First-Time Buyer's Guide

First-time buyers have several low down payment options: FHA loans require just 3.5% down, conventional loans offer 3% down programs, VA loans provide 0% down for eligible veterans, and USDA loans offer 0% down for rural properties. Many state and local down payment assistance programs can help cover these costs.

Credit requirements vary by loan type: FHA loans accept scores as low as 580 (500 with 10% down), conventional loans typically require 620-640, VA loans have no VA-mandated minimum but lenders usually want 620+. Higher scores qualify for better rates. Check your score early and address any issues before applying.

Programs include: FHA loans for flexible credit requirements, state housing finance agency programs with down payment assistance, Fannie Mae HomeReady and Freddie Mac Home Possible (3% down), Good Neighbor Next Door (50% off for teachers/first responders), and local grants. Many programs can be combined for maximum benefit.

Yes, pre-approval is essential. It tells you exactly how much you can borrow, shows sellers you are a serious qualified buyer, strengthens your offer in competitive markets, and helps you avoid wasting time on homes outside your budget. Pre-approval typically lasts 60-90 days.

Lenders typically allow a debt-to-income ratio of 43-50%. A common guideline is spending no more than 28% of gross monthly income on housing costs. Consider all expenses: mortgage payment, property taxes, insurance, HOA fees, maintenance, and utilities. Use a mortgage calculator to estimate your comfortable price range.

Beyond down payment and closing costs, budget for: home inspection ($300-500), appraisal ($400-700), moving expenses, immediate repairs or improvements, furniture and appliances, utility setup fees, and ongoing maintenance (1-2% of home value annually). Having reserves protects against unexpected expenses.

Common mistakes include: not getting pre-approved first, house hunting without a clear budget, skipping the home inspection, making big purchases before closing, depleting all savings on the down payment, choosing based on emotion over finances, and not shopping multiple lenders for the best rate.

Buying makes sense if you plan to stay 3-5+ years, have stable income, and can afford the total costs of ownership. Benefits include building equity, tax deductions, and fixed housing costs. Renting may be better if you need flexibility, have limited savings, or are unsure about location. Compare local rent vs buy costs using calculators.