Buying your first home is exciting, and it has a lot of moving parts. This checklist walks through the ten things worth settling before you start making offers.
1. Know your budget
Look at your income, debts, savings and the monthly cost of owning, including the mortgage payment, property taxes and insurance. A common rule of thumb is to keep housing costs to about 28% of gross monthly income, though lenders set their own limits.
2. Check your credit
Your credit affects whether you are approved and how your loan is priced. Pull your free reports at AnnualCreditReport.com, fix any errors, and avoid new debt.
3. Save for the down payment and closing costs
Closing costs are separate from the down payment and are often about 2% to 5% of the purchase price. Some loan programs allow a down payment of 3% to 3.5%, and a few allow none. A larger down payment can widen your options.
4. Learn the main loan types
- Conventional loans: some programs allow as little as 3% down for eligible borrowers.
- FHA loans: as little as 3.5% down with a qualifying credit score, with mortgage insurance.
- VA loans: no down payment for eligible veterans and service members.
- USDA loans: no down payment for eligible properties in eligible areas.
The right choice depends on your finances and goals. Eligibility rules apply to each program.
5. Get pre-approved
A pre-approval means a lender has reviewed your income, assets and credit. It shows sellers you are serious and gives you a realistic price range. It is not a final loan commitment.
6. Plan for the full cost of owning
Budget for property taxes, homeowners insurance, utilities, maintenance and any HOA dues, not only the mortgage payment.
7. Choose a good real estate agent
Look for someone who knows the area you want, listens to your budget, and has experience with first-time buyers.
8. Get a home inspection
An inspection can uncover problems with the foundation, roof, plumbing or wiring. It can give you room to negotiate repairs, or to walk away if the issues are serious.
9. Keep your finances steady until closing
Lenders may check your credit and employment again before closing. Avoid opening new credit, financing a car, changing jobs, or moving large sums of money without telling your lender first.
10. Think long term
Consider how long you plan to stay, how the home fits your life in a few years, and what resale might look like.
Every borrower is different. If you would like to talk through your own situation, the MonaLending team is happy to help.
