It might be the third smallest state in the U.S., but tiny Connecticut definitely packs a punch when it comes to history, culture, and overall quality of life. Connecticut residents enjoy four seasons, the picturesque combination of coastal shores and mountain ranges, and a mix of country and city living.
Its proximity to New York only adds to the appeal, with commuters often choosing the less-expensive option of buying a home here, with weekend getaways to Broadway shows just a quick train ride away. It’s also considered to be a family-friendly state, with highly ranked schools and universities, more than 100 state parks, and 2,000 miles of hiking and biking trails to enjoy.
If this all sounds perfect and you’re thinking of purchasing a home in Connecticut, read on!
While the median price of a home in Connecticut was $361,501, as of July 2022, housing prices can vary greatly, and those seeking to buy in some of the more sought-after areas might find themselves paying well over one million for their dream home. And with so many options, determining which county is best, what you can afford, and how to go about the process can seem overwhelming.
With the help of top agent David Landau, who works with 68% more single-family homes than the average agent in Newtown, Connecticut, we’ve put together a comprehensive guide that breaks down all the ins and outs of buying a house in the Constitution State. With tips on everything from how to save for your down payment, specific loan programs for buyers, and what you should look for in an agent, we’ve got you covered.
Steps to buying a home in Connecticut
Let’s dive into the steps of buying a house in Connecticut:
1. Assess your readiness
Before you start looking for homes in Connecticut, you want to determine if you’re ready to purchase one. Consider factors such as how long you plan to be in the area, if you have steady employment, and if you have enough money saved for not just the down payment, but for closing costs, maintenance, property taxes, and more. Homebuyers in Connecticut pay an average of just over $2,700 in closing costs when purchasing a home.
During this time, review your credit score and determine if it’s considered excellent, good, fair, or poor. Typically, the higher your credit score, the lower your interest rate will be, which saves you money over the life of the loan. You may want to pay off any collection accounts, dispute errors on your credit report, and pay down your credit card balances before you start shopping for a home.
According to Landau, these are all things that should be in order before you start the house-hunting process, and buyers should always consider how much house they can really afford. “I talk to my clients about the importance of working within their budget, and not ending up house poor,” he says.
2. Saving for your down payment
The amount you’ll need to save for your home purchase will depend on several factors, including the cost of the house you buy, closing costs, and attorney fees (more on that later!). Most lenders will also want buyers to have at least some residual after the purchase, so that you aren’t completely wiping out your savings to buy a home.
Different loan programs will require different down payment amounts, but you don’t always need to put 20% down when buying a home. A survey completed by the National Association of Realtors found that first-time homebuyers put just 7% down on average in 2021.
Some buyers may also qualify for one of Connecticut’s down payment assistance programs, which, based on certain criteria, covers part or all of your down payment. These programs include:
Connecticut Housing Finance Authority (CHFA): The Connecticut Housing Finance Authority offers down payment assistance to first-time buyers in the form of a second mortgage called a DAP loan. Both the down payment and closing costs can be financed up to $20,000, with an interest rate of just 1.0%. Homebuyers must already be prequalified through a CHFA approved lender, and are required to attend a homebuyer education class prior to closing.
SmartMove Connecticut: Connecticut’s Housing Development Fund (HDF) SmartMove program allows first-time homebuyers the opportunity to purchase a home with as little as 1.0% down, by way of a low interest (3.0%) second mortgage for up to 25% of the home’s purchase price. In order to qualify, buyers cannot have owned a home in the last three years, and must meet certain income limits, which vary between individual counties within the state. Buyers must also prequalify for their first mortgage through an HDF approved lender.
HDF Live Where You Work: In order to help families reduce commute costs and improve their work-life balance, The Housing Development Fund created the “Live Where You Work” program, which allows first-time homebuyers to purchase a house in the same town where they work. Funded in partnership with Eversource Energy and the Connecticut Housing Authority, qualified buyers can get up to $20,000 in down payment assistance, which is repaid as a zero-interest second mortgage. Eligibility requirements include income levels below 80% of the area’s AMI (area median income), and buyers cannot have owned a home in the last three years.
3. Get preapproved for a mortgage
Getting preapproved for a mortgage will help you determine how much you can afford, which will then inform your home search. It’s always smart to shop around for the best rates and terms, so be sure to research a few different lenders during this process.
Landau recommends that buyers consider local lenders first when shopping for a mortgage. “We always suggest getting preapproved with a local lender who knows the area, especially if you’re competing against other offers,” he says. “With the current shifting market, financing is heavily looked at, and there’s a preference for a local lender that understands the process here.”
You can also ask family, friends, your buyer’s agent, and attorneys for mortgage lender recommendations. When choosing a mortgage lender, ask for a detailed cost breakdown, review the terms you are being offered, and compare loan types.
According to the US Consumer Financial Protection Bureau (CFPB), there are three general categories of mortgage:
There are two types of conventional loans — conforming and non-conforming. A conforming conventional loan will meet or exceed the guidelines set by Fannie Mae and Freddie Mac which are government-sponsored enterprises (GSEs) that purchase conventional loans. Guidelines for a non-conforming loan will vary more widely depending on the lender.
Typical requirements for a conventional loan may include:
- Minimum credit score of at least 620
- Maximum debt-to-income (DTI) ratio of 43%
- Minimum down payment of 5%, though some programs allow for a 3% down payment
- Maximum loan amount of $647,200 in most counties; $970,800 in high-cost counties
- Typically requires private mortgage insurance (PMI) if the down payment is less than 20%
Non-conforming loans are for borrowers who do not fit into the guidelines set by Fannie and Freddie and are not eligible to be purchased by them — jumbo loans are an example of this because they offer loan amounts above the limits set by Fannie and Freddie.
An FHA loan is insured by the Federal Housing Administration and available from FHA-approved lenders. An FHA loan is unique in that borrowers are able to use a down payment assistance program for the entire down payment. Requirements to qualify for an FHA loan may include:
- Minimum credit score dependent on down payment amount:
- 580 = 3.5% down payment
- 500-579 = 10% down payment
- An upfront mortgage insurance premium
- Mortgage insurance premium (MIP) paid monthly for the life of the loan
- DTI of 43% or lower
- Must be borrower’s primary residence
Similar to conventional conforming loans in this way, FHA loans have loan limits that vary from county to county. For example, in Fairfield County, CT, the maximum loan amount is $695,750 for single family homes, while in New Haven-Milford County, the loan limit is $420,680. Find the FHA loan limit for homes in the county you are looking to purchase in here.
VA loans: For veterans, service members, and surviving spouses. Loans backed by the VA offer 0% down payments for those who qualify. Different lenders will have different requirements, however, VA-backed loans do not have a universal maximum DTI requirement.
USDA loans: These loans are backed by the United States Department of Agriculture and are for lower income borrowers in “rural areas.” To determine if the area you are purchasing in is eligible for a USDA home loan, use this eligibility map. These loans also offer 0% down for qualified borrowers.
4. Research the market and determine where you would like to buy
Now that you know more about preparing to purchase a house and down payments, it’s time to decide where you want to live. Do you want to live near family and friends, start over in a new city, live on the coast, or in a more rural area? Consider work commute times, average house prices, and things to do in each area that you’re thinking about living in.
Some great places to consider when buying a house in Connecticut include:
Fairfield County: With its close proximity to New York City (60-70 miles away), Fairfield County is often the first choice for young professionals in Connecticut. The median home price here was $546,529 as of December, 2021, and it’s been ranked as one of the best places to live in the state. Residents of Fairfield County not only have easy access to the bright lights of New York, but also top schools, plenty of shops and restaurants, and a relaxed, suburban vibe.
Hartford County: Hartford County includes the cities of Glastonbury, West Hartford, and South Windsor, which are the Connecticut Chamber of Commerce’s top picks for best cities to live in Connecticut. All of these towns are rich in history, have some of the state’s best school districts, and plenty of options for recreational activities. Hartford County is also home to Connecticut’s capital city of Hartford, where residents enjoy an abundance of museums, performing arts, and family-friendly parks. The median home price here as of late 2021 was just under $300,000, although you might find higher prices in cities such as Glastonbury or West Hartford.
New Haven: New Haven County is Connecticut’s third most populous, not to mention one of the most popular places to live! The median home price here is just over $315,000, and its location on the Long Island Sound makes it very sought after. New Haven County is home to Yale University, and living here not only provides access to arts and culture, but also outdoor fun that includes hiking, biking, and water sports.
Middlesex County: Middlesex County gets high marks for its school system, earning a top three ranking for “Counties with the Best Public Schools in Connecticut.” The median home price is $352,064, and major towns within the county include Cromwell, a suburb of nearby Hartford, and Middleton, which sits on the Connecticut River and is home to Wesleyan College.
5. Find a local Connecticut agent
Real estate agents almost always appreciate it when their clients come to them to start home shopping after getting preapproved for a mortgage. This typically means that a buyer is ready to go and can start making offers. Choose a knowledgeable agent that specializes in representing buyers in the area you want to purchase in.
Your buyer’s agent will be able to help you create a wishlist, set up viewing appointments for you, tell you more about what’s going on in the neighborhood, negotiate on your behalf, and connect you with other vendors such as a title company, insurance agent, and home inspector. Real estate agents are also incredibly knowledgeable on the homebuying process as a whole and can hold your hand throughout the process to keep closing on track.
6. Start shopping for homes in Connecticut
Once you’re preapproved for your loan and line up a knowledgeable agent to work with, the fun part of the house-hunting process really begins! Depending on your budget and location preferences, Connecticut home styles range from historic Saltbox and Colonial houses, beachy bungalows, modern ranch styles, or townhomes, commonly called “row houses.”
The summer months are often the busiest for Connecticut’s housing market, and Landau says house hunting in winter means less competition and a higher chance of being able to negotiate. “Sellers who have their property listed at this time are motivated and more likely to deal,” he explains.
Landau says he always cautions buyers to be aware of potentially big-ticket repair items, like roofs or HVAC replacement, when looking at homes. It’s easy to get caught up when you love a location or floor plan, but you also don’t want to get into a house and then end up with a bunch of expensive repairs right after closing. “Especially for first-time buyers, who might not be aware of these kinds of things,” Landau says, “we don’t want to get them into a house just to find out they can’t afford to live in it.”
7. Make a strong offer
Working with your agent to craft a winning offer can sound overwhelming. In competitive markets, cash offers could be more likely to be accepted by sellers with multiple interested buyers. While it is not always recommended to completely waive contingencies to impress a seller, you might consider pairing down to just the inspection contingency and financing contingency to remain competitive. Get creative with your offer — you may want to offer a larger earnest money deposit, schedule a quick closing, or even consider letting the seller rent the house back from you for a certain period of time.
Like many regions across the U.S., Landau says that the market in Connecticut has softened slightly in 2022, but sellers are still going to want your strongest and best offer. “Some sellers still want cash offers with no contingencies,” he says, “and there are often still multiple offers on very desirable properties.”
He adds that properties that aren’t as desirable or need work aren’t getting those multiple offers now, making it much easier for buyers to negotiate. “Prices have leveled off, and some sellers are now overpricing their properties, which is why you really need a skilled agent who knows the current market,” he says.
Components of an offer when buying a house in Connecticut include:
- Purchase price
- Closing date
- Earnest money deposit amount
- Contingencies: Financing, home inspection, and appraisal
- Closing cost stipulations: Who pays for what, and if you’re asking the seller for a credit to use toward closing costs
- Home warranty
- Personal property: Such as appliances or furniture
8. Send your earnest money deposit
Your earnest money deposit, also known as a “good faith deposit,” is an amount of money you agree to pay the seller to indicate that you are serious about purchasing the home. This is usually between 1% and 3% of the purchase price. However, a higher deposit can be more attractive to sellers and make your offer stand out in competitive markets.
Whether or not you get your earnest deposit money back if you decide to back out of the sale depends on the contract. If you decide to back out of the purchase for any reason not specified in the contract, you could forfeit your earnest money. Be sure to review the contract with your real estate agent and attorney before making any decisions.
9. Order a title search
Ordering a title search can be done any time after your offer is accepted, but it’s a good idea to do it as soon as possible because it may take a couple weeks for the title search to come back, especially if the title company is backed up. Who customarily chooses the title company can vary by state and even county — but if it is the buyer’s choice, your real estate agent or mortgage lender will likely have a recommendation.
The title company will issue a preliminary title report that will be reviewed by all parties including your lender and will include items such as property tax information, easements, CC&Rs, deed restrictions, liens, and any judgments against the title of the home. Any liens, encumbrances, or judgments against the property will need to be removed before the buyer can close on the property.
Connecticut can sometimes have unique title issues that you might not find in other states, especially when it comes to older properties. “Some of these properties have been here since the 1700’s,” says Landau. “Sometimes properties changed title a long time ago and it wasn’t documented. There were also no land surveys back then, so property line issues can be another common problem.” Landau says these are usually minor and easily resolved, but it is something buyers in Connecticut should consider when looking at homes.
10. Shop for homeowners and specialty hazard insurances
Homeowners insurance is always recommended and it is almost always required if you’re financing your home with a mortgage. The average yearly cost of homeowner’s insurance in Connecticut is $1,216 per year.
Landau adds that in some regions, it’s common for lenders to require additional specialty insurance for flooding. “Connecticut has a lot of coastal areas, as well as many lakes and rivers,” he says. If you buy a house that sits in a flood zone, it’s likely you’ll be required to get that extra coverage, which averages about $1,500 a year.
11. Order inspections and appraisal
If you’re applying for a mortgage, your lender will most likely order the appraisal and you will pay for it. You will be responsible for ordering your own inspections with the help of your buyer’s agent, again, at your own cost. Your agent can recommend a licensed home inspection company if you don’t have one. The home inspector will schedule a date and time to inspect the house and depending on its size, it may take a couple of hours to complete.
Some common issues in homes in Connecticut that merit a separate inspection include:
Well and septic: Many homes in Connecticut include a well and a septic system, especially in more rural areas. If either hasn’t been maintained properly, it can lead to in-ground leaks, toxins, and other problems. Buyers will want to get separate inspections for each in order to make sure both are working properly, and that the well water is safe and free from contaminants.
Radon gas: According to Landau, many homes in Connecticut also have radon gas, and a separate inspection for it is always recommended. “It’s not necessarily a big problem,” he says, “but buyers will want to get an inspection for that so it can be resolved prior to move in.”
Until recently, it was common for sellers to refuse to do any repairs, but as the market has softened, that has changed. You can still negotiate for repairs, but I do recommend sticking to health and safety issues in order to keep things moving forward.
- David Landau Real Estate AgentCloseDavid Landau Real Estate Agent at RE/MAX Right Choice
- Years of Experience 9
- Transactions 166
- Average Price Point $317k
- Single Family Homes 131
12. Negotiate repairs
Remember that everything is negotiable. If you have an inspection contingency in your contract, and the inspection report comes back with tens of thousands of dollars of necessary repairs, it’s time to negotiate.
Talk to your buyer’s agent and come up with a plan for what to ask for during negotiations. Do you want a credit for the leaky roof or would you rather a licensed contractor repair it prior to settlement? If the house needs two new toilets, are you willing to walk away if the seller refuses to budge during negotiations? Keep the bottom line in mind, but don’t nitpick. Home inspectors are meant to be thorough. Focus on major repairs that need to be done ASAP and are going to be costly.
“Until recently, it was common for sellers to refuse to do any repairs, but as the market has softened, that has changed,” says Landau. “You can still negotiate for repairs, but I do recommend sticking to health and safety issues in order to keep things moving forward.”
13. Final walkthrough
This is to verify that agreed-upon repairs have been completed and the condition of the home is satisfactory. The final walkthrough is usually done a day or two before the closing date.
With the help of your agent, check that all plumbing, electrical, and HVAC units are on and working. If personal items such as the dining room chandelier and the washer and dryer were included in the contract, make sure they’re still in the house.
Buyers should always bring their agent with them to the final walkthrough, along with the repair addendum to the purchase agreement for the house. Your agent will be able to keep you on task as to verifying repairs are complete, and having the repair list in hand will ensure you don’t miss anything.
If you find that the necessary repairs were not made, or that there were damages left behind by the seller, notify your agent immediately so they can rectify the situation before closing.
14. Closing time!
In Connecticut, it takes an average of 30 to 45 days to close on a home. “Because most buyers still finance their home purchase, we have to order appraisals, get inspections, negotiate and complete any repairs, all of which can take at least 30 days,” says Landau.
Connecticut is also what’s known as an attorney state, which means that you’re required to have a real estate attorney handle the closing as opposed to a title company. This might sound intimidating, but it’s a common mandate in many states, and can actually bring peace of mind to buyers who want to make sure they fully understand everything they’re signing.
It can take a day or two for the title to record, but once you’ve signed off on everything, the keys to your new home are handed off and you can call it yours!
Buying a home in Connecticut’s still-competitive market can feel a little challenging, which is why pairing with an agent who knows the best areas to live, best times to buy, and the best ways to navigate your purchase is so important. They’ll be able to assist you in finding the perfect home, from the moment you decide to buy to holding those keys in your hand and knowing you’re officially a Connecticut homeowner!
Header Image Source: (Juliette Dickens / Unsplash)
- "Flood Insurance in Connecticut: How Much It Costs and When You Need Coverage," ValuePenguin (May 2022)
- "Best homeowners insurance in Connecticut of 2022," Bankrate (August 2022)
- "Tackling Home Financing and Down Payment Misconceptions," National Association of Realtors (January 2022)
- "ClosingCorp Reports Average Closing Cost Data for Refinances In 2020," businesswire (March 2021)