13 Essential Tips for First Time Homebuyers

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Contributor, Benzinga
June 26, 2024

Buying your first home can cause a rollercoaster of emotions. The process includes twists and turns that depend on the market. Homeownership often requires several steps before buying, including researching the market, understanding your needs and knowing your budget. For many first time homebuyers, the process of buying a home raises questions. Use these tips for first time homebuyers and be sure to have a top team of funding professionals along for the ride.

Tips Before Buying a Home

Buying a home starts long before paper meets pen. Such as contemplating your wants and needs while exploring different neighborhoods and school districts. Take a closer look at these tips for first time homebuyers.

1. Consider Your Needs and Wants

Before purchasing a home, consider your needs versus your wants. For example, you will likely need a functional bathroom, but you may want optional barn doors. Wants are optional items that can be added or improved after buying a home. Needs are basic requirements such as location and school district.

2. Research the Market

When researching the market, narrow your search to a neighborhood or specific school district. Searching by location can help create relevant expectations in terms of pricing and amenities. If possible, examine property value estimates in the neighborhood and walk around to get a feel for the location.

3. Determine Your Budget

When determining a budget, consider the 28% rule, which states that a mortgage should be below 28% of your monthly gross income. Account for potential periods of unemployment or illness by creating safeguards such as having a home mortgage near the bottom or middle of your budget. Having an affordable mortgage rate can protect against unforeseen expenses. Top lenders often have mortgage calculators and learning tools on their websites to improve the budgeting process.

4. Check Your Credit

Building credit is a priority when preparing to purchase a home. A credit report is a reflection of your credit accounts and credit card debt. A credit score above 620 is recommended when applying for a first time homebuyer loan. A credit score also represents your creditworthiness. Credit scores typically range from 300 to 850 and are provided by one of the three main credit reporting bureaus. 

5. Pay Off All Debt and Build an Emergency Fund

Paying off all debt and creating an emergency fund before buying a house is a good move. Paying off debt can increase your credit score while improving your financial position. An emergency fund can help protect you from unexpected events with financial consequences. The fund should have enough to support a minimum of three months’ worth of expenses. Emergency funds should not be invested because they need to be liquid to promote easy access.

6. Save for Down Payment

A down payment is the upfront partial payment used to secure a house. Down payments are typically 20%, but it’s possible to buy a house with a 10% down payment. Having a larger down payment will help reduce the monthly mortgage payments. Keep in mind that in a competitive market, cash buyers often hold an advantage. The homebuyer should be aware of the maintenance costs associated with a home purchase

Tips When Looking for a Home

Looking for a home can prove a rewarding process if you understand the costs, work with a reputable real estate agent and have a clear understanding of your needs and budget. Examine multiple top lenders and research different home loan opportunities, including mortgage loan, to understand what best meets your needs.

7. Understand the Costs

The initial costs include the price of the house as well as lending-related fees, property survey fees, closing costs and title-related fees. Buying a house also has multiple ongoing costs such as insurance, property taxes, utilities and improvement-related expenses. Before purchasing a house, determine whether the initial and recurring fees fit your budget.

8. Work With a Real Estate Agent

Working with a real estate agent can prove beneficial for first time homebuyers. A real estate agent is trained and licensed to assist you in your home-buying search. It’s a good idea to contact an agent once you’ve received a preapproval letter. A preapproval letter is a letter from a mortgage lender that indicates of your ability to receive funding in the future. First time homebuyers can also reach out before mortgage preapproval to get additional guidance.

9. Search for Properties That Fit Your Needs and Budget

Search for properties that fit both your needs and budget constraints. Wants are optional and can be added as needed. Keep the 28% rule in mind when looking at potential homes.

10. Look for Multiple Lenders and Compare Rates

Compare a minimum of three down payment assistance programs and mortgage lenders while also examining interest rates. Top lenders have a wide selection of loans dedicated to assisting first time homebuyers, including 30-year fixed-rate mortgages, 15-year fixed-rate mortgages, Federal Housing Administration (FHA) loans and Department of Veterans Affairs (VA) loans.

Tips When Buying a Home

The transition to actively buying a home requires a dedicated team of professionals. To achieve first time home ownership keep in mind that hiring an inspector can protect against unforeseen property instability. Secure the best home insurance by calculating how much coverage you will need. Finalize your purchase and pay attention to details such as the closing costs and paperwork.

11. Hire an Inspector

A home inspection is a crucial step in the homebuying process. Ask people in your life who recently purchased their dream home for inspector recommendations. Home inspectors help protect and inform first time buyers about the prospective home by examining important features such as the foundation and the roof. Inspectors can also create room for negotiation once you’re ready to make an offer.

12. Make an Offer and Negotiate

Remeber that buyers who make cash offers are typically more attractive. Top lenders have homebuyer programs like the Buyer Accepted program, which are designed to assist first time homebuyers to make cash offers to remain competitive with other offers. Ask about a home warranty before signing. Keep in mind that sellers can accept or reject an offer, which can leave room for negotiation.

Continue to read on How to Make an Offer on a House.

13. Secure Home Insurance and Finalize Purchase

Before selecting a home insurance provider, know your needs and research what a policy covers. Calculate how much homeowners insurance you will require and compare various policies. The process of finalizing the purchase depends on the state.

Compare the Best Mortgage Lenders for First Time Home Buyers

When it comes to purchasing a first home, finding the right mortgage lender is crucial. There are several top lenders that cater specifically to first time home buyers, offering competitive rates, low down payment options and excellent customer service. By comparing the offerings of these top lenders, you can make an informed decision that suits your financial needs and goals.

Get the Keys to Your Future

Homeownership is an exciting journey that often requires a fair amount of time and effort. Enjoy the process by using tips from knowledgeable real estate professionals, lenders and property inspectors. Creating a team dedicated to building your future can expedite the process while also getting you into your first home at a reasonable price.

Frequently Asked Questions


How do you qualify for a first time homebuyer’s loan?


To qualify for a loan, first time homebuyers will need to meet a minimum credit requirement and have proof of employment history. The exact requirements vary depending on the loan. For example, people interested in an FHA loan can have lower credit scores. 


What is the average age of first time homebuyers?


The average first time homebuyer in the United States is in their mid-30s. Over time, the average age of first time homebuyers has steadily increased. 


What are first time homebuyer benefits?


First time homebuying benefits range from increased access to financial assistance to more flexible requirements. First time homebuyers also have access to a wide selection of tax breaks and loans.