your mortgage lender will pay the remaining balance.
Typically, mortgage lenders in Connecticut want you to contribute 20% of the purchase price as a down payment. That would be $72,130 for a $360,650 home — the typical home value in Connecticut.
However, you have options to lower your down payment amount.
Government backed loans, like VA and FHA loans, allow you to contribute 0% and 3.5% of your home's purchase price respectively. Even conventional loans allow for down payments as low as 3-5% (though the minimum varies by lender).
Minimum down payment (%)
Down payment ($)
Based on typical home values from Zillow (August 2022)
But making a down payment of less than 20% comes with some risks.
First, because you're borrowing more money, you'll have a higher monthly payment and pay more in interest over the life of your loan.
Based on home values from Zillow (August 2022) and a 5.48% interest rate for a 30-year loan.
Second, you may have to purchase mortgage insurance.
Conventional loans require private mortgage insurance (PMI) until your loan balance reaches 80% of the purchase price. FHA loans, on the other hand, require a mortgage insurance premium (MIP) for the life of your loans.
Mortgage insurance costs around 1% of your mortgage balance annually. However, rates vary based on your down payment and credit score. Typically, your mortgage insurance payment is added to your mortgage payment each month.
VA loans don't charge mortgage insurance. Instead, you'll pay a VA loan funding fee at closing, which can range from 1.4% to 3.6% of the purchase price.
Connecticut down payment assistance programs
There are several down payment assistance programs in Connecticut for homebuyers like you. These programs can provide you with a government grant or a second mortgage with deferred or forgiven payments. Each option has its own eligibility requirements, so be sure to read the fine print to find the right one for you.
To help you get started, here are some local programs to check out:
CHFA Down Payment Assistance Program
The Connecticut Housing Finance Authority (CHFA) offers its Down Payment Assistance Program to applicants who qualify for a CHFA mortgage. The loan must be for at least $3,000, but not more than the minimum down payment required to purchase a home (around 3-3.5% of the total sale price).
Borrowers must contribute at least $1,000 towards the acquisition costs and prove that they're capable of paying back the loans. Applicants are also required to attend a homebuyer education class before closing.
The Housing Development Fund offers down payment assistance to first-time homebuyers via its SmartMove Connecticut program. Participants may receive up to 25% of the sales price in the form of a 20-year second mortgage with a fixed interest rate of 3%.
The program is recommended for people with a credit score of at least 660, but those with lower scores might still be eligible based on other lower factors. Participants must complete a homebuyer education course and pay any fees associated with taking the loan out (typically between $750 and $2,500). You'll also need to check the household income limits to make sure you're eligible for the program.
U.S. Department of Housing and Urban Development
You can check out HUD’s list of alternative programs in Connecticut here.
Step 2: Find a great real estate agent in Connecticut
Your real estate agent will be your main ally during the home buying process. Besides finding and showing you properties, your agent will help you make offers, negotiate contracts, and navigate the closing process. Plus, they can recommend other service providers like title companies and inspectors to help you buy your home in Connecticut.
Don't rush into choosing an agent. Instead, take the time to research and interview multiple real estate agents who have experience in the neighborhoods you're interested in. You should pay attention to a realtor's:
- Years of experience
- Number of transactions in the last year (the more the better!)
- Experience in your price range
- Overall review score
- Individual reviews and complaints
Step 3: Get preapproved for a mortgage
A mortgage preapproval letter is an offer to lend you up to a certain amount of money to purchase a home. It shows sellers that you are a serious buyer who is financially qualified to make an offer on a home.
Most sellers in Connecticut will require preapproval before showing you their home.
You don't have to decide on one lender right now. In fact, you should compare interest rates and preapproval amounts from several lenders to make sure you're getting the absolute best terms when you buy your Connecticut home.
Step 4: Choose the right location
Currently, the typical home value in Connecticut is $360,650, but don't worry if that doesn't perfectly match your budget. Home prices vary dramatically from city to city and even from neighborhood to neighborhood!
Also, look at past home value trends. This will give you an idea of how much your home's value could go up over the next few years.
To give you an idea of how appreciation could impact what your house is worth in the future, consider these examples from three neighborhoods in Bridgeport:
Home value appreciation in Bridgeport
Brooklawn- St. Vincent's
West Side- West End
Step 5: Start house hunting in Connecticut
Searching for homes in Connecticut is the fun part of the home buying process! You'll get to look at a variety of homes and discover what you really want in a home.
Make a list of everything you want in a home and prioritize them. At the top of the list should be the items that are most important to you. This will help you separate your "must-haves" from your "nice-to-haves."
Your agent can help you understand if your wants are realistic for your budget and favorite neighborhoods or if you need to rethink what you're looking for.
Look at current housing inventory
The timing of your house hunt in Connecticut can have a big impact on your number of options. For example, in Connecticut, May has historically seen the most homes for sale. Searching in this season could give you more options and a greater likelihood of finding your dream home.
On the other hand, December gives you the fewest choices in Connecticut. Historically, there are 57.3% fewer homes for sale than during Connecticut's peak season.
Housing inventory in Connecticut by season
New listings per month
Based on data from Realtor.com (September 2022)
Step 6: Make an offer
Once you find a Connecticut house you love, it's time to make an offer. Your real estate agent will help you write a compelling offer that gives you the best shot of convincing the homeowner to sell to you.
Currently, in Connecticut, homes stay on the market for 71 days before going under contract. However, every market goes through seasonal changes. During busier months, homes get snatched up more quickly than others.
Historically, Connecticut homes sell fastest in June, where the average property is only on the market for 53 days. If your home search falls around this time, you should be prepared to move quickly and potentially make offers on several homes before yours is accepted.
On the other hand, if you buy in January, you have a bit more time to search. Homes typically stay on the market 23 days longer than Connecticut's annual average.
Average time homes spend on market in Connecticut
Based on data from Realtor.com (September 2022)
» LEARN MORE: What should an offer include?
Step 7: Inspections and appraisals
Inspections and appraisals are an opportunity for you to better evaluate the home's condition and value before officially purchasing it. You may have an opportunity after this step to renegotiate the terms of your contract with the seller if something unexpected pops up.
Home inspections in Connecticut
Having your Connecticut home inspected by a licensed inspector gives you peace of mind about the condition of the property before you commit thousands of dollars to purchase it.
Your inspector should check out the following parts of the property:
- Electrical system
- HVAC system
If the home has a septic system, you should also pay for a septic inspection to make sure it doesn't have any problems that wouldn't be covered in a typical home inspection.
Connecticut disclosure laws require sellers to inform potential buyers of any serious issues with a property. Although most of these problems can be identified with a general home inspection, it's a good idea to do a few additional tests for greater peace of mind.
Here are a few inspections you may want to consider before buying a home:
- Radon testing: Radon is an invisible but toxic substance that can make its way into a home without the homeowner's knowledge. Before buying a home in Connecticut, it's recommended to do a radon test to prevent potential health risks. Learn more about radon or order an inexpensive test kit by checking out the Connecticut Department of Health website.
- Termite and pest inspections: Some loans require pest inspections before closing, but all buyers are recommended to thoroughly check for pests. Getting an inspection will help ensure that the property is safe and in good condition prior to move-in day.
Appraisals determine the value of the property. If you're using a mortgage to buy your new home, your lender will order an appraisal to make sure the home is worth the money that it's loaning you.
Step 8: Close on your new home!
On the closing date, you’ll meet at the title company to sign the necessary paperwork and settle your closing costs.
If you have any questions about the homebuyer paperwork, try to ask your agent before the closing date. It's important to fully understand everything before signing to avoid any title transfer issues.
Prepare to review and sign numerous documents, including:
- The mortgage promissory note
- The deed
- The disclosure statements
After the paperwork is finished, you’ll have to pay closing costs. These can generally be divided into four categories:
- Lender fees: Fees paid to your mortgage lender for originating and underwriting the loan. You might also have to pay other fees connected to the loan, such as appraisal and survey fees.
- Prepaid costs: Ongoing costs of homeownership, such as property taxes and homeowners insurance. Most mortgage lenders require buyers to pay these fees up front.
- Title and escrow charges: Charges paid to the title company for their services. In some cases, buyers and sellers split this fee.
- Other closing costs: Miscellaneous costs based on each buyer's unique situation. Additional closing costs may cover pest inspections, flood insurance, real estate attorney fees, or other expenses.
Buyers in Connecticut typically pay 3–5% of the purchase price in closing costs. For a $360,700 home — the typical home value in Connecticut — that's between $10,821 and $18,035!
Frequently asked questions
In Connecticut it's required for a real estate attorney to be part of every home sale. While your agent can make recommendations, remember you get to make the final decision. Interview lawyers before hiring them to make sure they have the experience you need.
- Save for down payment
- Get pre-approved for a mortgage
- Choose your preferred Connecticut neighborhoods
- Partner with the right real estate agent in Connecticut
- Go house hunting
- Make a strong offer
- Inspections and appraisals
- Do a final walkthrough and close
Yes! Connecticut’s HFA Advantage and HFA Preferred Mortgage Programs aim to help first-time homebuyers and buyers in specific counties. Both programs offer home purchase loans with low interest rates, no up-front mortgage insurance costs, and options for down payment assistance.
To qualify, the borrower’s income can't exceed 80% of their county's area median income. Their home must be used as a primary residence and fall within the CHFA's sales price limits.
Federal Reserve. "Housing Market Tightness During COVID-19: Increased Demand or Reduced Supply?." Accessed October 11, 2022. Updated July 08, 2021.
Consumer Protection Financial Bureau. "The Fed is raising interest rates. What does that mean for borrowers and savers?." Accessed October 11, 2022. Updated March 17, 2022.