As with any major purchase, you will want to do your homework and a lot of research first before you buy your first home. Here are the most important tips for the first-time home buyers

How to prepare

As you save to buy your first home, you will need to start the saving process well before you start shopping. There are some main costs that you will need to consider:

TIP 1:  Have you started saving

  • Down payment: The required down payment will depend on the type of mortgage you choose, your lender’s terms, and how much money you put down. With excellent credit you will be able to get a loan as low as 3% down, but even 3% can be a challenge to save. Buying a $500,000 house? That 3% is $15,000. Start by figuring out how much money you will need for your down payment that way you can start setting up your savings that you will need for the down payment.
  • Closing costs: These are fees and expenses you have to pay to finalize your closing (home purchase), and they can be $5,000-$10,000 or more. The closing costs are NOT included as part of your loan and are paid at the closing.
  • Moving expenses, furniture, home repairs, and upgrades:  You may need some cash on hand after the closing, you may need to make some home repairs, and the cost of moving your furniture, clothing etc.

TIP 2: How much can you realistically afford

Talk with a lender to determine what your monthly payment would be with various loan programs, down payment options, and set a price range you are comfortable with.

TIP 3: How solid is your credit score

You can easily get free copies of your credit report from each of the three major credit bureaus, then you can see what you may need to pay off and how you can improve your score. Keep your credit card balances low, don’t open any new credit cards, and pay all your bills on time or early.

TIP 4: Review mortgage options

There are many mortgage options available for all types of buyers (from USDA loans backed by the U.S. Department of Agriculture to a a VA loan for veterans to conventional loans). You’ll also have to decide whether you want a 15-year mortgage or a 30-year mortgage, and whether you want the interest rate to stay the same or not. Your lender can help you figure out what your monthly payment would be on each type of mortgage and will help you determine what you are eligible for. Talk to multiple mortgage lenders to see what programs and terms are available before making a decision on a home loan.

TIP 5: Get your lender pre-approval letter

A pre-approval is a lender’s offer to loan you a certain amount of money at terms (including mortgage rates, other terms). A pre-approval letter shows home sellers that you are serious about buying. Having that pre-approval may give you an edge with the seller over other buyers.  Get your pre-approval once you are ready to start your home search.

Home shopping tips

For all home shoppers, not just those buying a home for the first time, shopping to find a home is probably the most fun – but also stressful – part. If you’re a first-time homebuyer, visit open houses to get a sense for what you want in your new home and what you don’t.


TIP 6: Neighborhood and must-haves

Figure out what you need in a home so that you can narrow down your search. Do you want a yard (and the upkeep that goes with it?) or do you prefer to be in a condominium where someone else is responsible for the outdoor upkeep? Are you interested in a fixer upper that needs a lot of work or are you more interested in a turn-key home?

Whatever your preferences, you should decide on what you must have in your home – and what you don’t want. This will help you narrow down what homes you should go see at an open house or on a private showing.

TIP 7: Choose your real estate agent carefully

A good real estate agent will watch the market for homes that meet your requirements and budget. They also will not push you to spend at the top of your budget (or go beyond it). And, probably most importantly, your agent will guide you through the negotiation and closing process. Get referrals from other recent home buyers, check references and reviews, and ask about the agent’s experience working with first-time home buyers.

Home purchasing tips

Once you’ve found a home, have your mortgage loan figured out, and want to move forward, here’s what you need to do:

TIP 8: Do not go above the budget you have set

You may need additional funds for repairs or improvements, so don’t spend beyond your budget on your first home. Avoid financial stress down the road by setting a budget and sticking to it.


Tip 9: You agent will negotiate

Your real estate agent will be able to help you negotiate your offer to a home seller, whether it’s asking the seller to pay for repairs that arise at a home inspection or negotiating to keep certain fixtures in the house.