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First Time Home Buyers Checklist

Small house with a keychain that says first time buyer
Buying your first home can be overwhelming, but it doesn't have to be.

Use these simple steps to prepare for buying your first home.


1. Calculate Your Budget

Not only will you need to know how much you can afford to spend in mortgage loan payments each month, but buying a home requires additional upfront costs as well. You will need to calculate the costs for paying a home inspector, closing costs (included in the mortgage on top of the home price), and your other monthly bills such as car loan payments and insurance needs. You should also calculate what down payment you can afford to make (typically 20% of the selling price). In addition, you should budget for monthly repairs and emergencies, and create an emergency savings fund to repair or replace items as needed.


2. Find a Real Estate Agent

While you can use mobile apps or search online or even by foot to find a home for sale nearby, you will likely ultimately need a real estate agent to connect with a home seller. Real estate agents can help find home listings, arrange showings, and negotiate on your behalf with an owner and their agent.


3. Check Your Credit (Or Work to Improve It)

A low credit score could affect your ability to get a loan at a competitive interest rate. Scores 760-850 are considered best, 700-759 are “good,” 650-749 “fair,” and 350-649 are considered “poor.” You can take steps to improve your credit score, but improvements can take time to affect your score, so you should start the process early. You can check your credit score for free through organizations such as once every 12 months. You should review your report for identity theft, fraud, incorrect information, and items that could lower your score (like unpaid overdue bills). Download and use this credit report review checklist to make sure all information is correct.


4. Get Approved for a Mortgage Loan

Banks can pre-approve you for a mortgage for a period of 90-120 days. Typically, this timeframe will cover your home search, but you can renew it if necessary. Mortgage loans require paperwork, including tax returns, W-2’s, proof of income and financial statements. You should gather these materials in advance of starting your loan application. You can apply at different banks for a loan, and accept the best offer for your needs. The Consumer Financial Protection Bureau (CFPB) has information you can use to educate yourself on types of loans and costs associated with mortgages before you make any final decisions.


5. Find a Home & Make an Offer

Once you find a home you would like to purchase, you can use your real estate agent to make an offer. There are several inspection steps that should take place before any final decision is made:

  • Get the home inspected. A licensed home inspector should do a thorough check inside and outside the home to look for any damage to areas like the foundation, roof, leaks, damage, signs of pests, areas that will need updating for code reasons, electrical, plumbing, and sewage issues, and appliances that are included with the home but that will need repair.
  • Get the home appraised. A home appraiser will report on the value of the home to you and the mortgage lender. You can then use the appraisal and inspection reports to make a renegotiated offer on the home.


6. Make a Renegotiation

Once you know what the reports say, you can make a new offer on the home to account for any repairs necessary on the home. Some repairs can be made by the existing owner and other repairs might be accounted for by the owner in the form of a lowered selling price. If you cannot meet on a new price in light of repairs needed, you may need to walk away from the sale.


7. Obtain Homeowner’s Insurance

If you are moving into the final stages of buying a home, your lender will require proof of homeowner’s insurance. You should talk to an insurance agent or broker to get multiple offers on insurance that suit your needs and the property you have in mind. Your mortgage lender could require certain insurance coverage, and you will also want to consider your home’s location (is flood insurance necessary, for example), your budget, and any additional coverage you may need. In addition, you should also consider aspects of your home life or past credit history that could impact your homeowner’s insurance premiums or even their availability. For example:

  • If you wish to run a business out of your home (childcare, sales, etc.), you could require more homeowner’s insurance than just a plain residence.
  • Your pets, (e.g., an aggressive dog breed), could impact your insurance quote.
  • Past insurance claims, which may not show up on your credit history, may come up in your insurance CLUE Report, which your mortgage lender, insurance broker and real agent can request for your insurance quote and loan. While your mortgage lender might estimate your insurance premium, your true premium amount will be based off of all aspects of your CLUE Report and past home ownership history, as well as other factors. (Learn more about CLUE Reports.)


8. Close the Deal

When you reach an agreement with the seller, the two parties arrange to close the deal. The closing day will involve a great deal of paperwork signing. Before the closing day, fill out this helpful Closing Day Checklist from the CFPB.


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