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First time home buyer guide

Buying a home for the first time can be daunting. It may be helpful to review some key considerations as you prepare for this important moment.

Congratulations, you've decided to buy a home! This exciting time in your life can also feel stressful because of the amount of questions you might have. However, tackling these tasks might help you feel more prepared for the home-buying process.

Key takeaways

  • Research payment assistance programs specifically available for first-time home buyers
  • Create a budget to break down home-related expenses you will be responsible for
  • Understand your wants vs needs for a home
  • Prepare all necessary paperwork ahead of time to help the buying process go more smoothly

Have you researched first-time homebuyer assistance programs that you may qualify for?

There are various programs available for first-time homebuyers that can assist you with paying for your first house. Down payment assistance (DPA) loans and grants can help offset the significant cost associated with making a down payment on a home. Tax deductions and closing assistance programs are also available to help a first-time home buyer with financing.

Have you created a budget for mortgage payments and other housing costs?

Laws prevent lenders from making home loans that exceed 35% of your monthly income. The general rule of thumb is to not exceed 28% of your gross monthly income, according to Forbes. To figure out what that looks like for your circumstances, set up a budget that includes housing costs as a line item, along with other monthly bills and regular living expenses. You'll also want to factor in things like homeowners insurance, any homeowners association (HOA) fees and home maintenance costs.

Have you considered other potential costs?

As a homeowner, you'll be responsible for managing more than just a mortgage payment. Things like fixing leaky pipes, clearing overflowing gutters, winterizing and lawn care are just some routine projects homeowners might have to address. That may also influence what type of home you look for. Can you live with a fixer-upper or do you prefer a move-in ready home? Do you possess the ability to make certain fixes, or will you need to hire out basic maintenance?

Have you saved enough for a down payment?

While you may be able to get some assistance for your down payment, you might want to figure out if you've saved enough to fully cover a down payment. If you're unable to put 20% down toward the cost of your home, you may be responsible for private mortgage insurance (PMI) depending on your type of mortgage.

Have you thought about wants and needs?

Wants and needs related to homeownership can vary from person to person. Make a list including a variety of things that are important to you and your family, from the number of bathrooms and size of yard, to the commute to your current job, school options and the stability of the neighborhood. When you consider these bigger items, also think about access to daily amenities such as grocery stores, shopping centers, parks and movie theaters. Resist the urge to get caught up in a house that you believe is "perfect." Take your time and make sure you have the budget and resources for the home you want.

Have you thought about the resiliency of the home construction?

As you're getting ready to build or start looking at homes, what should you look for to make sure the home can withstand what Mother Nature dishes out? has compiled a Buyer's Guide to Resilient Homes brochure that helps you think through some potential scenarios. There are even checklists to help you through the process.

Have you gotten your paperwork in order?

If you're ready to buy a home, you'll need specific documents pulled together to complete the mortgage approval process. Those may include several years of tax returns and pay stubs, and it's helpful to have that information lined up ahead of time. In addition, you'll want to review your credit score and talk to a lender about getting pre-approved before you start looking for a home. That way you and your real estate agent can feel more confident about what you can afford and the interest rates for which you may qualify.

Do you need a real estate agent?

Homes can be listed in different ways by sellers, the most common being with a real estate agent or for sale by owner. Some buyers work with a real estate agent to help find the right home and facilitate this negotiation, while others handle these steps on their own. If you find a house you like, you'll make an offer and likely go through a negotiation process before the sale is finalized. You might also want to check your state's requirements about using a lawyer to finalize the documents.

For many people, buying a home for the first time is a big decision and accomplishment. Consider talking to a State Farm® agent to learn more about home and property insurance and what might be the best coverage to help protect it.

The information in this article was obtained from various sources not associated with State Farm® (including State Farm Mutual Automobile Insurance Company and its subsidiaries and affiliates). While we believe it to be reliable and accurate, we do not warrant the accuracy or reliability of the information. State Farm is not responsible for, and does not endorse or approve, either implicitly or explicitly, the content of any third party sites that might be hyperlinked from this page. The information is not intended to replace manuals, instructions or information provided by a manufacturer or the advice of a qualified professional, or to affect coverage under any applicable insurance policy. These suggestions are not a complete list of every loss control measure. State Farm makes no guarantees of results from use of this information.

Neither State Farm nor its agents provide tax or legal advice.

State Farm Fire and Casualty Company
State Farm General Insurance Company
Bloomington, IL

State Farm Florida Insurance Company
Winter Haven, FL

State Farm Lloyds
Richardson, TX

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