The position of underwater vehicle relative to target is determined by magnetic field magnitude and gradients of target on condition that geomagnetic anomaly can be inversed as a magnetic dipole target. The magnetic field is measured by the device installed on vehicle and composed of ten single-axis magnetometers. Because the noise of magnetometers results in the coefficients of a six-order equation with one variable inaccurate, it will put obscure influence on the localization precision. The statistical properties of these coefficients are analyzed theoretically, and their means and variances are deduced considering Gaussian noises of magnetometers. However, it is difficult to determinate the detailed expression of statistic distribution. A localization iterative algorithm is put forward and described, and its astringency is discussed theoretically and simulated numerically. These results show favorable astringency for the iterative algorithm, which can improve remarkably the localization precision.