15 first-time home buyer tips for a smoother purchase
The first-time home buyer tips that change the most outcomes are the unglamorous ones: check your credit early, get preapproved before you tour, and budget past the down payment. Start with the number that stops most people before they begin. A 20% down payment is not required. Conventional financing goes to 3% down, FHA to 3.5% with a 580 credit score, and VA and USDA loans to zero down.
Then plan for the cash you don’t see on the listing. Closing costs typically run 2% – 5% of the purchase price on top of your down payment, and the CFPB’s advice on the loan itself is to contact more than one lender and compare their Loan Estimates side by side before you choose.
Below are 15 first-time home buyer tips in the order a purchase unfolds. For the full sequence, start with our Home Buying guide and the first-time home buyers hub.
Key takeaways:
- The 20% myth costs buyers years: Conventional loans go to 3% down, FHA to 3.5% with a 580 credit score, and VA and USDA to 0% for eligible buyers.
- Preapproval sets your real price range: Verified income, assets, and credit turn a guess into a number, and putting 3 Loan Estimates side by side is the only way to see what the same file costs at different lenders.
- Budget for the purchase, not the payment: Add closing costs of 2% – 5% of the purchase price, plus taxes, insurance, and maintenance, before deciding what you can afford.
How should you prepare financially to buy your first home?
Financial prep sets your price range months before you tour. Three numbers do the work: your down payment, your credit score, and your total housing cost.
1. Learn the real down payment minimums
The minimum is far lower than most buyers assume. Fannie Mae’s 97% loan-to-value options allow 3% down, and the standard 97% program requires at least one first-time buyer, someone with no ownership interest in a residential property for three years before the purchase. FHA allows 3.5% down at a 580 credit score.1 VA purchase loans require nothing down as long as the sales price isn’t higher than the appraised value, and USDA’s Section 502 Guaranteed program offers 100% financing in eligible rural areas.2
Here’s what those minimums cost on a $250,000 purchase.3
| Loan program | Minimum down payment | Cash down on a $250,000 home |
|---|---|---|
| Conventional (97% LTV) | 3% | $7,500 |
| FHA (580+ score) | 3.5% | $8,750 |
| VA (eligible veterans, service members) | 0% | $0 |
| USDA Section 502 Guaranteed | 0% in eligible rural areas | $0 |
A larger down payment still lowers your payment and your mortgage insurance. It just isn’t the entry ticket. Before you delay a year to save more, check whether first-time home buyer grants and down payment assistance close the gap now, and read how to save for a down payment.
2. Check your credit early, and know what changed
Pull your reports before a lender does. All three nationwide credit bureaus permanently offer free weekly reports at AnnualCreditReport.com, giving you time to dispute an error that could cost you a rate tier.
Credit floors are also moving. For loan casefiles created on or after November 16, 2025, Fannie Mae’s Desktop Underwriter no longer applies a minimum representative credit score, using its own risk assessment instead. Lenders keep their own overlays, so a 620 floor remains common on conventional files. Pay down card balances and skip new credit applications before you apply. Keep your shopping tight, too: credit scoring models generally treat multiple mortgage inquiries inside a 45-day window as a single inquiry.
3. Build your budget around total cost, not the monthly payment
Your principal and interest payment is the smallest part of what you’ll owe. Add property taxes, insurance, mortgage insurance, HOA dues, and a maintenance reserve, then test the total against your income. The 28/36 guideline, housing under 28% of gross income, total debt under 36%, is a rule of thumb, not a program rule. Your lender’s ceiling sits higher: Fannie Mae caps manually underwritten loans at 36% debt-to-income, stretching to 45% with the right credit score and reserves, and allows 50% through Desktop Underwriter.
Our guide to budgeting for your first home walks the worksheet, and how to budget for closing costs breaks the 2% – 5% range into line items.
What should you line up before you start touring homes?
Do three things before your first showing: get preapproved, assemble your team, pick a loan program. Buyers who tour first and finance later usually lose the house they wanted.
4. Get preapproved before you shop
A preapproval is a lender’s written estimate based on verified income, assets, and credit, not what you told someone over the phone. It sets your ceiling, and it’s the first thing a listing agent checks. Shop it: the CFPB tells buyers to contact multiple lenders and compare their Loan Estimates, and a competing Loan Estimate is your best bargaining chip. Read the CFPB’s buying a house toolkit with our home buying process guide.
5. Build your team before you need it
You need three people: a buyer’s agent who knows the submarket, a mortgage professional who shops your file rather than sells one product, and a home inspector you hire yourself. A housing counselor is a free fourth opinion, find a HUD-approved housing counselor, since assistance programs often require the class anyway. HUD’s guide to buying a home explains each role, and ours covers choosing a real estate agent.
6. Compare loan programs before you pick one
The right program depends on your credit, your cash, and where the house sits. Here’s how the four main paths compare.
| Program | Minimum down payment | Credit score floor | Mortgage insurance |
|---|---|---|---|
| Conventional (97% LTV) | 3% | None in DU since Nov. 16, 2025; lender overlays commonly 620 | PMI above 80% LTV; cancelable by request at 80%, automatic at 78% |
| FHA | 3.5% at 580+; 10% at 500 – 579 | 580 for 3.5% down; 500 absolute floor | 1.75% upfront MIP plus annual MIP, loan term above 90% LTV, 11 years at 90% or less |
| VA | 0% when the price doesn’t exceed appraised value | Set by the lender, not by VA | No PMI or MIP; 2.15% funding fee on a first-use zero-down purchase, with exemptions |
| USDA (Section 502 Guaranteed) | 0% in eligible rural areas | Set by the lender | No PMI; an upfront guarantee fee and an annual fee apply |
Because Align is a broker, we place all four through partner lenders. Including USDA, which many retail banks don’t offer.
How do you shop for the right first home?
Touring is where budgets quietly break. Decide what you want before a listing photo decides for you.
7. Separate must-haves from nice-to-haves
Write two lists before you tour, and cap the must-haves at 5 items. Bedroom count, commute, lot, and school district are structural. You can’t change them after closing. Countertops, paint, and fixtures are negotiable. Buyers who treat finishes as must-haves overpay for a kitchen and underweight what decides whether they like the house in year three. See purchasing your first house.
8. Tour with a checklist, not a feeling
Check the same items in every home: roof age, furnace and water heater age, electrical panel capacity, basement water stains, window condition, and how the ground grades away from the foundation. In Michigan, ask about the basement. Freeze-thaw cycles show up in foundations, and a winter tour hides drainage problems one spring rain would expose. The home inspection checklist for buyers works on a showing too.
9. Underwrite the neighborhood, not just the house
Look up the property’s assessed value rather than the seller’s tax bill, because a Michigan transfer uncaps taxable value the following year and your first full bill can jump. Check the school district boundary, planned road work, and the flood zone. Then drive the commute at the hour you’d really drive it.
How do you make an offer that protects you?
An offer is a set of terms, not just a price. Three of them decide whether your money is protected.
10. Price the offer from closed comps, then ask for concessions
Ask your agent for sales that closed in the last 90 days in the same neighborhood, with similar square footage, bed and bath counts, and condition. Your lender lends against the lower of the sales price or the appraised value, so every dollar above what the comps support is cash out of your pocket.
Then use the most underrated first-time buyer tool: seller-paid closing costs. On a conventional principal residence, Fannie Mae permits interested party contributions up to 3% of value above 90% LTV, 6% between 75.01% and 90%, and 9% at 75% or less. Though they can’t cover your down payment or reserves. See negotiating a home purchase and creating a competitive offer.
11. Get a home inspection, even though no lender requires one
No lender requires a home inspection, and that’s exactly why buyers skip it. HUD is blunt here: an appraisal estimates value for the lender and does not replace a home inspection, and FHA doesn’t guarantee the home’s condition. Attend the inspection and read the whole report. The findings are your leverage on price, repairs, or credits. The home appraisal process is no substitute.
12. Line up homeowners insurance early, and check the flood zone
Insurance is a closing condition, not a formality. Fannie Mae requires coverage equal to the lesser of 100% of the improvements’ insurable value or the unpaid principal balance, as long as that amount is at least 80% of insurable value. Quote it while you’re under contract, a claims history or an aging roof changes the price.
Flood coverage is separate and can be mandatory: federally regulated lenders must require it on any building in a Special Flood Hazard Area carrying a federally backed loan, a monthly cost that never appears in the listing. Read buying a home in a flood zone before you write the offer.
How do you get to closing without surprises?
The last 30 days are where first purchases go sideways, usually over paperwork rather than money.
13. Read every disclosure the day it arrives
Federal rules give you two checkpoints. Your Loan Estimate must arrive within 3 business days after the lender receives your application, and your Closing Disclosure at least 3 business days before closing. Put them side by side and question every line that moved. An inaccurate APR, a changed loan product, or an added prepayment penalty restarts that 3-day clock. Our guide to preparing for a home closing lists what to bring.
14. Do the final walk-through like an inspection
Walk the house after the sellers move out. Run every faucet, flip every switch, test the furnace and air conditioning, confirm agreed-upon repairs were done, and verify the appliances written into the contract are still there. Damage you find after you sign is yours.
15. Freeze your finances until you have the keys
Lenders re-verify credit and employment shortly before closing. Between preapproval and closing, don’t finance furniture, open a card, change jobs, or move large sums without telling your loan officer. A new $400 payment can push your debt-to-income ratio past program limits and kill an approved file days before closing.
What Michigan first-time buyers should know
Michigan runs its own down payment assistance through MSHDA, and state tax rules create a first-year surprise buyers elsewhere never see.
- MI Home Loan, $566,355 sales price limit: Open to first-time buyers statewide and repeat buyers in targeted areas, it requires a 640 credit score and pairs with conventional, FHA, VA, or RD financing. Income limits apply by family size and county.
- MI 10K DPA, up to $10,000: Paired with a MI Home Loan, this is a 0% non-amortizing loan with no monthly payment, repaid when you sell, refinance, pay off the first mortgage or stop living in the home. It requires a HUD-approved homebuyer education class.
- Assistance runs on funding cycles: MSHDA’s $25,000 First-Generation DPA pilot closed once its funds ran out, and agency allocations can close mid-year without warning. Confirm a program is open and funded before you build a purchase around it.
- Your tax bill resets, up to 18 mills: Under Proposal A, a transfer of ownership uncaps taxable value to the state equalized value the year after the sale, so the seller’s tax bill is not a preview of yours. File a Principal Residence Exemption (Form 2368) by June 1 to exempt up to 18 mills of school operating tax; file by November 1 and it applies to the winter levy only.4
Know what doesn’t exist, too. There is no federal first-time homebuyer tax credit today. The 2008 – 2010 credit is gone, and the IRS retired its repayment form after tax year 2024. Read first-time home buyer tax credits for what’s claimable, and first-time home buyer programs for assistance that does exist.
How Align works with first-time buyers
You are not supposed to know all of this yet. Samantha handles your loan herself from the first conversation to the closing table, and she explains each step before you sign anything.
She places MSHDA loans, including down payment assistance, alongside FHA and conventional options, so you can compare them side by side.
Most buyers never compare. In a federal survey of 2023 home buyers, 66% applied with only one lender or broker. One application with Align reaches multiple wholesale lenders.
Get a first-time homebuyer plan
Sources: FHFA and CFPB, National Survey of Mortgage Originations, loans made in 2023.
FAQ: First-time home buyer tips
Here are answers to common questions about first-time home buyer tips.
How much money should a first-time home buyer have saved?
Plan for your down payment plus 2% to 5% of the purchase price in closing costs, and a cushion of one to three months of expenses. On a $250,000 home with 3.5% down, that’s roughly $8,750 down plus $5,000 to $12,500 in closing costs. Assistance can cut the cash you need upfront, MSHDA’s MI 10K DPA offers up to $10,000. Our guide to preparing to buy covers the full cash checklist.
What credit score do I need to buy a house for the first time?
FHA allows scores as low as 580 with 3.5% down, and 500 to 579 with 10% down. Fannie Mae’s Desktop Underwriter dropped its minimum representative credit score for casefiles created on or after November 16, 2025, but lenders still set their own floors, commonly 620 on conventional loans. Higher scores price better everywhere. See what’s a good credit score to buy a house.
Should I get preapproved before looking at houses?
Yes. Preapproval is a lender’s written estimate of how much you can borrow based on verified income, assets, and credit. It defines your realistic price range, strengthens your offers, and speeds up closing. Most sellers’ agents expect one with any offer. Read more on the importance of mortgage preapproval.
What is the biggest mistake first-time home buyers make?
Shopping for homes before understanding the full budget. Buyers who focus on the sticker price underestimate property taxes, insurance, maintenance, and closing costs of 2% to 5%, then end up house-poor. Getting preapproved and budgeting for total monthly cost prevents most first-timer regrets, see how to avoid buyer’s remorse.
The bottom line on first-time home buyer tips
These 15 first-time home buyer tips come down to three habits. Check your credit early using the free weekly reports at AnnualCreditReport.com. Get preapproved before you tour, and put at least 3 Loan Estimates side by side. The CFPB’s own guidance is to contact multiple lenders and compare their offers. And budget for the purchase, not the payment: a 20% down payment isn’t required, since conventional goes to 3% down, FHA to 3.5% at a 580 score, and VA and USDA to zero, but closing costs of 2% – 5% are still real cash.
If you’re ready to buy your first home, talk to Align Lending, we’ll shop your scenario across our lender network, run conventional, FHA, VA, USDA, and MSHDA side by side, and show you the numbers together. Call 248-506-5727 or start online today.
Footnotes:
1. Align Lending is not acting on behalf of or at the direction of FHA or HUD. FHA down payment, credit score, and mortgage insurance requirements are set by HUD and are subject to change. Return to text.
2. Align Lending works with VA-approved lenders and is not endorsed or sponsored by the Dept. of Veterans Affairs or any government agency. VA eligibility, entitlement, and funding fee rules are set by the Department of Veterans Affairs and are subject to change. Return to text.
3. Example figures are hypothetical and for educational purposes only; they do not constitute an advertisement of credit terms or a rate quote under federal or state lending laws. Your down payment, closing costs, and cash to close depend on your application, the property, the loan program, and market conditions. Return to text.
4. This is not tax advice. Uncapping of taxable value, Principal Residence Exemption eligibility, and filing deadlines are governed by Michigan law and administered by your local assessor. Consult a qualified tax professional about your situation. Return to text.
Sources: FHA down payment tiers, credit score minimums, MIP amounts and duration, and form 92564-CN, HUD. 97% LTV options, first-time buyer definition, DTI maximums, interested party contribution limits, property insurance coverage, and the November 16, 2025 removal of DU’s minimum representative credit score, Fannie Mae Selling Guide and Announcement SEL-2025-09. No-down-payment purchase loans and the 2.15% first-use funding fee, VA. Section 502 Guaranteed 100% financing, USDA Rural Development. Guidance to contact multiple lenders and compare Loan Estimates, TRID disclosure timing, and PMI cancellation and termination, CFPB. Closing costs of 2% – 5% of the purchase price and the 45-day credit-inquiry shopping window are common planning conventions, not agency-published standards. Free weekly credit reports, FTC. Mandatory flood insurance in Special Flood Hazard Areas, FEMA. The expired 2008 – 2010 first-time homebuyer credit, IRS. MI Home Loan, MI 10K DPA, and the closed First-Generation DPA pilot, MSHDA. Uncapping and the Principal Residence Exemption, Michigan Department of Treasury.
This article is for informational purposes only and is not intended to provide legal, financial, or tax advice. Loan requirements, assistance program funding, and property tax rules change, confirm current terms with a licensed professional before you rely on them. Figures shown are illustrative, are not a rate quote or an offer of credit, and are subject to change. Align Lending is an independent Michigan mortgage broker, NMLS #2041154.
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