First-Time Homebuying

Buying your first home can be exciting—and stressful. Beyond the challenge of finding the right home in the right neighborhood, many financial questions are sure to arise. With advance planning—and saving—the homebuying process will be much easier.

Our top tips:

1. Prioritize Your Living Needs Over Investment: While home values may rise, it's not guaranteed. If financial return is your primary goal, investing in stocks or bonds might be a better choice. For return on investment, plan to own a property for at least five years.

2. Know What You Can Afford: Use a mortgage calculator to figure out how much you can borrow based on your monthly income and financial obligations. A general rule is to keep your housing costs below 31–40 percent of your gross monthly income.

3. Check Your Credit Score: Having a better credit score can mean lower mortgage rates. Take steps to boost your score before you start house hunting.

4. Understand Additional Costs: Plan for property taxes, homeowner insurance, and potential major repairs and routine maintenance. If you’re looking at a condo or a home in a community with shared facilities, there may be monthly association fees.

5. Save for a Down-payment: Aim to put down at least 20 percent of your mortgage to avoid private mortgage insurance (PMI) premiums and to make it easier to qualify for a mortgage at a lower rate. A larger down-payment can also make your offer more competitive.

6. Prepare Your Documents: Commonly requested documents include bank and brokerage account statements, pay stubs, previous W2s, IRS Form 4506, and homeowners insurance policies.

7. Get Pre-approved for a Loan: A preapproval letter specifies how much a lender is willing to lend you and shows real estate agents and sellers that you’re a serious buyer. In competitive markets, many realtors require a preapproval letter before showing properties.

By following these tips, you can navigate the homebuying process more smoothly and confidently.