First Time Home Buyer Tips

Purchasing your first home is an exciting rite of passage, but with it comes a long list of hoops you will have to jump through before those keys are in your hands. Whether you are still dreaming or in the process of getting your act together, knowing about what you need to buy a house can not only save you money and stress but also time. Everything from credit scores and stable income to closing costs and how to select the right mortgage loan program is covered in this step-by-step resource guide, so you will know what you need to do.

How Your Credit Score Impacts Your Home Purchase

Your credit score is a vital statistic in the homebuying process. Lenders will use it to determine your qualifications to buy a house, interest rate, and loan terms. The higher the score, the lower your rates and the more you save over time on your mortgage (and that adds up thousands).

Take control of your money, optimize your spending and grow your savings automatically

• Excellent (740+): You can qualify for the best rates and terms.
• Good (670–739): Eligible for most loan programs, at competitive rates.
• Fair (580–669): Possible; though you’ll likely get your home, you can expect high rates so be prepared.
• Poor (Below 580) – Most lenders will require credit improvement before approval.

Tip: If you pull your credit report early, fix any errors and pay down high balances. A moderate 20–30 point boost can also open the door to better mortgage terms.

Saving for a Down Payment: What You Need to Know

These are the largest requirements for purchasing a house, and we mean down payment. In the past, 20% of the purchase price was what buyers had to pay as a down payment, but today, many first-time homebuyer programs let you put as little as 3% down!

These are some of the options for smaller down payments for a first-time homebuyer:

• FHA loans: 3.5% for scores 580 and above.
• Conventional loans: 3% threshold for first-time home buyers on eligible properties.
• VA/USDA loans: 0% down if eligible.

Pro tip: Create a different savings account for your down payment in order not to use it. The best way is to transfer from each paycheck, make sure to automate this for more savings on reaching your goal.

The Importance of a Steady Income and Job Stability

Steady income and job stability are crucial to assure a lender of your ability to repay the loan. Some programs want to see that the first-time homebuyer has held the same job for at least two years.

Two years of tax returns and proof of contracts or income in the last year if you are self-employed. This is even if you are intending to move jobs, also defer the job switch until buying your first home, so as not to complicate your mortgage approval.

Calculating Your Debt-to-Income Ratio

Your debt-to-income (DTI) ratio compares your monthly debt payments to your gross monthly income. Most lenders prefer a DTI of 43% or lower, though some first-time homebuyer programs allow higher percentages.

Formula:

Monthly Debt Payments ÷ Gross Monthly Income × 100 = DTI

For example, if you earn $5,000 monthly and pay $1,800 in debts, your DTI is 36% — a healthy number for mortgage approval. Tracking and reducing liabilities with a debt payoff tracker can help you improve this ratio over time and qualify for better loan terms.

Budgeting for Closing Costs and Other Expenses

Many first-time buyers focus on the down payment but overlook closing costs. These typically range from 2% to 5% of the home’s purchase price and cover expenses like lender fees, title insurance, and property taxes.

Other ongoing costs to budget for:

• Homeowners insurance
• Property taxes
• Maintenance and repairs
• HOA fees (if applicable)

Having extra funds ensures you can handle these without financial strain. Using a home budget app can help you track expenses, plan for closing costs, and manage ongoing homeownership costs more effectively.

The Role of Mortgage Pre-Approval in Buying Your First Home

Before you start house hunting, get a mortgage pre-approval. This step confirms how much you can borrow based on your credit, income, and DTI ratio.

Benefits of pre-approval:

• Speeds up the buying process
• Makes your offer more competitive
• Helps narrow your search to realistic price ranges

Choosing the Right Mortgage Loan Program and Buying a Home for the First Time

Mortgage programs vary widely, and the right choice depends on your financial situation. Common types include:

• Conventional loans – Best for strong credit and higher down payments.
• FHA loans – Designed for those with moderate credit and smaller down payments.
• VA loans – For veterans and active-duty military, with no down payment required.
• USDA loans – For rural first-time homebuyers with low-to-moderate income.

Review interest rates, fees, and requirements before deciding.

Why a Skilled Real Estate Agent Can Make All the Difference

While you can search online, a skilled real estate agent brings local expertise, negotiates on your behalf, and helps you navigate contracts and inspections. They can also spot potential issues with a first house before they become expensive problems.

Look for an agent with experience working with first-time homebuyers and knowledge of your target neighborhoods.

First Time Home Buyer List of Things to Buy

Once you close on your home, the first-time homebuyer will  likely need:

• Basic tools (hammer, screwdrivers, measuring tape)
• Cleaning supplies
• Light bulbs and batteries
• Lawn care equipment (if applicable)
• Safety essentials (smoke and carbon monoxide detectors)

Budgeting for these items ensures a smooth move-in process.

Steps to Buying a House for the First Time: Quick Checklist

If you are a first-time homebuyer, follow these steps:

1. Check and improve your credit score
2. Save for a down payment and closing costs
3. Secure a steady income and stable employment
4. Calculate your debt-to-income ratio
5. Get mortgage pre-approval
6. Choose the right loan program
7. Hire a skilled real estate agent
8. Make an offer and close the deal

Conclusion

Buying a home for the first time is a big step, but it doesn’t have to be overwhelming if you understand the process and prepare early. By focusing on your credit score, building a healthy savings for your down payment, maintaining steady income, and keeping your debt-to-income ratio in check, you’ll be in a strong position to meet the main requirements to buy a house.