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The Essentials for First-Time Home Buyers!

A Guide to Purchasing Your 1st Home.


If you’re thinking of purchasing your first home, it’s exhilarating and scary at the same time? And, you’re taking an amazing step and embarking on an incredible journey. We all know that buying a home is one of the most significant financial decisions one will make.

First-time homebuyers face a big financial commitment and a whole lot of new information. But, don’t worry, we’ve got you covered with these nine steps to purchasing your 1st home.


HDC Step 1: Save Early, Pay Off Debt & Create An Emergency Fund.

Getting a mortgage requires putting skin in the game by making a down payment on your home. Depending on the loan, that’s typically from 3% of the purchase price, up to 20%.

Start saving for your down payment by slashing expenses, paying off existing debt, and creating a budget to help you reach your goal. Additionally, it’s essential to begin working on creating a household emergency fund. Owning a home is an expensive yet rewarding endeavor.

However, you have to be prepared for any unforeseen repairs maintenance, replace the significant mechanicals such as an HVAC or plumbing, or just general upkeep needed. Having an emergency expenses fund built up and set aside is critical for any new homeowner.

HDC Step 2; Work On Your Credit Score & No Large Purchases.

Your credit score plays a crucial role in obtaining a mortgage loan. Start by paying off or paying down credit cards: the higher your available credit and the lower your utilization, the higher your score.

Before finding a lender, review your credit reports from all three major agencies: Equifax, Experian & TransUnion. Each will show different credit history items. You’re entitled to an annual free report from each agency, available from Look for errors such as old debts you’ve paid off or items that aren’t yours. Take steps to dispute errors, and follow up to make sure they’ve been corrected. You’ll want to make sure to do this at least 3-6 months before you start the home buying process.

Additionally, DO NOT MAKE ANY LARGE PURCHASES! Buying and /or financing large purchases like a new vehicle, furniture, large TVs, etc., will significantly affect your borrowing power & reduce your loanable amount, possibly hurting your credit score since you’re increasing utilization and lowering your available credit. That could have a bearing on home loan terms, such as interest rates.

Rule of Thumb: Do not make any large purchases - Wait until you have finalized everything & moved into your new home to ensure no issues arise.

HDC Step 3: Figure Out How Much Home You Can Afford.

What price home are you in the market for? In addition to estimating monthly mortgage payments that you think are doable on your income, have you factored in other expenses such as insurance, property taxes, utility payments, and maintenance costs?

When going through the home buying process, it’s important to note not to use those mortgage calculation tools that the realtor listings have on their listing pages. These calculators do not consider additional factors to increase your overall mortgage payment amount. This is why it’s pertinent to find the perfect online tool to calculate your monthly payment correctly and reflect the actual numbers that the others do not consider. I have used this mortgage calculator to help factor in all of the possible costs of a first home purchase allowing for a more informed decision regarding how much you can be comfortable with.

When you speak with lenders, they’ll help you understand the maximum mortgage you qualify for. Then you’ll need to decide what price home and which loan amount up to that maximum are most affordable for your lifestyle.

HDC Step 4; Explore Mortgage Lender Options & First Time Home Buyers Programs

A good start for exploring different mortgages is to compare conventional loans to FHA loans. An FHA loan for first-time homebuyers, for example, allows lower qualifying credit scores and lower down-payments than conventional loans do.

A conventional loan, however, can have fewer restrictions. If you are an active-duty service member or veteran, another option is VA home loans. These have generous benefits and terms.

There are many mortgage products available. Your best bet is to work with an experienced loan officer who asks the right questions and finds loans that best fit your situation. Then you’ll have everything you need to make a decision.

Like the FHA loan mentioned above, there are first-time homebuyer programs that can save you money. Here are a few to ask your lender about:

  • Fannie Mae & Freddie Mac: These real estate entities fund the HomeReady® and Home Possible® mortgage programs, respectively.

  • Fannie Mae’s HomePath & Freddie Mac’s HomeSteps have programs for buying foreclosed homes that favor first-time homebuyers.

  • USDA Loans: The U.S. Department of Agriculture guarantees mortgages to home buyers in some rural areas.

HDC Step 5; Prepare Your Loan Paperwork & Other Documentation

A stress-free home purchase is all about being prepared. You can get ahead of the game by gathering your financial paperwork.

This includes all bank account statements, 30 days of pay stubs, two years of W-2s and tax returns, 12 months of rent payments and/or lease documentation of any outstanding loans, etc. are required.

HDC Step 6; Get Your Loan Pre-Approved

Once you’ve decided which lender to work with, the next step is to get pre-approved.

To get pre-approved, you will need all of the necessary documentation mentioned above to verify your financial information and history and submit your loan for preliminary underwriting. Once approved, you can take that pre-approval letter with you when house hunting, and this will show the seller that you are a serious buyer that is ready to make a deal.

In this highly competitive market, being pre-approved is a must and will give you an edge in the home buying process. Loan pre-approval shows sellers that you’re ready, willing, and able to buy their home. A pre-approved buyer may win over a buyer who hasn’t started the application process in a multiple-offer situation.

HDC Step 7; Be Sure to Consider Closing Costs

When estimating how far your cash will go toward buying a home, make sure you add in closing costs. Closing or “going to settlement” is the end of the homebuying process. That’s the day money changes hands to complete the sale. Your lender will give you an estimate of all costs early on, but many people are surprised by how much closing costs are. Depending on the lender and location, closing costs typically vary from 2-5% of your home’s purchase price.

HDC Step 8; It’s a Competitive Market, but Don’t Be Afraid to Negotiate & Make an Offer.

When you know what price home you can afford and what you need to be happy, it’s worth negotiating to get it.

Once you find the perfect home, speak with your agent to get an idea of what a competitive offer would be and make an offer.

When negotiating, remember since the start of COVID-19, it has been a hot & super competitive market with low inventory and multiple offers per property, so a low-ball offer will not get you home. Be sure to work through your agent to help you prepare a solid offer to buy and negotiate strategically on your behalf.

HDC Step 9; Prepare for Closing

Once you’ve submitted your offer and have gone through the bidding and negotiation process and the seller accepts your bid, the closing process can begin. Whether an existing home or a new build, the average time for closing is typically around 45-60 days.

Your agent will guide you through the remaining steps of closing, from the final closing costs, the home inspection, final walk-through to signing the contract and other required documentation to complete the process of purchasing your new home.

Lastly, once you’re completed with the steps above, the final steps are to CELEBRATE, pack & prepare for your move-in date!

Remember, this is the most significant investment you’ll make, so it’s critical to be prepared and have the right professionals to guide you

throughout the entire process!

Good luck & happy house hunting!

Be Bold. Be Confident. Be Uniquely YOU!

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