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First-Time Homebuyer Tips: What You Need to Know Before Buying a House

Written by T.J. Trembley | Dec 28, 2023 1:30:00 PM

Visualize it: a cozy kitchen for your morning coffee, a backyard barbecue with friends, or a quiet corner just for you. Sounds dreamy, right?  Let’s make it happen.

Let's break down the homebuying process with clear steps to help you go from scrolling listings to stepping into your new home.

Financial Requirements for First-Time Homebuyers

Before you start scrolling through listings, here's what you'll need to qualify for a mortgage:

Down Payment

The 20% down payment myth? Busted! Many first-time buyers qualify with as little as 3% down. A larger down payment can lower your monthly payment and help you avoid mortgage insurance, but don't let a smaller savings account derail your homeownership dreams.

Credit Score

A good credit score can mean better mortgage rates. While you don’t need perfection, a higher score gives you more loan options.

💡 Pro tip: Check your credit report frequently to tackle any errors or high-interest debt.

Proof of Income

Lenders want to know that you can handle monthly payments. Have your recent pay stubs, tax returns, and W-2s ready to show stable, reliable income.

Savings for Other Costs

Your down payment is just the beginning. Budget for closing costs (typically 2-5% of the loan amount), inspections, moving expenses, and that all-important emergency fund.

Two key ratios lenders look at: 
  1. Debt-to-Income Ratio (DTI): How much total debt you have compared to your income (aim for under 35%)
  2. Housing Expense Ratio: How much of your income would go toward housing costs (ideally under 28%)

 💡 Pro tip: Use our Mortgage Calculator to get a real-world view of your potential monthly payment.

What to Look for When House Hunting

Once your finances are in good shape, you're ready to start exploring homes. But before you fall for the open floor plan or backyard patio, make sure to check for the stuff that really matters:

Location

Your commute, school district quality, neighborhood safety, and proximity to essentials won't change with a fresh coat of paint.

Structural Integrity

Check the roof, foundation, HVAC, plumbing, and electrical systems—the bones of your potential home.

Warning Signs

Water stains, uneven floors, musty odors, or outdated electrical systems can signal expensive problems lurking behind those staged rooms.

The home inspection isn't just a formality—it's your protection. Never skip it! A thorough inspection reveals hidden issues and gives you negotiating leverage if repairs are needed.

Homeownership Costs Beyond the Mortgage

Your mortgage payment is just one slice of the homeownership pie. Remember to budget for:

  • Property taxes (often included in your monthly mortgage payment)
  • Homeowners' insurance (required by lenders)
  • Utilities (which may be higher than what you paid as a renter)
  • Maintenance fund (experts recommend saving 1-3% of your home's value annually)
  • HOA fees (if applicable)

Planning for these expenses now prevents financial stress later when the water heater decides to call it quits!

Making an Offer That Stands Out

Found "the one"? Here's how to make your next move confidently:

Get Pre-Approved

Pre-approval shows sellers you mean business. CCCU's quick process gives you clarity on your budget and positions you to act fast when your dream home appears.

💡 Pro tip: CCCU's pre-approval process helps you move quickly when you find your dream home.

Partner With a Buyer's Agent

A good agent advocates for your interests and guides you through each step. Find someone who knows the local market and communicates clearly.

Research Before Making an Offer

The price isn't everything. Your agent can help analyze comparable sales, market trends, and seller priorities to craft a compelling offer.

CCCU First-Time Homebuyer Resources

At City & County Credit Union, we believe buying your first home should feel exciting, not overwhelming. That's why we've built tools, tips, and personalized support for Minnesota homebuyers at every step.

Here's what you can expect:

Ready to turn your homeownership dreams into reality? Download our Ultimate First-Time Homebuyer's Guide for clear advice, helpful tools, and real answers.