How Do I Buy a First Home? A Step-by-Step Guide for First-Time Buyers

Buying your first home can feel overwhelming. It’s one of the most significant financial decisions you’ll make—and the process is filled with unfamiliar terms, paperwork, and decisions. But don’t worry. If you’re wondering, “How do I buy a first home?”, this guide breaks it down step by step.

We’ll walk you through everything from saving your down payment to closing day and answer the most common questions first-time buyers ask.

Step-by-Step Guide to Buying Your First Home
15 Frequently Asked Questions About Buying a First Home
Final Thoughts
- You Can Listen To Our Podcast About What Steps Should You Take When Buying Your First Home? Below or By clicking here.
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Step-by-Step Guide to Buying Your First Home

1. Check Your Credit Score

Your credit score is a significant factor in determining whether you qualify for a mortgage and what your interest rate will be. Most lenders look for a score of 620 or higher for conventional loans, but some first-time buyer programs accept lower scores.

Tip: Get your free credit report from AnnualCreditReport.com and dispute any errors. Pay down debts to improve your score.

2. Figure Out Your Budget

Know how much of a house you can afford before you start looking. A general rule: your monthly mortgage payment (including taxes and insurance) should be no more than 28–30% of your gross monthly income.

Use our Home Affordability Calculator to figure out how much or what cost of a home you can afford.

Calculate How Much Home You Can Afford Now!

3. Get Pre-Approved for a Mortgage

A pre-approval shows sellers you’re a serious buyer. It also gives you a clear budget based on income, debt, credit score, and down payment.

Contact a few lenders to compare rates and fees. Don’t just go with your bank—shop around.

4. Explore First-Time Homebuyer Programs

Many states and cities offer grants, loans, or tax credits to help first-time buyers with down payments or closing costs. These can save you thousands.

We cover this more in the FAQs below.

5. Start Saving for Your Down Payment and Closing Costs

You don’t need 20% down. Many first-time buyers put down as little as 3–5% with conventional or FHA loans. VA and USDA loans offer 0% down for eligible buyers.

You’ll also need 2–5% of the home price for closing costs.

Example: A 5% down payment on a $300,000 home is $15,000. Closing costs might be another $6,000–$9,000.

6. Find a Real Estate Agent You Trust

Your agent is your guide through the entire homebuying process. They’ll help you find homes, make offers, negotiate, and avoid common pitfalls.

Choose an agent with local experience and good reviews. As a buyer, you usually don’t pay them—agents get paid from the seller’s side.

7. Start House Hunting

Once you’re pre-approved and have a solid agent, you’re ready to start looking. Make a list of must-haves vs. nice-to-haves. Think location, size, layout, commute, schools, and more.

Tour homes in person and online. Don’t rush—you want to get it right.

8. Make an Offer

When you find the right home, your agent will help you make a competitive offer based on local market trends. This includes the offer price, contingencies (inspection or financing), and timelines.

The seller may accept, reject, or counter your offer.

9. Get a Home Inspection

Once your offer is accepted, hire a licensed inspector to check the home’s structure, systems, and overall condition. It costs $300–$600 and is worth every penny.

If there are serious issues, you can negotiate repairs or walk away.

10. Finalize Your Mortgage

Once you sign the purchase contract, your lender will finalize the loan. You’ll submit documents such as pay stubs, tax returns, and bank statements.

The lender will order an appraisal to confirm the home’s value. You’ll also get a final loan estimate with exact costs.

11. Do a Final Walkthrough

Right before closing, you’ll walk through the home to make sure it’s in the agreed-upon condition—no new damage, agreed-upon repairs done, appliances in place, etc.

12. Close on Your New Home

You’ll sign all the documents at closing, pay your down payment and closing costs, and officially become a homeowner. The process takes about an hour or two.

Then you get the keys.

15 Frequently Asked Questions About Buying a First Home

Are there first-time buyer programs available?

Yes, there are, and they can include:

Down payment assistance grants or loans
Reduced interest rates
Tax credits
Examples include CalHFA (California), MassHousing (Massachusetts), and NY State of Opportunity (New York). Also look into FHA, VA, and USDA loans.

How much income do I need to buy a home in an average American city?

It varies by city, but as a rough estimate:
For a $300,000 home, you might need an annual income of $70,000–$85,000, depending on your down payment, debts, and interest rate.
Use the 28/36 rule: no more than 28% of your income on housing, and 36% on total debt (including credit cards, loans, etc.).
Check Out Our Home Affordability Calculator by clicking here.

How much should I save before buying a home?

Aim to save:
3–5% for a down payment
2–5% for closing costs
$1,000+ for inspections and upfront fees
A few months’ expenses for an emergency fund
In total, expect to save at least $10,000–$20,000, depending on your market.

What credit score do I need to buy a home?

620 is the minimum for most conventional loans.
580 for FHA loans.
Some lenders go lower, but you’ll pay more in interest.
A higher score = better rates and lower monthly payments.

What is the difference between pre-qualification and pre-approval?

Pre-qualification is a quick estimate based on self-reported info.
Pre-approval is based on verified financial documents. It carries more weight with sellers and is required before making offers.

How do I find the best mortgage lender?

Compare quotes from:
Banks
Credit unions
Mortgage brokers
Online lenders
Look at interest rates, fees, and reviews. Getting multiple quotes can save you thousands over the life of your loan.

Do I need a real estate agent?

Technically, no, but it’s highly recommended—especially for first-time buyers. A good agent protects your interests, negotiates on your behalf, and simplifies a complex process.

How long does it take to buy a home?

On average, it takes 30–60 days from offer to closing. The full process (from pre-approval to closing) may take 3–6 months, depending on your timeline and market conditions.

What is earnest money?

It’s a deposit (usually 1–3% of the home price) you put down after your offer is accepted to show you’re serious. It goes toward your down payment or closing costs. You could lose it if you back out for a reason not covered by a contingency.

What are closing costs, and what’s included?

Closing costs are fees paid at the end of the transaction. They include:
Lender fees
Title insurance
Appraisal
Taxes
Homeowner’s insurance
Attorney fees (if required)
Typical range: 2–5% of the home price.

Can I buy a home with student loan debt?

Yes, you can. Lenders will factor in your debt-to-income ratio (DTI). If your loans are manageable and your income is strong, you can still qualify.
Paying down high-interest debts helps.

What if I don’t have 20% down?

No problem. Many buyers use:
Conventional loans with 3–5% down
FHA loans with 3.5% down
VA or USDA loans with 0% down
If you put down less than 20%, you’ll likely pay PMI (Private Mortgage Insurance), which adds to your monthly payment.

Should I buy now or wait for prices to drop?

Trying to time the market is risky. Focus on your financial readiness—not market predictions. If you can afford the monthly payment and plan to stay for 5+ years, buying now can still be smart.

What is an home appraisal and why does it matter?

An appraisal is an unbiased estimate of a home’s value. Your lender requires it to make sure the home is worth the loan amount.
If the appraisal is lower than the purchase price, you may need to renegotiate or pay the difference.

What should I know about homeowners’ insurance?

Lenders require it, and it protects you financially if your home is damaged or destroyed. Rates depend on location, size, and coverage options.
Compare quotes from multiple providers. Expect to pay $800–$1,500 per year on average

Final Thoughts

Buying your first home isn’t easy—but it is doable with the right plan. Start with your finances, get pre-approved, and work with a great agent. Lean on first-time buyer programs, and don’t rush.

Your first home doesn’t have to be perfect. It just has to be the right move for your life right now.

You Can Listen To Our Podcast About What Steps Should You Take When Buying Your First Home?
Below or By clicking here.

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