Buying Your First Home: 13 Actionable Steps


If you’re considering buying your first home, congrats!

Homeownership is one of the most rewarding experiences, but it can come with many headaches like anything.

Here are some home-buying tips to help you with your home purchase:

1. Research your market

When you’re ready to look for a home, it’s essential to DYOR (do your own research).

This isn’t crypto or NFTs, but it’s much more challenging to be profitable in the housing market and requires more upfront capital. 💸

Don’t rely on your real estate agent to make the tough decisions or decide which neighborhood is right for you.

At a very high level, you’ll need to understand your area’s property taxes, mortgage rates, and average home values.

Research the home values in your area by looking at listings on real estate websites such as Zillow or Trulia.

Look at recent sales nearby—they’ll give you an idea of how much other people are paying for comparable homes. Check what

2. Set a realistic budget

earnest money

The most important – and toughest – thing to do when buying your first home is to set a realistic budget.

The key 🔑 is knowing how much you can afford to pay for a home. It sounds easy, but there are a lot of costs associated with purchasing a home, and they’re not easy to estimate.

There’s also a lot of emotion involved, which can sometimes cause first-time home buyers to overspend. You see your dream home, and a lender is telling you that you can get a loan for that much…but can you really afford a $4,000 a month mortgage for 30 years on top of your other expenses?

Figure out how much you have for a down payment and closing costs, and then calculate your monthly mortgage payment using a mortgage calculator.

It’ll be helpful to talk with a mortgage lender or real estate agent so they can help guide you toward more accurate estimates.

Although it’s tempting to go over your budget, it’s important to practice restraint, and you’ll thank yourself later. 🙏

Calculating your budget

The best way to do this is to start with your monthly net income. Subtract your living expenses (groceries, drinks, nightlife, etc.) and see what you’re left with.

Now subtract the home expenses.

Subtract the down payment, closing costs, and other upfront fees (home inspection fees, appraisal, realtor fees, etc.) from your savings and see how much you’re left with in case of an emergency.

Then subtract your monthly mortgage payments and other monthly expenses such as home insurance, HOA, and more from your net income and see what you’re left with.

For example, if you want a house in the hills with two Teslas to commute to work (do people still do that? 🤔), chances are you’ll have to cut expenses to make it work.

Always compare 🍎 to 🍏 when looking at different properties. Once you find your budget range, it’s best not to venture out too much when looking at comps.

3. Save for the down payment and closing costs

If you’re buying a home for the first time, there are two major payments you need to prepare for: the down payment and closing costs.

Let’s start with the down payment. You’ll need a down payment or a percentage of the purchase price.

The minimum is 3.5% down for FHA loans and 5% down for conventional mortgages.

If you want to put down the minimum, that’s fine. Just be aware that this will cost you more in interest later on as you’ll have to pay private mortgage insurance (PMI) (you’ll have to make larger monthly payments). You can also get a mortgage with no money down—but it won’t be cheap, so I won’t talk about it here.

The average amount that lenders are looking for is 20% of the purchase price. If you make an offer on a $250,000 home, you’ll have to come up with $50,000 (20% of $250k).

Closing costs are another thing that buyers should be prepared for—they can add another 1%-3% on top of the cost of buying a home.

Closing costs include appraisals and inspections, title work and filing fees, lender fees (such as recording taxes), homeowners insurance premiums paid at closing time…the list goes on!

4. Don’t stop paying down your debt. Improve your debt-to-income ratio

foreclosure debt

Debt isn’t always a bad thing. Debt can be used appropriately to build wealth and buy assets. But if you’re buying your first home, it’s best to pay down as much debt as possible.

Ensure your income-to-debt ratio is less than 50% to avoid issues when getting pre-approved for a mortgage.

Your lender may even ask you to pay off some debt, for example:

  • If you have student loan debt, keep paying those down as quickly as possible. 💸

  • If you have credit card debt, you’ll want to make sure you pay it all off, if possible.

5. Maintain a solid credit history and credit score

Now that you’ve begun the home-buying process, it’s time to get the ball rolling with the loan application process. You’ll need a solid credit score when lenders pull your credit report.

Hopefully, you’ve already been building up your credit long before Reading this blog post 🤞 or you’re still a ways away from buying because building credit is not a quick fix.

Your credit score determines the deal you’ll get on your home loan, so it’s crucial to maintain a good one.

Your credit score is based on how well—or poorly—you’ve managed your finances. The 5️⃣ components are:

  • payment history (35%)
  • amounts owed (30%)
  • length of credit history (15%)
  • new credit accounts opened (10%)
  • types of credit accounts used (10%)
credit score components

Credit scores range from 300-850.

  • 750+ is very good
  • 700-750 is excellent
  • 650-699 is good
  • 600-649 is fair
  • 550-599 is poor
  • below 550 is bad or poor.

Here are a few tips to improve your score over time:

  • Keep track of late payments sent to collections and ask that they be removed from your record ASAP by contacting each creditor directly.
  • Pay any balances on existing accounts to less than 30% of their total limit when possible.
  • Don’t close unused accounts unless necessary. Every card helps build a picture of responsible behavior over time.

6. Choose a real estate agent you trust

Choosing a good real estate agent is one of the first steps toward making the right decisions.

Find an experienced agent who knows the local market, what comps have sold for, and how much you’ll need to spend for your forever home.

Ask about their experience and what clients they typically work with.

Also, make sure they’re available when you need them.

7. Do your homework on the house itself

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Once you’ve found the right family house, there are additional things to consider. Before making an offer on the property, it’s crucial to do your homework on the house itself.

  • Get a home inspection: This is something that most buyers require as part of their offer, and you should too. It’s your last chance to ensure the house is in good condition or to negotiate a cheaper price.

  • Check out nearby neighborhoods: Find a few neighbors who have been in the neighborhood for more than five years and ask what they like and don’t like about living there.

8. Get the right home insurance

Home insurance is one of those things you don’t think about until it’s too late.

You get a new house, and suddenly, you’re like, “I wonder if I should get home insurance”? And then you start thinking about all the things that could happen to your house and how much they’d cost. And then you think: “Oh my god, what if my house is on fire and burns down? How would I live? Where would I go?”

And then you realize… you don’t have home insurance. You’re living in this beautiful home without any protection whatsoever!

9. Don’t let emotions cloud your judgment.

The process of buying a home is long and tedious. It’s important not to let your emotions cloud your judgment because you’ll miss out on your dream home.

You should also ensure that the monthly payment works with your budget, not just what the bank says is right. If you’re going to put yourself in debt for 30 years, do it wisely by making sure it’s worth it.

Don’t get too attached to one specific area until all of these other factors have been considered.

10. Be prepared for more unexpected expenses after closing.

After you’ve closed on your home and moved in, be prepared for unexpected expenses.

To start with, list everything you will need to buy (furniture, appliances, etc.) and how much those things cost. Then, figure out how much money you can afford to spend.

You’ll have to pay for utility bills, landscaping, and possibly pest control services.

If you’re moving into an older home, there are sure to be some unexpected repairs or renovations that need to be done soon after moving in.

11. Don’t wait until you find a home to look for a lender. Get pre-approved early

Tips for Choosing the Right Mortgage Broker
Tips for Choosing the Right Mortgage Broker

You should start the mortgage process as soon as you decide to buy a home. You can get pre-approved for a mortgage early on, which will give you a better sense of how much you can afford.

The importance of getting pre-approved is that it shows the seller you are serious enough to be a buyer.

When you talk with a real estate agent or even see an ad for a house, they will always ask if you have gotten pre-approved.

You can get pre-approved by working directly with an institution like your bank or credit Union or through a mortgage broker.

To be approved for a loan, your lender needs the following:

  • Your credit score. This is important because it shows how well you manage debt, among other factors. If your credit score isn’t very high right now, don’t panic—there are ways to improve it before applying for a loan!

  • Proof of employment history, such as pay stubs or W-2 forms from recent employers

  • Documents showing how much money you make each month by showing two years of tax returns.

  • Bank statements for the past two months showing your down payment in your account.

12. Do your homework on loan types.

foreclosure pre-approval
Photo by Andrea Piacquadio

Your first mortgage may be the largest loan you ever take out, so it’s critical to research and ensure you’re getting the best rate possible. This means knowing about points, closing costs, and prepayment penalties – make sure you don’t have those.

There are several different types of mortgages. The most common options are conventional mortgages or an FHA loan (federal housing administration).

  • Points: A point is a percentage of your loan amount (usually 1% of the total). The fewer points you pay upfront, the higher your monthly payment will be. This offsets some interest over time if you refinance or sell the home before paying off your mortgage.

  • Closing Costs: These include fees for appraisals, inspections, title searches, and lender-required payments not covered by insurance or escrow. These expenses vary depending on where you live but tend to hover around 2% – 3%.

  • Private Mortgage Insurance (PMI): If your down payment was less than 20%, lenders typically require PMI until enough equity is built up for them not to worry about losing money if you foreclose on the property (which happens more often than most people think). PMI usually runs 0.5%-1% annually, depending on how much equity has been accrued.

The interest rate, points, and fees of your loan can vary depending on many factors, including the length of your mortgage term and whether or not you have a credit score that qualifies for a low-interest rate.

13. Get quotes from multiple lenders.

When buying your first home, it can be tempting to stick with the first lender you speak to, but it’s important to see what else is out there.

The difference between a 2% and 4% mortgage rate could mean thousands of dollars in savings over the term of your loan.

Get quotes from multiple mortgage lenders to get the best rate.

There are other things to look out for as well:

  • Look at different types of loans (fixed-rate, adjustable rate) and terms—30 years vs. 15 years).

  • Check their online reviews on sites like Zillow or Yelp (or use whatever review site works best in your area).  The reviews should give you a good sense of whether customers have been happy with their service and what problems they encountered along the way.

  • Make sure there are no prepayment penalties.

Final Thoughts

Buying your first home is a big step; ensure you’re prepared.

Whether you have all the time in the world or are on a tight deadline, it’s never too early to start looking into financing options and shopping around for mortgage quotes.

Expect your home to be an imperfect place at first.

The Top 5 Home Exterior Upgrades for ROI
The Top 5 Home Exterior Upgrades for ROI

When buying a home, it’s important to remember that the house you’re buying is an imperfect place at first. Be prepared for things not to be perfect immediately—but don’t let that stop you from making the purchase!

After all, it will become your family’s home in no time and can be changed as necessary over time.

Buying your first house is a big undertaking, but it’s worth it in the end.

Buying your first house is a big undertaking, but it’s worth it in the end. You’ll have more financial freedom and flexibility with a home of your own.

You save money on rent and other expenses and don’t have roommates!

Kurby Team

The Kurby Content Team is a diverse group of seasoned real estate experts dedicated to providing insightful, reliable information for homebuyers, real estate investors, and real estate agents. With backgrounds ranging from real estate brokerage, property investment, and residential home buying, our team combines decades of experience with a passion for demystifying the real estate world. We at Kurby are committed to helping you make informed, successful real estate decisions. Whether you're a first-time homebuyer, a seasoned investor, or a real estate professional, count on the Kurby Content Team to deliver the most relevant, actionable real estate content you need.

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