Lenders like to see that you will have some money left in the bank after closing to cover emergencies or immediate repairs. 3. Determine Your Budget
Do not skip this step! A pre-approval letter shows sellers that you are a serious buyer with actual purchasing power. 1. Gather Your Documentation guide to buying your first house
Many first-time buyers believe they need a 20% down payment. While 20% is ideal because it eliminates the need for Private Mortgage Insurance (PMI), many loan programs allow as little as 3% to 5% down. Lenders like to see that you will have
Be honest about what you can afford. Lenders use the "debt-to-income" (DTI) ratio to qualify you for a loan, usually looking for a DTI of 43% or less. However, just because a bank says you can borrow a certain amount doesn’t mean you should. Calculate your monthly housing costs, including: Principal and interest Property taxes Homeowners insurance Homeowners Association (HOA) fees (if applicable) Utilities and maintenance costs Phase 2: Getting Mortgage Pre-Approval A pre-approval letter shows sellers that you are
Number of bedrooms, school district, proximity to work, a layout that fits your family.
Don't just go with your primary bank. Get quotes from multiple sources, including local banks, credit unions, and online brokers. Compare their loan estimates, looking closely at both the interest rates and the loan origination fees. 3. Understand Your Loan Options
As a buyer, using a real estate agent is generally free to you (the seller usually pays the commission). Look for an agent who specializes in first-time buyers and knows your target neighborhood well. They will guide you through negotiations, paperwork, and scheduling tours. 2. Create Your "Needs" vs. "Wants" List