Keys to Your First Home: A Beginner’s Guide to Homeownership
May 14, 2026 4:25 am
For many people, buying a home is one of the biggest financial moves they will make in their entire lives. It’s also one of the most complicated, especially since we’re all becoming accustomed to doing the majority of our shopping online — even for vehicles. Navigating pre-approval, negotiating closing costs, and budgeting for the other expenses that come with home ownership come with a substantial price tag — even in a buyer’s market. But don’t panic. Getting through the process unscathed is totally possible as long as you take your time and check all the boxes. Here are some of the most important things for first-time buyers to keep in mind.
How Much Home Can You Afford?
Knowing what you can afford to spend and how much a certain price range will cost in monthly mortgage payments is the first step to setting your budget. Mortgage lenders like to see that you’re spending no more than 36% of your gross income (if you’re like me and can’t remember the difference between net and gross, read here) on your home loan and other debts combined. Sometimes they let you stretch this ratio, but you shouldn’t really try to adhere to that guidance for your own financial well-being. You’ll also need to factor in appraisal fees, inspection fees, and closing costs — which typically run 3% to 6% of your purchase price — and of course, your down payment. Although it’s possible to put down as little as 3% and qualify for a conventional mortgage, think about trying to put down 10% if possible. And, if you can cross the 20% down threshold, you can avoid having to pay pricey private mortgage insurance, known as PMI.
Don’t Forget The Other Costs of Homeownership
Purchasing a house is really the first step to homeownership. Some financial experts suggest “playing house,” which means figuring out what you’ll likely owe each month and then taking that amount out of your monthly budget, like a mock mortgage payment. Then, see how that feels. Will you be able to manage your other expenses and daily spending? Are you comfortable spending that amount for the next 20 or 30 years? Completing this exercise will hopefully give you a baseline for a mortgage amount you can comfortably afford. And remember, the costs don’t end with your monthly mortgage. You’ll also need to plan for property taxes, insurance, utilities, garbage and trash fees, HOA fees, and maintenance charges. If you’ve got a friend in the area, ask what they spend outside their mortgage to get an idea of what these costs tend to be.
Focus On Your Credit Score
We’re technically in a buyer’s market — at least in most of the country — but mortgage rates remain elevated. They’ve also become more unpredictable — rising and falling with inflation trends and Federal Reserve policy shifts. While you can’t control the economy, you can control how lenders price your loan. For example, borrowers with excellent credit still secure noticeably lower rates than those with fair credit, and lower scores often come with significantly higher costs.
What can you do? In the months leading up to your loan application, focus on strengthening your credit profile. A stronger credit score can make an impactful difference in both your interest rate and your monthly payment, especially in a higher-rate environment.
Choose the Right Financial Partner
This probably comes as no surprise, but credit unions are the best place to obtain your mortgage — especially if you’re a first-time homebuyer. Not only are credit unions local and friendly, but they also offer competitive rates that can help you save thousands of dollars over the course of your mortgage. Credit unions — and all responsible lenders — want to see that you’ll still have a financial cushion after closing, so you’ll be able to keep up with your mortgage payments even if your income situation changes.
Also, first-time homebuyers who get pre-approved for their mortgage can make a competitive offer quickly when they find their dream home. If you’re pre-approved for full financing, you can make a confident offer and stand out from other buyers who won’t be able to close as quickly.
Ready, Set, (Window) Shop
You may not be ready to buy your first home just yet, but it’s a good idea to start looking around to see what your budget gets you in the areas you’re most interested in — not abandoned castles for sale on Instagram. Sigh. This can help you narrow in on neighborhoods you love, schools you like, and traffic patterns that fit your lifestyle.
During this time, you should also emotionally prepare yourself for the fact that your “perfect” home might not be possible on your budget. Much like our blog post on weddings, social media and genAI can often set us up for failure. Instead, decide on your future home’s “must-haves” and “nice-to-haves.” What can you live without? Roughly half of all buyers have to make compromises to buy a house, so decide now what those are. Are you willing to have a longer commute, or will you take a smaller kitchen if there’s a gorgeous master bath? Deciding where you’re willing to compromise ahead of time can help with the stress of having to make a quick decision.
Don’t Give Up The Home Inspection
Finally, if you’re tempted to forgo a home inspection – say you happen to get into the thick of a bidding war – here’s a word of caution: Don’t. It’s imperative to have a licensed and bonded professional give it a thorough once-over. Even the most beautiful house isn’t worth taking risks on. And even new homes could have expensive-to-repair foundation issues – something that wouldn’t be obvious to a first-time buyer in love with the property.
Happy hunting!
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