State-specific financial checklist for buying a home — tax implications, insurance considerations, and common mistakes for Oregon residents.
The largest purchase most people make. From down payments to mortgage types to hidden costs, here's the complete financial roadmap for first-time and move-up homebuyers.
Oregon Tax Profile
Oregon has no sales tax, but high income tax rates apply to all retirement income. Social Security is exempt. The high income tax on retirement distributions is the main concern.
Check your credit score and credit report
Pull your free credit reports at annualcreditreport.com. Dispute any errors before applying for a mortgage. A credit score of 740+ gets the best rates; below 620 makes it hard to qualify for conventional loans. Pay down credit card balances — your credit utilization ratio matters.
Determine how much house you can actually afford
The 28/36 rule: Housing costs (mortgage, taxes, insurance, HOA) should not exceed 28% of gross monthly income. Total debt payments (housing + credit cards + auto loans + student loans) should not exceed 36%. But these are maximums — many financial planners suggest staying well below these limits for comfort.
Save for a down payment (and closing costs)
Conventional loans: as low as 3% down (but 20% avoids PMI). FHA loans: 3.5% down. VA loans: 0% down for eligible military. USDA loans: 0% down in eligible rural areas. Closing costs: 2-5% of the purchase price. Budget for both separately. PMI (Private Mortgage Insurance) costs 0.5-1.5% of the loan annually until 20% equity.
Get pre-approved, not just pre-qualified
A pre-approval involves a hard credit check and document verification — it's a real commitment from the lender. A pre-qualification is just an estimate. In competitive markets, sellers won't take your offer seriously without a pre-approval letter. Shop rates with at least 3 lenders.
Budget for all the hidden costs
Beyond mortgage + taxes + insurance: maintenance (1-3% of home value annually), utilities (typically higher than renting), HOA dues (if applicable), furnishings, lawn/snow care, and higher commuting costs if you're moving farther from work. Homeownership costs 30-50% more than just the mortgage payment.
Understand your mortgage options
Fixed-rate: Rate is locked for the life of the loan (15, 20, or 30 years). Predictable, best if you plan to stay long-term. ARM (Adjustable Rate): Lower initial rate that adjusts after 5, 7, or 10 years. Riskier but can save money if you'll sell before the adjustment. Points: Pay upfront to lower your rate — generally worth it if you'll keep the mortgage 5+ years.
Don't forget the inspection
A $400-600 home inspection can save you tens of thousands. Never skip it — even on new construction. Consider additional specialized inspections for: sewer/ septic, radon, mold, termites, and structural issues. Use inspection findings to negotiate repairs or price reductions.
Protect yourself with the right insurance
Homeowners insurance (HO-3 is standard) covers structure, personal property, and liability. If in a flood zone, flood insurance is required by mortgage lenders and is NOT covered by standard policies. Earthquake coverage is separate. Shop multiple carriers — rates vary significantly. Consider an umbrella liability policy for additional protection.
Oregon tax note: Top rate 9.9%. State income tax applies at the top rate of 9.9% — factor this into your planning.
Alistair combines state-specific rules with your unique financial picture to help you through buying a home.
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