So, you're finally ready to take the plunge into homeownership, huh? Buying your first home is a huge milestone, but let's be honest - it can also be totally overwhelming. Where do you even start? How much can you afford? What kind of mortgage should you get? The good news is, with some planning and patience, you've got this. 

We're here to walk you through everything you need to know to find and buy your first home. By the end of this guide, you'll feel empowered and excited to start your search. 

Homeownership may seem complicated, but when you break it down step-by-step, it's completely doable. Take a deep breath and dive in - your new home is waiting for you!

First Time Home Buyer Programs to Help You Achieve Your Dream

The government wants to help first time home buyers achieve the dream of homeownership. Here are some of the major programs available to help you buy your first home:

Federal Housing Administration Loan (FHA loan)

The FHA loan allows you to put as little as 3.5% down on an FHA- approved loan. It offers more lenient credit score and debt-to- income ratio requirements than conventional mortgages. FHA loans are a great option if you have little savings or slightly imperfect credit.

USDA Rural Housing Loan

If your income meets certain limits and you're looking to buy in a rural area, a USDA mortgage may be for you. They require no down payment and offer subsidized interest rates.

VA Home Loan

For military members and veterans, a VA home loan offers a 100% financing option with no down payment, low interest rates, and no private mortgage insurance requirement. If you served or are currently serving, this can be an incredible benefit.

Down Payment Assistance Programs

There are state, local, and nonprofit programs that provide grants and low-interest loans to help with your down payment and closing costs. Eligibility depends on factors like your location, income, and the type of home you want to buy. Do some research to find programs you may qualify for.

Tips for Finding the Best Homes for First Time Buyers

As a first-time home buyer, finding the right place can feel overwhelming. Here are some tips to help you navigate the search and find homes well-suited for new homeowners:

Look for low maintenance options.

Consider condos, townhouses, or homes with an HOA that handles exterior upkeep. You'll have enough to worry about as a new homeowner without the added stress of mowing lawns or clearing gutters.

Seek out move-in ready homes.

Look for recently renovated properties or newer builds. You don't want to deal with costly repairs or renovations right after moving in. Aim for a place you can just unpack and settle into. Check the basics. 

Inspect the roof, HVAC system, plumbing, and electrical to ensure everything is in working order and up to code. Have an inspector evaluate the foundation and structure as well. It's best to identify any major issues before you buy.

Consider resale value.

While you may not plan to sell soon, choose a home that will hold its value over time in case you do. Look for desirable features like an open floor plan, energy efficiency, storage space, and outdoor living areas.

Location, location, location

Choose a home in an area you love with essential amenities nearby. Look for low crime rates, access to public transit, highly rated schools, parks, restaurants, shops, and entertainment within an easy commute.

How to Choose the Right Real Estate Agent or Realtor?

Choosing the right real estate agent or Realtor is one of the most important decisions you'll make as a first-time homebuyer. They will guide you through the complex process of finding and purchasing your new home. Look for an agent who is knowledgeable, available, and willing to answer all your questions.

  • Do your research. Ask family and friends for referrals or check reviews of realtor for top-rated agents in your area. Meet with a few to find one you connect with.
  • Look for experience. An agent who specializes in first-time homebuyers or the neighborhood you want to buy in will know the local market inside and out. They'll understand what constitutes a good deal and can help you avoid overpaying.
  • Discuss their credentials. Choose an agent who holds real estate licenses or designations which show they are committed to ongoing education. Credentials like ABR (Accredited Buyer's Representative) or SRS® (Seller Representative Specialist) demonstrate experience.
  • Make sure they're available when you need them. The process of buying a home involves visiting properties, filling out paperwork, negotiations and more. Choose an agent who makes themselves readily available to answer your questions, provide guidance and handle details.
  • Discuss their fees upfront. Realtors typically earn a commission which is a percentage of the final sale price of the home. The commission is usually split between the buyer's and seller's agents.
  • Trust your instincts. Your real estate agent will be your partner through a complicated financial and legal transaction. Choose someone you connect with, who listens to your needs and priorities, explains things clearly, and makes you feel comfortable every step of the way.
  • Following these tips for home buyer help will ensure you find an agent able to provide the knowledge, support, and service you need as a first-time homebuyer. The agent you choose can make or break your experience, so take your time and choose wisely.

Frequently Asked Questions from First Time Home Buyers

As a first-time home buyer, you probably have a lot of questions about the process. Here are some of the most frequently asked questions by new home buyers:

How much can I afford?

The general rule of thumb is that your monthly housing payment (including principal, interest, taxes and insurance) shouldn't exceed 28% of your gross monthly income. Work with a mortgage lender to determine how much you can borrow based on your income and credit score.

What type of mortgage should I choose?

The two most common options for first time home buyers are fixed- rate mortgages, where the interest rate stays the same for the life of the loan, and adjustable-rate mortgages or ARMS, where the rate may change after an initial period. Fixed-rate mortgages provide payment stability but often have higher interest rates. ARMS typically offer lower initial rates, but payments could increase a lot in the future.

How much do I need for a down payment?

As a first-time home buyer, you may be able to put down as little as 3-5% of the purchase price. However, the lower your down payment, the higher your interest rate and monthly payment will be. Aim for at least 20% down to get the best rates, but don't delay purchasing a home just to save more. There are down payment assistance programs that can help.

How long does the home buying process take?

Typically, purchasing a home will take between 2 to 4 months. The exact time frame depends on factors like how quickly you can get approved for a mortgage, how fast the seller is able to move, and how long inspections and appraisals take. Start looking at homes as soon as you're ready to buy so you can find one you love, then get the ball rolling with a lender. The sooner you start, the sooner you can get the keys to your new home!

First-Time Homebuyer Statistics

  • First-time buyers made up 26 percent of all home buyers, a decrease from 34 percent last year.
  • Seventy percent of Younger Millennials and 46 percent of Older Millennials were first-time home buyers, more than other age groups.
  • 21 percent of Gen Xers were also first-time home buyers.

Source: 2023 NAR Home Buyer and Seller Generational Trends(National Association of REALTORS®, 2023)

Home Buyer's Guide

Paul Burrowes, CRS, CCEC, SFR, NHCP, LHC, REALTOR® I DRE# 01955563 (831) 295-5130 Licensed REALTOR® with over 15 years of experience and expertise. Commits to being on time and transparent. Acts as your consultant to ensure you make the best decisions to fit your transaction at every step in the process. Negotiates towards a low stress, win-win outcome. Handles all the details for you, ensuring the hundreds of steps in your real estate transaction go smoothly. Proudly serving Silicon Valley, Santa Cruz, Monterey, and Santa Clara Counties!

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