Buying your first home is exciting, but it can also be confusing. Between saving money, finding the right place, and getting a loan, there’s a lot to learn. This guide explains every major step in simple terms so you can feel ready and confident.
1. Know What You Can Afford
Start by looking at your income, savings, and monthly bills. Lenders often use the 28/36 rule, which means your housing costs shouldn’t be more than 28% of your monthly income, and all debts combined shouldn’t exceed 36%.
You’ll need money for your down payment, which is usually between 3% and 20% of the home price. A higher down payment means smaller monthly payments.
Also budget for closing costs, which cover things like the appraisal, inspection, and title fees—usually around 2–5% of your loan amount.
➡️ Learn more from the Consumer Financial Protection Bureau (CFPB)
2. Understand Your Credit
Your credit score helps lenders decide if you’ll get approved and what interest rate you’ll pay. Most loans require a score of at least 620, though some government-backed loans accept lower.
Before applying, check your credit report for mistakes and pay down any debts. You can get a free report each year at AnnualCreditReport.com, the only official source backed by federal law.
3. Get Preapproved for a Mortgage
A preapproval letter from a lender shows how much they’ll lend you and proves you’re a serious buyer.
Have your pay stubs, bank statements, and tax returns ready before applying. This speeds things up when you find a home you like.
➡️ CFPB guide: What is mortgage preapproval?
4. Compare Loan Options
Different types of mortgages fit different buyers:
- Conventional loans: Good for buyers with strong credit and higher down payments.
- FHA loans: Designed for first-time buyers with lower credit scores or small down payments.
- VA loans: For military members and veterans; no down payment required.
- USDA loans: For homes in rural areas; offer low or zero down payments.
Ask your lender which option matches your income and goals.
➡️ Official FHA resource: FHA Loan Basics
➡️ VA benefits: VA Home Loans
5. Learn About Mortgage Insurance
If your down payment is under 20%, you’ll likely pay private mortgage insurance (PMI). It protects the lender if you stop making payments. Once you’ve built 20% equity, you can usually request to cancel it.
➡️ More from the CFPB on PMI
6. Pick the Right Home and Neighborhood
Think about what fits your lifestyle. Check the area’s schools, commute times, and safety. Visit at different times of day to see how it feels.
A buyer’s agent helps you find homes, write offers, and negotiate—without costing you anything (their fee comes from the seller).
7. Know the Steps to Buying
Once you make an offer, you’ll pay earnest money to show you’re serious. The home then goes through an inspection and appraisal.
After that, you’ll close on the loan—signing final papers and getting your keys. The whole process usually takes 30–60 days.
➡️ Learn the full process from HUD’s Home Buying Guide
8. Plan for the Future
After closing, you’ll have new costs: property taxes, insurance, and maintenance. Try saving 1–2% of your home’s value each year for repairs.
If interest rates drop later, you may be able to refinance to lower your monthly payment.
9. Check for First-Time Buyer Programs
Many cities and states offer grants or special loans to help with down payments or closing costs. These can make buying easier if you qualify.
Start with your local housing agency or check federal options below:
➡️ HUD Local Homebuying Programs
➡️ Down Payment Assistance Information – FHA Resource Center
10. Take Your Time
Don’t rush into the first house you see. Ask questions, compare loans, and read every document. Buying a home is a big step, but preparation makes it manageable.
Bottom Line
Buying your first home isn’t just about finding a house—it’s about building a plan. Know your budget, compare loans, and learn each step before you sign. The more you understand, the smoother your path to homeownership will be.
