The Complete First-Time Homebuyer Guide
Everything you need to know about buying your first home, from saving for a down payment to closing day.
Understanding the Homebuying Process
First-time buyers account for approximately 34% of all home purchases in the United States, and many qualify for special programs with lower down payments and reduced interest rates.
Key Tips
- Start the pre-approval process at least 2-3 months before you plan to start house hunting
- Create a realistic budget that includes not just the mortgage payment but also property taxes, insurance, and maintenance costs
- Research neighborhoods thoroughly before committing to a location
Financial Preparation
Even a 20-point increase in your credit score can save you thousands of dollars over the life of your mortgage through better interest rates.
Key Tips
- Aim to save at least 3-6 months of living expenses as an emergency fund beyond your down payment
- Avoid making large purchases or changing jobs during the mortgage process
- Consider setting up automatic transfers to a dedicated home savings account
Loan Options for First-Time Buyers
Key Tips
- FHA loans are often the best starting point for buyers with lower credit scores or smaller savings
- Check if your state offers first-time homebuyer assistance programs for additional down payment help
- Compare loan estimates from at least three different lenders to ensure you get the best terms
Finding the Right Home
The average first-time homebuyer looks at 10 homes over 10 weeks before making an offer. Do not feel pressured to rush the process.
Making an Offer and Closing
Key Tips
- Always include an inspection contingency so you can negotiate repairs or walk away if serious issues are found
- Get a final walkthrough of the property 24-48 hours before closing
- Budget 2-5% of the purchase price for closing costs in addition to your down payment
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Frequently Asked Questions
The amount varies depending on the loan program. FHA loans require as little as 3.5% down, while some conventional programs allow 3% down. VA and USDA loans offer zero down payment options for eligible buyers. You should also budget 2-5% of the purchase price for closing costs and maintain an emergency fund of 3-6 months of expenses.
The minimum credit score depends on the loan type. FHA loans accept scores as low as 580 with 3.5% down or 500 with 10% down. Conventional loans typically require a minimum of 620. VA and USDA loans generally require 580-620. Higher scores will qualify you for better interest rates and terms.
From start to finish, the homebuying process typically takes 3-6 months. This includes 1-2 months for financial preparation and pre-approval, 1-3 months for home searching, and 30-45 days for closing once your offer is accepted. The timeline can vary based on your local market conditions and how quickly you find the right home.
Yes, getting pre-approved before house hunting is strongly recommended. Pre-approval tells you exactly how much you can afford, strengthens your offers in competitive markets, and speeds up the closing process. Most sellers and real estate agents prefer working with pre-approved buyers.
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