Guide
Everything you need to know before buying your first home — from understanding your budget and choosing a loan type to navigating closing day.
Buying a home is one of the biggest financial decisions you'll make. Before diving in, it helps to check a few boxes:
Lenders typically want to see at least two years of consistent employment. This doesn't mean the same job — just steady income history.
Your debt-to-income ratio (DTI) should generally be below 45–50%. That includes car payments, student loans, credit cards, and your future mortgage payment.
You'll need funds for a down payment (as low as 0–3.5% depending on loan type) plus closing costs (typically 2–5% of the loan amount).
Most loans require a minimum credit score of 580–620. Higher scores unlock better rates. If your score needs work, even a few months of improvement can make a big difference.
Not sure where you stand? A free pre-qualification call with our team can give you a clear picture in about 15 minutes.
Your affordability depends on four main factors:
Your total income before taxes and deductions. Include salary, bonuses, commissions, rental income, and any other documented income sources.
Car payments, student loans, credit card minimums, and any other recurring debt obligations. The lower your existing debt, the more house you can afford.
A larger down payment reduces the amount you borrow and your monthly payment. It can also eliminate the need for mortgage insurance.
Your credit score, loan type, and market conditions determine your rate. Even a small difference in rate can significantly affect your monthly payment and total cost over time.
The 28/36 Rule: A common guideline is to keep your housing costs below 28% of gross income, and total debt payments below 36%. These aren't hard limits — some loan programs allow higher ratios — but they're a good starting point.
Use our mortgage calculator to estimate what your monthly payment might look like at different price points.
As a first-time buyer, you'll likely choose from one of these four loan types:
Not government-backed. Competitive rates for borrowers with 620+ credit and 5–20% down. PMI required under 20% but can be removed once you hit 20% equity.
Government-insured. Popular with first-time buyers because of lower credit requirements (580+) and just 3.5% down. Trade-off: mortgage insurance for the life of the loan.
For eligible veterans, active duty, and surviving spouses. Zero down payment, no PMI, and competitive rates. One of the strongest loan programs available to those who qualify.
Zero down payment for eligible properties in rural and suburban areas. Income limits apply. Great option if you're buying outside major metro areas.
For a deeper dive, see our loan comparison guide.
You don't need 20% down to buy a home. Here's what each loan type actually requires:
| Loan Type | Minimum Down | Example ($400K home) |
|---|---|---|
| Conventional | 3% | $12,000 |
| FHA | 3.5% | $14,000 |
| VA | 0% | $0 |
| USDA | 0% | $0 |
Down payment assistance: Many states and local programs offer grants, forgivable loans, and low-interest second mortgages to help with your down payment. Some are income-based, others target specific professions. Our team can help identify programs in your area.
Gift funds: Most loan programs allow part or all of your down payment to come from a gift — typically from a family member. FHA loans are especially flexible with gift fund sourcing.
Here's a simplified overview of the journey from "I want to buy a home" to getting your keys:
For the full breakdown, see our step-by-step mortgage process guide.
First-time buyers often stumble on these — here's how to avoid them:
Shopping for homes without a pre-approval wastes time and weakens your offers. Sellers and agents take pre-approved buyers more seriously.
Opening new credit cards, financing a car, or changing jobs during your loan process can derail your approval. Keep your finances stable until after closing.
An inspection costs a few hundred dollars but can reveal thousands in hidden issues. Never skip it, even in a competitive market.
Consider the total cost of the loan — interest rate, PMI, closing costs, and how long you plan to stay. A lower monthly payment isn't always the better deal.
Different lenders offer different rates and fee structures. Even a 0.25% difference in rate can save (or cost) tens of thousands over the life of your loan.
Keep a cash reserve after closing. You'll need money for moving, furnishing, and unexpected repairs. Most financial advisors recommend at least 3–6 months of expenses in reserve.
Buying your first home doesn't have to be overwhelming. Here's what you get when you work with us:
We close nearly twice as fast as the industry average. That means you're in your new home sooner.
Processing, underwriting, and closing all happen in-house. Fewer handoffs means fewer delays and better communication.
Backed by CrossCountry Mortgage — the #1 retail mortgage lender in the U.S.1 — we have options for virtually every borrower profile.
Real people, real answers, real fast. 94% of our clients receive proactive weekly updates throughout the process.2
Talk to our team for a free pre-qualification. We'll walk you through your options with no obligation.
Book a Call (732) 539-1255Let's figure out the right loan, the right budget, and the right timeline for you. No pressure — just clear guidance from a team that does this every day.
