If you’re considering buying your first home, you’re probably feeling a healthy mix of excitement and intimidation. From selecting the right lender and securing the best mortgage rate to understanding the details of your property inspection, you have a lot to consider. We can help you navigate the adventure of buying your first home with confidence.

Here are five things every first-time home buyer should know.

Begin Saving Early

Before purchasing a home, it is important to account for your expenses. First, there’s the down payment, which varies. Most conventional lenders expect you to put down ten percent on your purchase. Lenders offering government-backed loans like FHAs may only require you to produce a down payment of three percent.

We suggest using a free mortgage calculator like the one you’ll find here to simplify the numbers.

You should also anticipate closing costs, which usually range from two to six percent of the total loan amount. Lastly, don’t forget about moving costs. The average cost to hire professionals to move a three-bedroom home is around $2,100.

Know What You Can Afford

Before shopping with your realtor, find out how much house you can afford.

Begin by tallying your monthly income and expenses, including debts, utilities, insurance, groceries, and any additional monthly expenses. Next, check your credit score. To be eligible for a conventional mortgage with an attractive interest rate, you should have a credit score of at least 620. If you have a credit score above 740, you’ll have a good chance of securing a better interest rate.

Lastly, remember that the cost of owning a home includes more than a mortgage. You must also budget for property taxes (which will be rolled into your monthly mortgage payment), homeowner insurance, maintenance, and potential HOA fees if you’re buying a condo or co-op.

Explore Your Mortgage Options

Many first-time home buyers are surprised to learn that there are several types of home loans. Here are the four most common ones:

Conventional Mortgages are not guaranteed by the federal government, so they generally come with higher interest rates, require stronger credit scores, and a down payment of three to twenty percent of the purchase price. If you are making a down payment of less than twenty percent, you must also carry private mortgage insurance.

FHA Loans are government-backed loans designed to make homeownership more accessible, especially to first-time homebuyers. They require lower down payments (as little as three and a half percent) and have more lenient credit score requirements. FHA loans also require homeowners to carry private mortgage insurance, like conventional loans.

VA Loans are available to eligible veterans, spouses, and active-duty service members who meet basic VA requirements. These mortgages are appealing because they do not require a down payment, have competitive interest rates, and do not require you to carry private mortgage insurance.

USDA Loans are best suited for low to moderate-income homebuyers who live in rural and suburban areas. They offer zero-down payment options and competitive interest rates.

Research First-Time Homebuyer Assistance Programs

First-time homebuyer assistance programs are initiatives offered by government agencies, non-profit organizations, and lenders to help first-time homebuyers purchase a home. These programs often combine low-interest-rate loans with down payment and closing cost assistance. And if you meet low-income standards, you may even be eligible for a grant or loan you do not have to repay.

Find the Right Agent

Collaborating with an experienced, personable, and communicative realtor can be the difference between a seamless transaction and a rocky one. To kickstart your search, reach out to friends, family, or coworkers and ask for agent recommendations—they may have the inside scoop on a reputable agent.

But don’t stop there; take your search online. Look for reviews and testimonials about potential agents. And remember, there’s no harm in asking the agent for references directly. It’s a smart move that can help you feel more confident as a first-time homebuyer.

JustChoice Lending: Your Mortgage Solution

JustChoice Lending (JCL) is a socially responsible mortgage lender providing competitive rates and personalized service. We assist clients of all income levels, including those from lower-income backgrounds, in achieving their homeownership goals by improving their credit scores. Contact us today to speak with one of our mortgage experts!