Important Legal Notice
Disclaimer: This article provides general educational information about home buying in the United States and should not be construed as legal, financial, tax, or real estate advice. Real estate laws, mortgage regulations, tax codes, and lending requirements vary by state, county, and municipality and are subject to change.
Professional Consultation Required: Before making any financial decisions related to purchasing real property, you must consult with licensed professionals, including but not limited to:
- A licensed real estate attorney admitted to practice in your state
- A licensed real estate agent or broker
- A qualified mortgage lender or loan officer
- A certified public accountant (CPA) or tax advisor
- A licensed home inspector
Verify Current Laws: Federal, state, and local real estate laws change frequently. Always verify current regulations on official government websites, including HUD.gov, ConsumerFinance.gov, and your state's official real estate commission website before proceeding with any transaction.
No Attorney-Client Relationship: Reading this article does not create an attorney-client relationship, professional advisory relationship, or fiduciary duty of any kind.
Information Currency: Laws, regulations, tax rates, lending criteria, and government programs are subject to frequent changes. Information presented may become outdated. Always verify current information through official sources and licensed professionals.
No Liability: While reasonable efforts have been made to provide accurate information, no warranty is given regarding completeness, accuracy, or currency of the information. Use of this information is entirely at your own risk.
What if the biggest mistake new home buyers make happens before buying your first home?
According to data from the National Association of Realtors® (NAR), first-time buyers make up about 32% of all transactions. Many say they wish they had better tips before making their purchase.
Common things first-time buyers do:
- Check mortgage rates online
- Browse home listings on Zillow or Realtor.com
- Try to figure out what they can afford
- Talk to a Realtor
Doing these steps in the right order can help you make a smarter purchase. Here are key home buying strategies for navigating the process.
The Smart Home Buying Checklist Process
Buyers who follow a home buying checklist tend to have better results. Here is the sequence that works best.
Phase 1: Build Your Financial Base (Weeks 1-4)
Before you start looking at homes, you need to know where you stand with your finances.
Debt-to-Income Ratio (DTI): The Consumer Financial Protection Bureau (CFPB) says your debt-to-income ratio is a key factor lenders use. Most loans require a DTI of 43% or lower. This ratio compares your monthly debt payments to your monthly income.
Assistance Programs: The U.S. Department of Housing (HUD) offers several assistance programs:
- FHA Loans: These loans let you put as little as 3.5% down with a minimum credit score as low as 580 (often lower than many rental requirements).
- VA Loans: For veterans, active military, and some spouses. These offer 0% down payment.
- USDA Loans: For buyers in rural and some suburban areas. These also offer 0% down.
- State and Local Programs: Many states offer additional programs with down payment help. Check HUD's local office list for options near you.
Phase 2: Research Your Market (Weeks 5-8)
Learn about the areas you are thinking about before you decide where to buy.
Crime Stats: Check the FBI's Crime Data Explorer for neighborhood crime data.
School Ratings: Visit GreatSchools.org for public school ratings. The National Center for Education Statistics has more detailed school data.
Home Values: The Federal Housing Finance Agency (FHFA) tracks home price trends over time.
Local Market Data: Ask your Realtor for a report on recent sales in your target area. This helps you see what homes are really selling for.
Tips for Viewing Homes
Once you know where you want to look, start scheduling tours. These strategies will help you evaluate buying your first home effectively. Use this comprehensive guide on what to look for buying house during viewings.
Viewing Tips:
- Look at several homes, so you can compare
- Don't tour too many in one day, or you will feel overwhelmed
- Take notes and photos at each place (ask first)
What to Check During Each Tour:
- Outside: Curb appeal, roof, foundation, yard
- Systems: Heating and cooling, water pressure, electrical outlets, plumbing
- Structure: Cracks in walls or ceilings, water spots, level floors, windows and doors
- Neighborhood: Noise, parking, nearby stores and services
Market Conditions: According to the National Association of Realtors® (NAR), markets vary a lot by region and season. Your agent can help you understand how competitive your area is.
Making an Offer
When you find the right home, work with your agent to make a fair offer. These tips can strengthen your position.
Offer Tips:
- Look at Recent Sales: See what similar homes have sold for nearby
- Consider Market Conditions: Know if buyers or sellers have the upper hand right now
- Set Your Max Price: Decide your limit based on what you can afford
- Include the Right Terms: Common ones include financing, inspection, and appraisal conditions
Pre-Approval Power: Having a pre-approval letter from a lender shows sellers you are serious and qualified. Get pre-approved through FHA-approved lenders or regular mortgage lenders.
Closing Time: According to Freddie Mac, closing usually takes 30 to 45 days. This can vary based on conditions and loan type.
Steps Before Closing
Finish these important tasks before you sign the final papers.
Step 1: Final Walk-Through Visit the home 24 to 48 hours before closing to check:
- The home is in the agreed condition
- All repairs have been done
- All systems work (heat, water, power)
- No new damage has happened
For new construction purchases, use our detailed new home walkthrough checklist covering 127 specific items to inspect before closing.
Step 2: Title and Insurance
- Title Insurance: This protects you if there are claims against the property. The CFPB has a guide that explains your options.
- Homeowner's Insurance: Required by lenders. Shop around for the best price and make sure coverage starts on closing day.
- Title Search: This confirms no one else has claims on the home.
Step 3: Review Your Closing Disclosure The CFPB requires lenders to give you this document at least three business days before closing. Review it closely:
- Compare it to your original Loan Estimate
- Check all costs and fees
- Verify the loan terms and monthly payment
- Ask about anything that looks wrong
Resources and Programs
Use these helpful tools and guides:
Government Resources:
- HUD's Home Buying Guide: Full information and assistance programs
- CFPB's Owning a Home: Tools and guides for the buying process
- USA.gov Housing Help: Federal programs and help
- IRS Publication 530: Tax info for homeowners
Key Takeaways:
- Get pre-approved for a mortgage before you start looking
- Research available programs at federal, state, and local levels
- Work with a good Realtor and home inspector
- Know your debt-to-income ratio and credit needs
- Read all documents carefully, especially the Closing Disclosure
- Do not skip the final walk-through
Next Steps: Following a clear plan helps you make a smart decision. Consider talking to a HUD-approved housing counselor for personal guidance. Find one at HUD's Housing Counseling portal.