First-Time Homebuyer Basics
Everything a first-time homebuyer needs to understand the process from start to finish. Covers the buying process, credit, pre-approval, down payment options, closing costs, and what to expect on closing day.
First-Time Homebuyer Basics
Buying your first home is one of the biggest decisions of your life. Here's a calm, honest walkthrough of how it actually works.
Step 1: Check Your Credit
Your credit score affects your loan options and interest rate. Get a free report at annualcreditreport.com.
- 620+ – qualifies for most conventional loans
- 580+ – qualifies for FHA loans with 3.5% down
- Under 580 – limited options, but a path forward exists
Step 2: Figure Out Your Budget
Use the affordability guide to understand what you can realistically afford. Factor in:
- Down payment
- Monthly mortgage payment (principal + interest)
- Property taxes (varies by county)
- Homeowner's insurance (~$100–200/month)
- HOA fees (if applicable)
- Maintenance (budget 1% of home value per year)
Step 3: Get Pre-Approved
A pre-approval letter shows sellers you're serious. It requires:
- Recent pay stubs
- 2 years of W-2s or tax returns
- Bank statements (last 2–3 months)
- ID
Step 4: Work with a Real Estate Agent
A buyer's agent represents your interests and is typically paid by the seller. Interview a few agents before choosing.
Step 5: Search for Homes
Be patient. Know your must-haves vs. nice-to-haves. Don't skip the inspection.
Step 6: Make an Offer
Your agent will guide you through the offer process. Key terms:
- Earnest money – a good-faith deposit (1–2% of purchase price)
- Contingencies – conditions for the sale (inspection, financing, appraisal)
- Closing date – typically 30–45 days from accepted offer
Step 7: The Inspection
Never waive the inspection. A licensed inspector will evaluate the home's condition. Negotiate repairs or credits based on findings.
Step 8: Underwriting & Appraisal
Your lender will verify your finances and order an appraisal to confirm the home's value.
Step 9: Closing Day
Bring:
- Government-issued ID
- Certified funds for closing costs (typically 2–5% of purchase price)
- Confirmation of homeowner's insurance
You'll sign a lot of documents. The home is yours when the deed is recorded.
Common Mistakes to Avoid
- Don't open new credit accounts during the process
- Don't make large deposits or transfers without documenting them
- Don't quit your job before closing
- Don't skip the final walkthrough
Topics Covered
Community Spotlight
"The first step that you should always take is talk to a lender."
— Savannah Romney
View Episode"Are you looking to save money, or are you looking to make money?"
— Ammon Childs
View EpisodeJust Buy That Real Estate
Near the end of the episode, Ammon is asked what advice he would give buyers right now. He doesn’t hesitate. If he could go back and tell younger Ammon one thing, it would be this: just buy that real estate. It appreciates over time. Rates come and go — and you can refinance. The forecast suggests rates will continue to fall. His regret is not buying more, sooner. Ryan echoes it: much of his own financial growth has come from real estate appreciation and rental properties, not his primary career income. Their shared message: real estate is how you get rich slowly — and that is not a criticism of slow. It is an endorsement of it.
Read storyThe Dream Home That Wasn't
A young engaged couple approved for just over $500,000 went to see their dream home. It was in terrible condition — $150,000 in repairs needed. They were defeated. Nikki pivoted them to a smaller, completely remodeled home with land to expand and a basement with a separate entrance for rental income. It wasn't as grand. But it required no repairs, had multiple future options, and was the smarter first chess move.
Read story