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Tips for First-Time Home Buyers
Let's get real about buying a home for the first time.
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Updated · 7 min read
How is this page expert verified?
NerdWallet's content is fact-checked for accuracy, timeliness and relevance. It undergoes a thorough review process involving writers and editors to ensure the information is as clear and complete as possible.
Kate Wood is a mortgages and student loans writer and spokesperson who joined NerdWallet in 2019. With an educational background in sociology, Kate feels strongly about issues like inequality in homeownership and higher education, and relishes any opportunity to demystify government programs. Prior to joining NerdWallet, she wrote about home remodeling, decor and maintenance for This Old House magazine.
Jeanette Margle leads the home loans content team at NerdWallet, where she has worked since 2019. Previously, she led NerdWallet's travel rewards content team and spent three years editing for Upgraded Points while self-employed as an editor and writing coach.
Jeanette earned bachelor's degrees in journalism and Plan II Honors from the University of Texas at Austin and has a Master of Education from the University of Houston. A lifelong Texan, Jeanette grew up in a small town in the Hill Country and lives in the Houston area with her husband and daughters.
Head of Content, Home Loans
If this truly is your first rodeo, you're in the right place. There's lots you need to know when you're buying a home, and our tips will help prepare you for some of the key steps. So if you're ready to buy a house, let's get started.
Before you do anything else, you need to know what your budget's going to be. NerdWallet's home affordability calculator can help with setting a price range based on your income, debts and expenses. You probably don't know your exact down payment yet — after all, you're still trying to figure out what you can buy — so start by entering an amount of cash that feels doable. Once you've got the basics in place, you can adjust the figures up or down.
There are some major upfront costs to buying a home, so the sooner you can start saving, the better. In NerdWallet's 2025 Home Buyer Report, 33% of nonhomeowners cited not having enough saved for a down payment as preventing them from pursuing homeownership. Here are the biggest expenses you'll need to save for and shortcuts to getting that cash saved.
The expense
What it costs
The shortcut
Down payment: The money you pay upfront to get a home loan.
Depending on the type of mortgage, your down payment could be as little as 3%. On a $400,000 home, that would be $12,000.
Automate your savings and stash it in a smart place. Once you know how much you can afford to save per month, set up an automatic transfer to a high-yield savings account.
Closing costs: The fees you pay to finalize the home purchase.
Closing costs are usually between 2% to 6% of the loan amount. For a $385,000 loan, that would be $7,700 to $23,100.
Moving: Don't forget that you'll need to move your furnishings (and maybe get some new stuff, too).
Local moves typically run up to $2,600. Longer distances and unusual items will add to the tab.
Minimize what you need professional movers to do. If you can handle boxes and smaller items, you'll only need to pay for the big stuff.
The money you pay upfront to get a home loan.
Depending on the type of mortgage, your down payment could be as little as 3%. On a $400,000 home, that would be $12,000.
Automate your savings and stash it in a smart place. Once you know how much you can afford to save per month, set up an automatic transfer to a high-yield savings account.
Down payment
The fees you pay to finalize the home purchase.
Closing costs are usually between 2% to 6% of the loan amount. For a $385,000 loan, that would be $7,700 to $23,100.
Don't forget that you'll need to move your furnishings (and maybe get some new stuff, too).
Local moves typically run up to $2,600. Longer distances and unusual items will add to the tab.
Minimize what you need professional movers to do. If you can handle boxes and smaller items, you'll only need to pay for the big stuff.
Moving
Nerdy Perspective
I saved for 10 years before finally becoming a homeowner. At first, I stashed $100 a month into a “house” sub-account at the local credit union. When my cash flow changed, I’d save a little more — when I paid off my student loans, when I changed jobs, when I combined incomes with my partner. My biggest regret is not knowing about high-yield savings accounts sooner.
Your credit score is key to determining whether you qualify for a mortgage. Having a higher score will generally get you a lower interest rate, too, which will save you money. While you're saving to buy a home, practice proper credit hygiene:
Get free copies of your credit reports from each of the three credit bureaus — Experian, Equifax and TransUnion — to see where you stand. Dispute any errors that could hurt your score.
Pay all your bills on time, and keep credit card balances as low as possible.
Keep current credit cards open. Closing a card will increase your credit utilization ratio, which can lower your score.
Avoid opening new credit accounts while you’re applying for mortgages. Opening new accounts could put a hard inquiry on your credit report and lower the overall average age of your credit accounts, which could hurt your score.
4. Research first-time home buyer assistance programs
We mentioned this in tip two, but it bears repeating: Look into first-time home buyer assistance. Many states (and some cities and counties) offer first-time home buyer programs, which often combine low-interest-rate loans and financial help with down payment assistance and closing costs.
Assistance may come in the form of a deferred or low-interest loan, or as a grant — that's free money that you don't have to pay back. Tax credits, known as mortgage credit certificates, are also available through some first-time home buyer programs.
While many first-time home buyer programs have income limits, not all do. Don't assume you won't qualify. Some programs focus on the home's location or the buyer's occupation rather than household income.
There's a surprisingly wide variety of mortgage types with varying down payment and eligibility requirements. Here are the main categories:
🏠 Conventional loans
• Conventional is the most common type of home loan
• Down payment may be as low as 3%
• Require private mortgage insurance until homeowner has 20% equity
🏠 FHA loans
• FHA loans are insured by the Federal Housing Administration
• Allow down payments as low as 3.5%
• FHA mortgage insurance is required and may last the entire life of the loan
🏠 VA loans
• VA loans are guaranteed by the Department of Veterans Affairs
• Available to current or former service members
• No down payment required
• VA funding fee is an added closing cost
🏠 USDA loans
• USDA loans are guaranteed, and in some cases provided by, the U.S. Department of Agriculture
• Home must be located in a rural or suburban area
• Buyers must fall below household income limits for the area
• No down payment required
Whichever type of home loan you use, you'll also choose a mortgage term — that's how long the loan lasts. You'll also choose between an adjustable or fixed interest rate. Spoiler alert: The vast majority of homeowners choose 30-year, fixed rate loans.
Once you know what kind of loan you're looking for, shop multiple mortgage lenders. Researchers at Freddie Mac estimate that comparing quotes from two lenders could save a buyer up to $600 a year and comparing at least four might save as much as $1,200 annually.
If comparing origination fees and interest rates isn't your jam, consider working with a mortgage broker. A mortgage broker will hunt for lenders with loan options that fit your needs, then present you with the options.
🤓Nerdy Tip
If you're comparing lenders on your own: When you're looking at sample interest rates on lender's websites, check to see whether discount points are included. Points are prepaid interest that lower your mortgage interest rate but raise your upfront costs. Lenders will sometimes pad their advertised rates with points to make them appear lower.
A mortgage preapproval is a lender's offer to loan you a certain amount under specific terms. Having a preapproval letter shows home sellers and real estate agents that you're a serious buyer — some agents require a preapproval before they'll show you homes.
Applying for preapproval shows you're financially ready to buy a home, but it doesn't commit you to anything. It makes sense to apply for preapproval when you're ready to seriously start home shopping — think in person with an agent instead of scrolling on your phone. It's also smart to apply for preapproval with more than one lender. You can compare what interest rate they're offering you at this stage, how much they might let you borrow, and what it might be like to work with that lender.
With preapproval, lenders review your finances in a fair amount of detail. It involves a hard credit pull, which yes, can temporarily ding your credit. But if you do all your preapproval applications within a limited timeframe — 30 days max — the credit bureaus will recognize that you're shopping and count all the different inquiries as one pull.
Shopping for a home
8. Choose a real estate agent carefully
A good real estate agent will scour the market for homes that meet your needs and guide you through the negotiation and closing processes. Get agent referrals from other recent home buyers. If you're searching online, you might look for an agent who specializes in the neighborhood or type of home you're looking for.
Interview at least a few agents and request references. Ask potential agents about their experience helping first-time home buyers in your market and how they plan to help you find a home. If your home search is lengthy, you could end up spending a lot of time with your agent — it's important to make sure you click.
To avoid financial stress down the road, set a price range based on your budget — and then stick to it.
A lender may offer to loan you more than what is comfortably affordable, or you may feel pressure to spend outside your comfort zone to beat another buyer’s offer in a bidding war.
In a competitive market, consider looking at properties below your price limit to give some wiggle room for bidding. In a buyers market, you may be able to view homes a bit above your limit. Your real estate agent can help you target a reasonable price range.
Your agent can also help you fine-tune your offer. In addition to contingencies that protect you, your offer could include perks that might entice the seller. For example, if your lender will guarantee a specific closing timeline, your offer can note that.
If you make an offer on a home that gets rejected, don’t get too discouraged. After I lost a bid on a home, I had a hard time shopping listings because I kept comparing them to that first home. My partner urged me to keep an open mind, and we found a home that was perfect for us — and completely different from that “dream house.”
Taylor Getler
Lead Writer, Mortgages
Buying your home
10. Don’t skip the home inspection
A home inspection is a thorough assessment of the home's structure and mechanical systems. Professional inspectors look for potential problems, so you can make an informed decision about buying the property.
The home inspection is different from an appraisal. The appraisal gives the lender an independent assessment of the home's current market value — they don't want to lend you more than the property's actual worth. While the appraisal info is certainly interesting for you as a buyer, it's really covering the lender's interests. The inspection, on the other hand, is totally for you and your peace of mind.
A couple of additional home inspection tips:
Standard inspections don’t test for things like radon, mold or pests. Understand what's included in the inspection and ask your agent what other inspections you might need.
Make sure the inspectors can get to every part of the house, such as the roof and any crawl spaces. Keep in mind that depending on the time of year and the weather, this isn't always possible, and note any areas the inspector can't review.
The buyer doesn’t have to attend the inspection, but it's definitely useful to be there. You can get a better understanding of the home and ask questions on the spot. If you can't attend the inspection, review the reports carefully and ask about anything that's unclear.
You may be able to save money by asking the seller to pay for repairs in advance or lower the price to cover the cost of repairs you’ll have to make later. You could even ask the seller to pay some of the closing costs. But keep in mind that lenders may limit the portion of closing costs the seller can pay.
Sellers customarily pay both the buyers' and sellers' real estate agent commissions, though they don't have to. A seller could counter by asking you to foot some of that bill.
Your negotiating power will depend on the local market. It's tougher to drive a hard bargain when there are more buyers than homes for sale. Work with your real estate agent to understand the local market and strategize accordingly.
Your lender will require you to buy homeowners insurance before closing the deal. (Yes, even though you don't own the home yet!)
Home insurance covers the cost to repair or replace your home and belongings if they're damaged by an incident covered in the policy. It also provides liability insurance if you're held responsible for an injury or accident. Buy enough home insurance to cover the cost of rebuilding the home if it's destroyed.
It may be worth buying an umbrella policy if you need to cover your home, cars and other major assets.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
Min. credit score
620620
Min. down payment
3%NBKC offers conventional loans for as little as 3% down.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
Min. credit score
500500
Min. down payment
3.5%New American Funding works with down payment assistance programs in 14 states, including California, Texas, Florida and Illinois.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
4.0
NerdWallet rating
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
Min. credit score
620620
Min. down payment
0%On VA loans, NBKC offers down payments as low as 0%.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
Min. credit score
500500
Min. down payment
3.5%New American Funding works with down payment assistance programs in 14 states, including California, Texas, Florida and Illinois.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
Min. credit score
620620
Min. down payment
3%Rate offers conventional loans with as little as 3% down.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
Min. credit score
620620
Min. down payment
3%NBKC offers conventional loans for as little as 3% down.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
Min. credit score
580580
Min. down payment
3%Rocket Mortgage offers conventional mortgages with as little as 1% down.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
Min. credit score
580580
Min. down payment
3%New American Funding works with down payment assistance programs in 14 states, including California, Texas, Florida and Illinois.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
Min. credit score
580580
Min. down payment
N/ANew American Funding works with down payment assistance programs in 14 states, including California, Texas, Florida and Illinois.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
Min. credit score
580580
Min. down payment
N/ANew American Funding works with down payment assistance programs in 14 states, including California, Texas, Florida and Illinois.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
Min. credit score
620620
Min. down payment
3%NBKC offers conventional loans for as little as 3% down.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
Min. credit score
500500
Min. down payment
3.5%New American Funding works with down payment assistance programs in 14 states, including California, Texas, Florida and Illinois.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
4.0
NerdWallet rating
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
Min. credit score
580580
Min. down payment
3.5%First-time home buyers may qualify for 3% down mortgages at Rocket.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
Min. credit score
620620
Min. down payment
0%Veterans United offers VA loans for as little as 0% down.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
Min. credit score
620620
Min. down payment
0%On VA loans, NBKC offers down payments as low as 0%.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
Min. credit score
500500
Min. down payment
3.5%New American Funding works with down payment assistance programs in 14 states, including California, Texas, Florida and Illinois.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
Min. credit score
620620
Min. down payment
3%Rate offers conventional loans with as little as 3% down.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
Min. credit score
620620
Min. down payment
1%Rocket Mortgage offers conventional mortgages with as little as 1% down.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
4.0
NerdWallet rating
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
Min. credit score
620620
Min. down payment
3%NBKC offers conventional loans for as little as 3% down.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
Min. credit score
580580
Min. down payment
3%Rocket Mortgage offers conventional mortgages with as little as 1% down.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
Min. credit score
580580
Min. down payment
3%New American Funding works with down payment assistance programs in 14 states, including California, Texas, Florida and Illinois.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
Min. credit score
580580
Min. down payment
N/ANew American Funding works with down payment assistance programs in 14 states, including California, Texas, Florida and Illinois.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
Min. credit score
720720
Min. down payment
N/ANBKC offers conventional loans for as little as 3% down.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
Min. credit score
580580
Min. down payment
N/ANew American Funding works with down payment assistance programs in 14 states, including California, Texas, Florida and Illinois.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
Min. credit score
720720
Min. down payment
N/ANBKC offers conventional loans for as little as 3% down.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
