Are you getting ready to buy your very first home? This guide helps first-time home buyers avoid costly mistakes before applying for a mortgage, shopping for homes, and choosing a loan. The biggest missteps usually involve budgeting, cash needed to close, credit changes, pre-approval, and picking a mortgage that does not fit your plans.
While the advice here is broadly useful, some loan options, qualification details, and assistance programs can vary by lender and by state. Taking time to plan before you buy can help you save money, reduce stress, and avoid the most common first-time buyer mistakes:
Before you start touring homes, decide on a monthly housing payment that fits your real life, not just the maximum a lender may approve. A safer budget looks at your full monthly housing cost, including principal, interest, property taxes, homeowners insurance, and any HOA dues, along with your other debts, regular living expenses, emergency savings, and overall comfort level.
Stretching to the top of your approval range can leave very little room for repairs, rising bills, or changes in income. Buying more house than you can comfortably afford can create stress long after the excitement of the purchase wears off.
Instead of using a rigid formula, build a payment range that lets you cover your bills, keep money in reserve, and still feel comfortable month to month. That way, you are shopping with a number that works for both your lender and your own financial goals.
Tip: Not sure how your mortgage payment works? Calculate how much your expected monthly payment could be using our handy mortgage calculator.
Many “could-be” FTHBs wait too long to apply for a mortgage, losing thousands of dollars paying rent when they could be paying a mortgage on their own home instead. It’s normal to hesitate if you think you’re not ready, but if it’s the traditional 20% down payment you’re worried about, think again.
Most FTHBs can qualify for a special mortgage that doesn’t require anywhere near the 20% down of a conventional mortgage. You can apply for an FHA loan and pay only 3.5 to 10% down on the home of your dreams, as long as you pay private mortgage insurance (PMI) to protect the bank’s investment.
Tip: Once you earn some equity in your home, you can always refinance to get rid of the PMI requirement and maybe even get a better interest rate!
So, you’ve got $80,000 in your savings account. Does that mean you should sink it all into a down payment? If you do, you could save a lot in interest over the years, but you’ll also be tying up all of your wealth in real estate.
This could give you trouble later if you need cash fast for an emergency. You could borrow against the equity, but that would cost you even more interest. You might end up paying more than you saved by making a big down payment to start with.
Tip: Limit your down payment as much as possible, and buy a few discount points on your mortgage to save on interest. Then stick your cash in an interest-bearing account so you have a cushion.
A lot of first-time buyers plan only for the down payment and are surprised by how much cash they need beyond that. In addition to your down payment, you may also need money for closing costs, prepaid property taxes, homeowners insurance, moving expenses, utility setup, and small repairs or purchases right after move-in.
That is why it is important to think in terms of total cash to close, not just the down payment. Even if you qualify for a low-down-payment loan, draining your account to get the keys can leave you financially exposed as soon as you move in.
Try to go into closing with a plan for both upfront costs and what you want to keep in reserve afterward. Having some savings left after closing can make homeownership much less stressful if an unexpected bill shows up early.
Getting ready to buy a home? Don’t start increasing credit limits, opening new lines of credit, or making big purchases on credit right before you apply for your mortgage (or right after!) You could wreck a perfectly good credit score and make yourself look like a risk to lenders.
Check your credit score well in advance of starting to shop for your first house, and try to raise your score if possible to qualify yourself for a better interest rate. This can help you immensely if you are applying for a loan product that rewards higher credit scores.
Tip: know what a “good” credit score is. For buying a home in Seattle, WA, for example, you’ll need a score around 620, but you can get better rates with a score over 700.
Many FTHBs make the mistake of home shopping before talking to a mortgage loan officer. In a competitive market, being preapproved can give you massive negotiating power, and move your serious offer on a home to the top of a seller’s stack. It doesn’t take a lot of work to apply for a mortgage online and find out exactly how much you’re approved to spend on the future home of your dreams.
At Sammamish, we do preapprovals routinely to help our homebuyers be prepared to put a confident offer in quickly as soon as they find their perfect home. You’ll get a preapproval letter after applying for and having all of your documentation verified and your credit score checked for your mortgage loan.
Tip: Don’t fall into the trap of simply getting “prequalified.” This is a surface look at your finances, and doesn’t include verification of your employment, income, and assets. A pre-approval lets you be taken seriously by sellers.
There are several mortgage types available, and some may be better suited for first-time home buyers than others.
For instance, there are fixed-rate mortgages and adjustable-rate mortgages. The former involves an interest rate that remains fixed throughout the mortgage term, while the latter involves a rate that fluctuates over time. With adjustable-rate mortgages, when interest rates increase, so could your mortgage payments, and vice versa, whereas with a fixed-rate mortgage, your payments will remain the same as the rate won’t change.
There are also FHA loans, which are mortgages backed by the FHA. These mortgages are quite popular among first-time home buyers as they have less stringent criteria. For example, the minimum credit score is lower for FHA loans than conventional loans. More specifically, you may be able to get approved for an FHA loan with a credit score of 580, as compared to a minimum of 620 for conventional loans.
Further, down payment minimums are also quite low with FHA loans. More specifically, the minimum down payment requirement for an FHA loan is 3.5% of the purchase price of a home. As such, it may be easier to qualify for an FHA loan with the lower minimum requirements, especially for first-time home buyers.
Be sure to compare different loan options to see how they’ll fit in with your budget.
Your mortgage lender is someone who has plenty of experience in the local market and is willing to develop a strong working relationship with you. They should also work closely with your specific situation to ensure that you get the best mortgage for you. This is an essential step in the home-buying process, especially for first-timers who have no experience in this endeavor.
A home will be your biggest asset, so it only makes sense to be vigilant in who you choose to help you secure a mortgage. Your lender should have your best interest in mind and provide you with several options to choose from in terms of things like a mortgage term, down payment, and other things that go into home buying.
Many first-time homebuyers are hesitant to get into the market for many reasons; perhaps they want more time to save up for a sizable down payment, or perhaps they’re waiting for the market to cool down. Or maybe they hope that mortgage interest rates will dip.
The thing is, if you wait too long, you could wind up paying more for a home. Based on how the real estate market is going across the country, prices are skyrocketing.
For instance, home prices can change while you wait, which may affect how much house you can afford.
If you are financially ready to buy a home, it may make sense to move forward based on your budget and goals. You should also keep an eye on today’s mortgage interest rates: Freddie Mac’s average 30-year fixed-rate mortgage was 7.18% as of November 5, 2026.
Don’t wait too long to buy your first home. If you get in early enough, you can take advantage of an increase in home equity sooner rather than later.
As a first-time home buyer, you do have a few benefits over someone who is buying their second home. You can take advantage of loan programs that allow you to buy with a low down payment, with fair to poor credit, and even with funds provided as a gift from a family member or friend.
You’ll also be able to instantly increase your net worth when you become a homeowner. Even if it takes you a few years to build up equity, owning your own home gives you immediate financial standing and looks good to the credit bureaus. Just make sure you make every payment on time!
If you run into trouble with your mortgage, and you’re in an FTHB program backed or sponsored by the federal government, you’ll also qualify for special programs in case of an unprecedented event, like a pandemic. For example, many FTHBs that were having trouble making their mortgage payments due to COVID-19 were able to get forbearance and avoid foreclosure or losing their credit rating.
When closing week arrives, you want to make sure you’ve crossed your “t’s” and dotted your “i’s”. Taking the steps to prepare long beforehand can help you realize a successful real estate transaction as a FTHB.
Are you a first-time home buyer? Navigating the homebuying process can be confusing and complicated. We understand how overwhelming it can feel, especially since it’s your first time dealing with things like escrow, appraisals, and closing costs.
We try to make the process as easy as possible, from making mortgage rates easy to find on our site, providing you with calculators, and letting you choose between initiating your application online or asking a loan officer to walk you through the steps. We’ll be with you every step of the way!
Sammamish Mortgage has been in business since 1992, and has assisted many home buyers in the Pacific Northwest. If you are looking for mortgage financing in Washington State, we can help. Sammamish Mortgage offers mortgage programs in Colorado, Idaho, Oregon, Washington, and California.
Contact us if you have any mortgage-related questions or concerns. If you are ready to move forward, you can view rates, obtain a customized instant rate quote, or apply instantly directly from our website.
No. Many first-time buyers qualify for loan programs with much lower down payment requirements. The article notes that FHA loans may allow as little as 3.5% down for qualified borrowers, while some buyers may choose a larger down payment if it fits their finances.
Prequalification is usually a basic review of your finances, while preapproval is more thorough and typically includes verification of income, assets, employment, and a credit check. In a competitive market, preapproval generally carries more weight with sellers.
There is no single amount that fits everyone, but the key is not to drain your savings for the down payment alone. Buyers should plan for total cash to close and still keep money available for reserves, moving costs, utility setup, and unexpected repairs after move-in.
Yes, it can. Opening new credit accounts, increasing balances, or making large purchases on credit before closing may lower your credit score or change your debt profile, which can affect mortgage approval or loan terms.
It depends on your credit profile, savings, and long-term plans. FHA loans may be easier to qualify for because they can allow lower credit scores and lower down payments, while conventional loans may be a better fit for borrowers with stronger credit and different cost priorities.
Not always. Rates and home prices can both change while you wait, and delaying a purchase could reduce affordability if prices rise. A better approach is to decide based on your budget, financial readiness, and homeownership goals rather than trying to perfectly time the market.
A common mistake is shopping based only on the maximum amount a lender may approve instead of what feels comfortable in real life. Buyers should look at the full monthly housing cost, including principal, interest, taxes, insurance, HOA dues, and their other regular expenses.
Because the down payment is only one part of the upfront cost. Buyers may also need funds for closing costs, prepaid property taxes, homeowners insurance, moving expenses, utility setup, and immediate home-related purchases or repairs.
Preapproval helps you understand how much you may be able to borrow and shows sellers that your financing has been more fully reviewed. That can make your offer stronger and help you act faster when you find a home you want.
Buyers should look for a lender with relevant market experience, clear communication, and a willingness to review multiple loan options that fit the borrower’s situation. The right lender should help you compare terms, down payment options, and loan types instead of pushing a one-size-fits-all solution.
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