Complete Guide for First Time Home Buyer


Let’s accept it, buying a house isn’t easy. Especially if you’re a first-time homebuyer, you must know the steps and processes. This comprehensive guide will cover every aspect of buying a home for first-timers. We’ll discuss essential tips, the cost of buying, things to avoid, and more. 

There are a number of elements that will determine the type of house you end up with. And because you may not have done anything like this previously, you’ll want to be extra careful in evaluating all options and drawing appropriate conclusions.

Some things you should be mindful of are your budget, downpayment, credit score, the location you plan to live, and so on. 

We’ll look into each factor so that you get to make an informed decision whenever you are ready to buy your new house.

What do I need to know as a first-time buyer? Is it hard to buy a house for the first time?

While knowing the entire process is useful, starting with the basics is good. The two fundamental components you must first understand are:

  • Downpayment: If you plan to buy your house on credit, you must make an initial payment. There are some practical ways to save for a downpayment. Here are a few: (1) find areas to cut expenditure (2) try getting a raise (3) sell items you don’t use 
  • Closing costs: These are the costs you need to pay in excess at the end of the transaction. Generally, closing costs range from 3% to 6% of the total home purchase price.

So is it hard to buy a house for the first time? Well, that’s a tricky question to answer. But with proper knowledge and information, you can overcome any challenge – including buying a house.

To have a successful buying experience, you’ll want to look into the following:

  • The location you want to buy in: If you’re looking to buy a house in, let’s say – New York, California, or Maryland – the cost will be significantly higher than if you believe in states like Pennsylvania. Also, the house price may vary from area to area within a state or city. 
  • Your credit score: Having a higher credit score is always better, regardless of if you’re planning to buy a house or not. But it is essential when planning to buy your first house because when it comes to getting a home loan, your credit score is what lenders see.
  • Finding reasonable mortgage rates is key when planning to buy a house. The lower the mortgage rate, the more you’ll save. Average mortgage rates vary from 4% to 6%. 

What is the first (and most important) step to buying a house for the first time?

The first and the most important step is determining how much you can afford. Not getting this part right may cause long-lasting frustration and stress.

One way to estimate how much you should pay is by incorporating the 28% rule within your buying plan. The 28% rule states that you should send about 28% of your gross monthly income on your mortgage payment.

So if your monthly income is $8,000, you should ideally be spending about $2,240 towards clearing your home loan. 

There are also some other costs that you need to consider:

  • Taxes & Insurance: The average property tax cost is $2,470 annually. Which comes out to $205 a month. The percentage of tax also varies from state to state. In New Jersey, the tax rate is about 2.47%, whereas, in Pennsylvania, it’s about 1.58. 
  • Homeowners Associations Dues: If you choose to buy your house in one, you’ll need to pay an HOA fee. This is the cost that is contributed towards the maintenance and development of the shared infrastructure of your community. Knowing if you’ll have to pay HOA would be helpful because you can then include it and calculate your total cost.

How much money do you need to buy a house for the first time?

The thought of buying a house can scare away a significant portion of first-timers. But it doesn’t have to be that way. 

You can buy your house on conventional loans with as low as 3% down payment and 3.5% down payment for FHA loans. To apply for and get the loan you want, you also need to maintain a decent credit score. The minimum credit score for a regular loan is 620 and for an FHA loan is 580.

Checklist for first time home buyers

  • Figure out your budget – As mentioned earlier, this is the first and most important question you need to answer before moving on to the other steps.
  • Maintain a good credit score – To be qualified for a home loan, you need to ensure that you have at least the bare minimum credit score (620 for regular loan & 580 for FHA loan)
  • Find a real estate agent – It’s not compulsory, but finding a real estate agent can be helpful. They are trained to guide you every step of the way and can be a valuable asset if you choose not to deal with the complexity of the process.
  • Explore mortgage options – Many different mortgage options are available to first-time homebuyers, including USDA loans, FHA loans, FTHB programs, and more. Explore each and find out which is best for you.
  • Find a mortgage lender – Make sure to pick a reputed mortgage lender to avoid falling into sticky situations. You can look into Bank of America, North American Savings Bank, SunTrust, Wells Fargo, etc.
  • Search for the ideal house – So you’ve figured out your budget, explored mortgage options, and found a lender. Now it’s time for the best part – searching for the place you’ll call home! Property costs vary from area to area and state to state. Also, the number of rooms and amenities may be a cost-determining factor.  
  • Make an offer – Getting pre-approval for a mortgage may give you an upper hand when making an offer. Also, make an offer that mutually benefits both you and the seller so that you can move towards closing the deal. 
  • Close the deal – Do a home inspection, find out the cost for similar properties in the area and be sure to negotiate before closing the deal.

Mistakes to avoid as first time home buyers

It is common to make mistakes as first-time home buyers. Well, it’s common to make mistakes whenever trying to do something new. 

But you’d want to avoid committing mistakes when it comes to buying your first house. You don’t want to harbor unnecessary tension or stress about clearing your mortgage.

Here are a few mistakes you’d like to avoid:

  • Not hiring a real estate agent: Not hiring a real estate agent can be fatal, especially if you are not sure about the process. Though it’s not necessary, it can be helpful to work with an expert.
  • Not getting enough quotes: When looking to get a loan for your house, it’s recommended to get quotes from a couple of different lenders. This will help you get a better idea of the rates in the market, so you can make an informed decision as to which lender you should pick.
  • Not saving enough: Saving money is a great way to make yourself financially secure. Though you may want to spend the stash of extra money on things you enjoy, it’s better to save it for the future so that you can use it to pay off your loan if required. 


What is the first step of the home buying process?

  • The first step is to get a pre-approval for the loan. 

What is the best advice for first-time homebuyers?

  • To save yourself from hassle, it’s advised to connect with a realtor. As experts in the field, they know the ins and outs of the entire process of buying a house. 

What is the minimum credit score to buy a home?

  • The minimum credit score is 620.

Who are the best mortgage lenders for first-time homebuyers?

  • Some good ones are PrimeLending, Chase, Freedom Mortgage, and Bank of America.

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