13 tips for first-time home buyers: Important things to know

Planning to buy your first home might conjure up images of shiny keys, furniture shopping, and fresh paint. But it also includes mortgage payments and a bunch of paperwork. 

From figuring out your budget to selecting the right mortgage lender, first-time home buyers face many new challenges while navigating the process. The good news is that buying a house for the first time can go smoothly with the right preparation and knowledge.

Whether you're just starting to think about homeownership or ready to begin house hunting, having a clear roadmap will help you make informed decisions. We've compiled the most critical advice for first time home buyers to guide you through each step of the process, from saving for your down payment to closing on your dream home.

Here are the key things to know as a first-time home buyer:

House buying tips

1. Build your savings early

Our first tip for first-time home buyers is setting aside money for your home purchase as soon as possible. Beyond the down payment, you'll need funds for closing costs, moving expenses, and immediate home repairs or improvements. Aim to save at least 20% of your target home price for the down payment. Note that some loan programs allow for smaller down payments, but they might come with premiums, like extra insurance.

Create a dedicated savings account specifically for your home purchase and set up automatic transfers to build your fund consistently. Consider temporarily cutting back on discretionary spending like dining out or entertainment to accelerate your savings timeline. These other mortgage tips become easier to achieve once your finances are in order.

2. Eliminate debt and create a financial safety net

Pay down existing debt before applying for a mortgage, as this will improve your debt-to-income ratio and make you more attractive to lenders. It will also help improve your credit score, which could mean lower monthly mortgage payments. Focus on high-interest debt first, such as credit cards, while making minimum payments on other obligations.

As you’re chipping away at existing debt, build an emergency fund with at least 3–6 months of living expenses. Homeownership comes with unexpected costs, and having a financial cushion will prevent you from falling behind on monthly payments if you face a job loss or major unexpected expense.

3. Create a homeowner budget

Monitor your current expenses for several months and track spending to understand where your money goes. Use this information to create a realistic budget that has room for your future mortgage payment, property taxes, homeowners insurance, and maintenance costs.

Remember that housing costs should typically not exceed 28% of your gross monthly income. Factor in utilities, HOA fees, and regular maintenance when calculating what you can truly afford.

4. Choose a lender you can trust

Research potential lenders thoroughly and compare their rates, fees, and customer service reputation. Read online reviews and ask friends, family, or your real estate agent for recommendations. A good lender will guide you through the process and help you understand your options without pressuring you into a particular loan product. They’ll respond to your questions and clearly explain loan terms and processes.

Better stands out as a verified, trustworthy mortgage lender that has funded over $108 billion in home loans and served 433,265 customers like you. Better offers a variety of loan options with pre-approval in as little as three minutes, transparent rates, and quick closing times. 

...in as little as 3 minutes – no credit impact

5. Look for mortgage loan options

Familiarize yourself with available loan types to find the best fit for your situation. Conventional loans — like those from banks — work well for buyers with good credit and stable income, while FHA loans have more flexible qualification requirements. VA loans provide excellent benefits for eligible veterans and service members, and USDA loans can help rural buyers.

Compare interest rates, but also consider the total cost of each loan, including potential origination fees and mortgage insurance requirements. A slightly higher rate might be worth it if the loan ultimately has lower fees or better terms.

6. Look into first-time home buyer assistance programs

Many states, counties, and cities offer programs specifically designed to help first-time buyers. Programs include down payment assistance, reduced interest rates, or help with closing costs. Some employer-sponsored programs also provide homebuying benefits.

Research what's available in your area and the eligibility requirements. Some programs require completing homebuyer education courses, while others have income limits or geographic restrictions.

7. Choose a reliable real estate agent

Work with an experienced agent who understands your local market, has a track record of helping first-time buyers, and can help make an optimal offer on your chosen house. A good agent will educate you about the process, help find properties that meet your criteria, and negotiate on your behalf.

Better offers a Real Estate Discount program, helping you save money when buying through their network of agents. You can ask potential agents about their experience, communication style, and how they'll support you throughout the process.

8. Plan with resale value in mind

Even if you plan to stay in your first home for many years, consider the resale potential when the time comes. Look for homes in desirable neighborhoods with good schools, convenient transportation, and stable property values.

Features like updated kitchens and bathrooms, adequate storage, and functional floor plans appeal to a broad range of buyers. Avoid highly personalized features or unusual layouts that could limit your future buyer pool.

9. Make a list of needs, priorities, and preferences

Before looking at homes, create three distinct lists: must-haves, nice-to-haves, and deal-breakers. Must-haves usually include the number of bedrooms, proximity to work, or a specific school district. Nice-to-haves could be features like a garage, updated appliances, or a large yard.

Be realistic about what’s within your budget and prepare to compromise on some items. Clear priorities help make decisions easier in competitive markets and stop you from falling in love with homes you can't afford.

10. Research neighborhoods thoroughly

Visit potential neighborhoods at different times and days of the week to get a feel for traffic patterns and noise levels, as well as the community atmosphere. Check crime statistics, school ratings, and future development plans that might affect property values.

Consider your daily commute, access to amenities like grocery stores and healthcare, and whether the neighborhood fits your lifestyle. What seems perfect on weekends might be very different during weekday rush hour.

11. Keep paperwork organized

Maintain organized files of all documents related to your home purchase, including loan applications, inspection reports, contracts, and correspondence with your lender and agent. Keeping everything easily accessible speeds up the process and shortens response times.

Create both physical and digital copies of important documents. Your lender will require extensive documentation, and preparation limits delays in the closing timeline.

12. Negotiate with the seller

Don't be afraid to negotiate on asking price, repairs, or other terms of the sale. Your agent can help understand what's reasonable to request based on market conditions and the property's condition. You might have more negotiating power in buyer's markets, while seller's markets may require more flexibility.

The cost of the house isn’t the only thing you could negotiate. Consider asking the seller to cover the home inspection, offer an early move-in date, or pay some of your closing costs, especially if you're stretching to afford the down payment. Sometimes sellers prefer counteroffers addressing other terms to simply reducing the sale price.

13. Plan for closing costs

Your budget for closing costs should typically be 2–5% of the home's purchase price. Costs include loan origination fees, title insurance, attorney fees, and prepaid items like property taxes and homeowners insurance.

Review your Closing Disclosure form carefully at least three days before closing to ensure all numbers match your expectations. Don't hesitate to ask questions about any fees or charges you don't understand.

Start your homebuying journey with confidence

Preparing to buy your first home takes time and effort, but following these house buying tips leads to informed decisions and avoids common pitfalls. Remember that preparing to buy your first home starts with understanding your finances and researching your options.

Better is here to support you throughout your homebuying journey with transparent rates, quick pre-approval, and various loan options designed to meet first-time buyer needs. Take the first step today by getting pre-approved, then apply these house hunting tips to turn your homeownership dreams into reality.

...in as little as 3 minutes – no credit impact