Your First Home - A Guide For Buyers

Your First Home: A Guide for Buyers

Buying your first home is an exciting step into adulthood, but it can feel a bit overwhelming, especially if you’re in your 20s or 30s. With the current housing market and interest rates on the move, it’s essential to know what you’re getting into before diving in. Here’s a straightforward guide to help you start your home buying journey, from understanding your budget to exploring financing options that fit your lifestyle.

Step 1: Know Your Budget—Talk to a Lender

Before you start scrolling through Zillow or booking tours, it’s important to figure out what you can actually afford. The best place to start is by chatting with a lender. They’ll take a look at your financial situation and give you a pre-approval, which shows you how much house you can realistically buy. This step also helps you understand what your monthly mortgage payments might look like and what kind of down payment options are available to you.

In 2024, mortgage interest rates are hovering around 6.5% to 7.5% for a 30-year fixed-rate mortgage. While these rates might seem high compared to the lows of a few years ago, they’re still manageable. Your lender can help you lock in a rate that works with your budget and future plans.

Step 2: Down Payment—You Don’t Need 20%

You’ve probably heard that you need 20% of the home’s purchase price as a down payment. While this is a great goal because it helps you avoid paying Private Mortgage Insurance (PMI), it’s not the only way to go, especially if you’re just starting out.

There are plenty of options out there that require much less upfront cash. For instance, FHA loans are super popular with first-time buyers because they only require a 3.5% down payment. If you’re a veteran or in the military, VA loans might let you buy a home with zero down. There are also conventional loans that require as little as 3% down if you meet certain income and credit criteria.

Step 3: Monthly Payments—What Fits Your Lifestyle?

Once you’ve got a handle on your down payment options, it’s time to think about your monthly mortgage payments. These payments include the principal (the amount you borrowed), interest (the cost of borrowing), taxes, and insurance. Your lender will help you break down these costs so you can see how they fit into your budget.

It might be tempting to stretch your budget to snag that dream home, but it’s crucial to be realistic. Consider other monthly expenses like student loans, car payments, and going out with friends. A good rule of thumb is to keep your housing costs at or below 30% of your gross monthly income.

Final Thoughts: Take the Leap

Buying your first home is a huge milestone, but it’s totally doable with the right plan and support. Start by chatting with a lender to see what’s possible, then explore your loan options to find what works best for you. With the right preparation, you’ll be on your way to owning a home that fits both your needs and your budget.

If you’re looking for a reputable lender, we’re happy to help with recommendations—just reach out! And if you’re a lender interested in partnering with us to support our clients, give us a call or send an email, and we’ll see if our values align.

You can text or call us at 469-209-8823, or email emma@gpagents.com.