Just thinking about buying your first home brings waves of emotion. It’s an exciting and frightening concept—and both responses are appropriate. Purchasing a house will almost certainly be the largest purchase you have ever made, and it demands thoughtful consideration and thorough preparation.
First and foremost: You’re not alone! Over one-third of all Americans are considering buying a home in the next five years. While only you can decide if you’re mentally ready to join them, we’ll help you determine if you’re in the financial position to do so.
With the right information, guidance, and preparation, nothing will catch you off guard. The dream of home ownership has come true for millions of Americans; it can come true for you too.
BEFORE YOU BUY Buying your first home is a big investment, and it’s easy to be blinded by wants and need-to-haves. Dreaming of spending lazy Sundays in the sunroom? Obsessed with the finished basement wet bar? We get it. But your first house is more than a home—it’s an investment.. If you choose right. Or a financial disaster if you do it wrong. By choosing correctly, it can produce income and equity for years to come, long after you’ve moved on to bigger and better spaces.
Are you ready to start your investing journey today?
Financial Readiness: The Pre-Flight Checklist
If you’ve ever watched a pilot prepare for takeoff, you’ve seen the routine. Dozens of switches, clicks, presses, gauge checks—all done in precise order, each step a specific purpose. What looks overwhelming to us is second nature to them. They’ve relentlessly prepared for this moment.
Our financial readiness section will get you just as ready as the pilot to take off toward purchasing your ideal first home.
The realities of buying a home
Chances are, you're currently a renter accustomed to spending a sizable chunk of cash each month for a roof over your head. Having a mortgage isn’t much different, but don’t be fooled. It's not a one-to-one comparison. A homeowner is responsible for expenses that a renter never even considers. What if the washing machine breaks? What if a pipe bursts? A renter makes a phone call—a homeowner breaks out the checkbook.
You'll also need savings accumulated in order to buy a home. You don’t just walk up with first and last month’s rent and waltz off into the sunset. A $300,000 home could require $25,000 upfront, between down payment, points, and closing costs. So it’s important to be prudent. You’ll want enough to cushion first-year expenses, which can be staggering.
The down payment
How much should you plan on putting down on your first home? This crucial question is the crux of your readiness check, as it’ll be the largest upfront bill in the process.
The old adage says you need 20 percent down, but very few first-time home buyers actually meet this mark. Most put down less than 10 percent—and some, less than five. But even at sub-five percent, once you add closing costs and additional expenses, a prospective buyer needs a large chunk of cash.
And of course, you need to consider how much of a house—in dollars—you're buying. You may already have a glimmer of a price range, but your potential lenders have their own ideas about what you can afford. And when you go to get prequalified for a mortgage, they’ll be happy to plainly tell you the limits of your borrowing capacity.
If you’re not there yet on your savings, make a timetable with the help of a thorough budget, including monthly inflows and outflows, to see how long you’ll need to get to your savings target.
There’s two different measures of debt-to-income (DTI) that your lender will calculate, so you might as well use them too. These numbers estimate how much you can comfortably pay each month—not just toward the mortgage balance, but also the other expenses that come with a mortgage. Mortgage payments are also referred to as PITI, or:
DTI ratios are calculated by dividing your:
Front-end DTI: Expected monthly payments toward PITI by your gross—or pre-tax—monthly income.
Back-end DTI: PITI plus total current debt load—think credit cards, auto loans, and student loans—by your gross monthly income.
Here's an example:
Gross monthly income: $4,500
Credit card minimums: $100
Car loan: $250
Student loans: $250
In this scenario, your front-end DTI would be 33.3 percent, and your back-end DTI would be 46.7 percent. Generally, the accepted ranges are:
Front-end DTI: 25 to 30 percent or lower to qualify for conventional mortgages and lower down payments
Back-end DTI: 30 to 38 percent or lower for ideal borrowing conditions—but can be up to 50 percent with a high credit score.
The closer both numbers get into the 20 to 30 percent range and the farther from the 40 percent or higher range, the better the terms you’ll be able to receive on key things like interest rate on the mortgage and the down payment amount.
Your credit dictates how trustworthy you have been with borrowings in the past, and helps a lender decide how much they will comfortably lend to you, as well as how much interest they will charge you in order to feel comfortable with your repayment risk.
The FICO score to qualify for minimum down payment levels—especially through the Federal Housing Association (FHA), the broadest first-time buyer program—is 600 and above. FICO considers 620 to 650 “good to fair” credit. Be sure to check out our loans page to find out the best lender options for you based on your credit score.
If your scores aren’t where they need to be, it’s time to scale back your plans and focus your efforts on raising your credit scores.
Are you in a position to pay down your other debts like student loans and credit cards? Have you already done so? Can you build a contingency fund? If so, how fast? If you’re a couple years away from being ready to buy your first home, it’s all about goal-setting today. We can light up the runway, but it’s your plane to fly.
Before you start house hunting, your budget levels need to be crystal clear. Do you have enough cash upfront to buy a home in your price range, including all closing costs? Will you have ample savings left over to cover the myriad expenses you’ll incur as you transition to homeownership? An out-of-the-blue $2,500 HVAC repair bill shouldn't threaten your ability to pay your mortgage on time.
Let’s start with a quick rundown of the core structure of a mortgage. A lender decides to give you an enormous loan, lots of time to pay it back, and charges you a fairly low interest rate while doing so. Do they do this out of the kindness of their hearts?
Spoiler alert: They do not.
They do it because the house you buy serves as collateral for that enormous loan. If you don't make your payments, the lender will foreclose on your home and take ownership. Yes, a mortgage carries a low rate and is a good deal in that regard—but make no mistake, your lender has a backstop.
Mortgages can vary in length, have fixed or variable interest rates, and either require a lot of cash upfront or not much at all. But in all of these scenarios, the property is collateral. When you take out a mortgage, you take a big bill and spread it out over a long time. You (or you and your partner if buying a home jointly) rely on the strength of your income(s) to make yourself appealing to a lender.
Each month payments are made toward that big bill, including some money going to all those PITI categories.
Conventional vs. non-conventional loans
Conventional loans are not insured by the federal government, and typically require larger down payments. Non-conventional loans are insured by the federal government, and generally allow down payments of 10 percent or less. That's generally a better fit for first-time home buyers.
However, keep in mind that a conventional mortgage with less than 20 percent down payment typically requires private mortgage insurance (PMI) until the purchaser accumulates at least 20 percent equity in the home.
Conforming vs. nonconforming loans
A conforming mortgage is a loan that falls below the max allowed by government-backing entities like Freddie Mac and Fannie Mae. Loans that come in above the federal maximum, which is maintained by the Federal Housing Authority, are considered nonconforming.
In 2020, the maximum allowed for a conforming loan is $510,400, with special stipulations for certain areas of the country where most home values are 115 percent above this max level. In these areas, the ceiling is raised to 150 percent of the max amount, or $765,600.
Jumbo loans are conventional loans for amounts above the federal conforming loan limits. Jumbo loan lenders typically require borrowers to provide proof of assets worth at least 10 percent of the home’s purchase price. They also have require higher incomes and credit scores.
While the federal government doesn’t issue mortgages directly, it does insure them, making it less risky for lenders to issue these loans. As a result, these loans have less-stringent credit score and down payment requirements.
Most first-time buyers find that FHA-backed loans are the most attractive option. With a minimum credit score of 580, a first-time buyer can put just 3.5 percent of the home’s price as a down payment. FHA-backed loan limits for 2020 vary by county, starting at $331,760 for single-family dwellings in lower-cost areas, and up to $765,600 in higher-cost counties. A full breakdown of U.S. limits by county can be found here.
In addition to the FHA, the Veteran’s Authority (VA) and the U.S. Department of Agriculture (USDA) also back mortgage loans. VA loans are available to military personnel and their families. They often require no down payment, and closing costs can potentially be paid by the seller or be rolled up into the loan itself.
USDA-backed loans are available in rural areas for low- and middle-income buyers, and may also require no down payment if you meet the income limitations.
This is the most common mortgage structure. Fixed mortgages are just that: Fixed in place with an interest rate that doesn’t change over the life of the loan. Most fixed mortgages are 15-year, 20-year, and 30-year payback periods. The main benefit to the borrower here is that you know exactly what your mortgage payment will be each month.
If you plan on living in your first home for seven to 10-plus years, fixed rate is probably the best route to go. You’ll build equity a bit slower than with variable-rate loans, and you’ll pay slightly higher interest costs over the long run, but the predictability of mortgage payments and the sense of security from locking in a set interest rate are immensely attractive.
These have an initial period with a fixed interest rate (which is generally lower than the rate you’d get on a fixed-rate loan), but then after a few years switches to a variable rate, based on market conditions.
If you’re a first-time buyer who thinks they may only live in their first home a few years before moving, maybe a variable-rate mortgage is a good bet. Your goal here would be to sell or refinance before, or soon after, the variable phase of the interest rate sets it. This way you avoid any adverse situation where market interest rates fluctuate wildly and your interest payments potentially spike higher.
Government-backed loans are offered on both fixed and variable-rate terms.
The topic is so important we started it twice—let’s return to our discussion of down payments. This will be one of the biggest checks you ever write, and the first payment on the largest sticker price you’ve ever paid!
Government-backed mortgage facilitators like the FHA allow most first-time home buyers to put 10 percent or less down. Qualified first-time buyers can put as low 3.5 percent down—a game-changer for homeownership. There’s a world of difference between having $10,000 in savings for a home and $30,000 in savings. It could take many years to save up the difference.
Many first-time homebuyers will utilize FHA-backed loans. In 2018, more than 80 percent of FHA-backed loans were issued to first-time homeowners! But the government doesn’t guarantee these loans for free. They require all first-time home buyers to purchase two types of mortgage insurance: upfront and ongoing.
Upfront mortgage insurance ranges from 1.3 to 1.5 percent of the price of the home, and is called upfront mortgage insurance premium (MIP). It's generally rolled into the mortgage itself, raising the outstanding balance of the mortgage.
Ongoing mortgage insurance is paid each month as part of the mortgage, amounting to 0.45 to 1.05 percent of the outstanding mortgage balance. This premium decreases each year as you pay off the loan. FHA-insured mortgages are generally required to have mortgage insurance paid on them for a minimum of 11 years.
Just having the down payment won't cut it. You’ll also need two to five percent of the home’s purchase price for closing costs and one to three percent set aside in a contingency fund to keep from pulling your hair out the first year of ownership.
Our recommended baseline: Plan on saving 10 percent of a home’s price upfront, even if you're using a low-down-payment loan.
Preparing for the Purchase
Here's the dream borrower, in the eyes of the lender:
Credit score: Above 700
Debt-to-income ratio: Below 30 percent
Renting history: Good with no hiccups
Savings: 10 percent of your desired home's purchase price.
But don’t worry. You don’t have to be a lender’s perfect dream in order to get a mortgage. Most FHA-backed loans can be had for a FICO score of 580 or more while still taking advantage of the sub-10 percent down payment minimums.
You will want to fall below 31 percent of front-end DTI in order to qualify for standard qualified mortgages. And you’ll want a back-end DTI no higher than 42 percent, especially if seeking approval for an FHA-backed loan. (There are cases of back-end DTI levels up to 50 percent being approved from FHA-insured lenders, but these come with higher interest costs and likely, insurance premiums to be paid.)
Planting a flag in a new home: Blessing or curse?
As you progress closer to “Yes, I’m ready to buy my first home!” it’s vital to inventory your life. Look at your career path—will you stay in the same location for the next several years? After taking out a mortgage, it may be several years before an opportunity to sell the home for a profit arises.
Building equity in your home is slow going the first few years. Most of your monthly payments go to interest, not principal. What if you have to move for a job sooner than expected? You'll also have less equity than expected. So in some ways, expecting equity is a fool’s errand. Life can unfold in utterly unpredictable ways. But before deciding to buy your first home, be as diligent as possible. This exercise might invigorate your resolve if you’re rarin’ to go—but if the exercise stokes a lot of anxiety, then maybe it’s best to hold off for now.
Pre-approval (or pre-qualification)
Before you walk into your first meeting with a real estate agent you’ll want to have proven—to yourself and to all interested parties—that you have the income, credit score, and the budget for a home. In short, you need to be pre-qualified and pre-approved.
A mortgage pre-approval tells real estate agents working on behalf of sellers that you will likely to be approved for a loan. It means your offers will be taken more seriously—and could even lift you above the pack.
Both pre-qualification and pre-approval are steps on the way to lender approval. Typically, the pre-qualification phase comes first, while the pre-approval—a more intensive process—is the next step. Before you put in your first offer, aim to be pre-approved.
During pre-qualification, you’ll submit financial records to the lender to provide picture of your total net worth—your assets, income, and current debts—as well as your credit score. So long as you don’t buy a big-ticket item or take out a new loan, you’ll most likely have no issues getting the funding you seek. Many lenders do pre-qualifications and pre-approvals over the internet.
Already been preapproved and/or prequalified, and feel comfortable that your finances are in order well enough to stay on this ride? Great! You’re ready to start reaching out to real estate agents. Your agent is your key business partner/psychologist/cheerleader.
Hiring a local agent with a large backing firm is the first-time homebuyer's best bet. But beware this potential minefield: Dual agency. Dual agency means your agent or their firm represents both you, the buyer, and the seller. Instead, seek out an exclusive buyer’s agent, who only serves your interests.
The first time you meet with your agent, be open and frank. Explain your wants and needs, talk through the absolute limits of your budget, show them how much you’re pre-qualified for, and be a good listener! Your agent will have insight the best residential areas. Come up with a schedule and battle plan for the next month, starting with how much availability you and your family have to view properties.
Yes, it’s possible to “go it on your own” and represent yourself. In this scenario you’d communicate directly with listing agents who work on behalf of the sellers. We strongly advise against this when buying your first home—instead, interview local buyer’s agents and get yourself a professional that’s looking out for your interests first.
Many first-time buyers accidentally skip this second—until a last-second rush before closing. Scouting homeowner's insurance ahead of time saves time.
Your lender might pitch you their own preferred insurance provider, but this might not be your best deal. Your best deal might be found by bundling home insurance with the company that handles your auto insurance.
First, any insurance company will want to see that you have a low- or no-claims history, whether with your car or rental. A good history can help you save 15 to 25 percent on the cost of a first-time homeowner policy. Given that average home insurance policies cost $1,000 to $2,000 per year, based on things like geography, home features, and the size of home, these savings add up.
If you’re a couple years away from buying but are actively saving, take out a renters insurance policy now. Premiums are low almost everywhere in the —less than $1 per day, typically—and having a couple years of claims-free history as a renter can easily pay you back two to three times on savings when you decide to buy your first home.
Get a couple of rate quotes on homeowners insurance early on while you’re still looking at properties. Once you’ve made an offer, go back to your preferred insurance provider with the specifics. Loop them in on the home inspection information once that part is completed, and you’ll be able to get a final rate quote that likely won't change after closing.
Homeowner policy features to know
You should know the difference between property protection and liability protection. (Most homeowner policies contain both types.)
Property protection covers the physical structure of the home, including attachments to the house, in-house appliances, plumbing, and electrical. The dollar amount of property protection is based on the replacement costs if damaged or destroyed—also known as the dwelling insured value. Your policy should also have coverage for other structures, like sheds and garages. And let’s not forget about the items in your home—a third level of property protection will cover personal property for you and your residing family members.
The liability protection features of a homeowner policy cover what may happen to things or people while on your property. Claims could come from injuries to a person or others’ property that occur on the policyholder’s land.
Geographic areas more prone to floods, fires, and earthquakes tend to have extra protections written into homeowner policies, making them more expensive than the national averages. These protections may go by the term “additional property coverages” or “endorsements,” and they may or may not be required by your lender. Be sure to read your initial mortgage offering documents carefully for details, or contact your lender directly to seek any clarifications if you are looking in an area with a higher claims history for certain natural events.
You’ve found a house that you love, talked things over with your agent, and are ready to approach the seller with an offer. You’re a mental tiger, prepared to go a couple rounds of offers and counter-offers. It's natural to be excited—even downright giddy!—when narrowing in on a home that you really like. You might be in love. But don't let personal attachment get in the way of the nuts and bolts of the home-buying process, or you’ll most likely be disappointed. The time to pop the champagne is when the keys are in your hand. Not a moment sooner.
Around 60 percent of first-time homebuyers had to make more than one offer before one was (finally) accepted. Be prepared for this—better yet, assume it will be the case so you won't be dejected when your first offer is rejected. This is a negotiation. And like all negotiations, there is a strategy.
Your agent should be able to guide you on the benefits of an earnest money deposit—which is sometimes required by the seller and sometimes offered in good faith. Earnest money is, well, earnest. It’s a sign to the seller that you want this house.
Typically, earnest money ranges from one to three percent of the home’s price. And no, it doesn’t directly into the seller’s pocket—regardless of outcome. If the deal falls through, in most scenarios the deposit returns to you. Earnest money is held in escrow until closing day, and is put toward the closing costs of the home purchase.
The goal of the home inspection is to make sure that all the major systems and structures in your prospective home are in working order. A home inspector evaluates things like the plumbing, electrical, HVAC, roofing, exterior walls, fireplaces, pools, and basement.
Testing is also generally done for harmful effects like mold, radon, and asbestos that may be lingering within the property. The inspector will follow a checklist and make notes of any systems that may need early repairs or isn’t in functioning order.
You’ll want to be present during the inspection, so make every effort to coordinate schedules with the inspector and be there to ask questions and hear their thoughts as you walk through the home together. And if you’re seeking an FHA-backed loan for your first home, this article gives a detailed breakdown of what to expect.
Don’t take any “pre-inspected” label on a house at face value—pay to have your own done. And definitely don’t let anyone bully you into thinking “you don’t need to get an inspection.” A home is the biggest of big-ticket items! This level of due diligence is essential.
You can expect a home inspection to run you $250 to $400—possibly more if the home tops 2,000 square feet, or if you've requested extra inspections, such as sewer, radon, or mold. Average home values by zip code and square footage are the biggest drivers of higher fees for home inspection.
How to handle inspection issues
Now that you've found and inspected a house, you've learned invaluable new information. Is the property structurally sound? Are major repairs needed? If a needed repair does lower the value of the home, you'll need to negotiate repairs or a closing credit. Your agent will know what's standard in your local market—so work with them on an appropriate response.
Almost all states include home inspection contingencies in the standard real estate sales contract. The contingency plays out as such: If an offer is made in good faith that the home is in working order, but the inspection turns up repairs that need doing (that the buyer wasn’t aware of), the buyer can cancel the bid or request a negotiation round to determine how to resolve the issue(s).
This could involve going back to the seller (via your agent) and requesting specific repairs directly, or a cash stipend or reduction in the mortgage to account for the repair cost that will be paid by the buyer.
Typically there is a one- to two-week window before the closing process begins for the buyer to make inspections and have their agent convey any grievances to the buyer should something pop up.
There are some things that could put your earnest money deposit in danger. Chief among them? Not reporting an inspection issue to the seller during the contingency window.
As you near closing day, set aside time to review all your pertinent documents one last time. This is your last chance to make sure closing costs are what you expected. Three days before closing you'll have in your possession all of the fine print and costs that you'll be expected to pay.
Review the closing disclosure, initial escrow disclosure, the promissory note (which describes your legal obligations in taking out a mortgage), and the full mortgage loan document. Make sure that none of the terms have changed.
The average first-time home buyer spends between $3,000 and $7,000 on closing costs. However, buyers in metros with average home prices above $350,000 can spend over $7,000 quite easily, because the average closing costs range between two and seven percent. The number varies based on factors like the type of mortgage loan, the state in which the transaction takes place, and the lender you're working with.
A lender is required to provide a borrower with a loan estimate (LE) document within three days of the lender receiving the mortgage application. The LE shows the lender's best estimate of the total cost breakdown of the loan, including all closing costs. Later on, three days before the closing date, the lender must provide a closing disclosure (CD), which will show all the cost estimates from the LE—and the final closing costs—indicating where any changes occurred between the LE and final closing.
CD rules have been advocated for effectively by the Consumer Financial Protection Bureau, or CFPB. They discuss the LE and closing disclosure more on their consumer website.
There's not typically going to be any major changes between the LE and the CD, but if there are be sure to contact your lender ASAP to ask about the discrepancies.
On lowering closing costs
Closing costs are obviously a big expense, and there can be a lot of motivation to drive them down. You're already forking over a big chunk of your savings—why stack on more costs?
Some first-time home buyers have the option to "roll up" some or all of their closing costs into the mortgage loan itself. This certainly seems attractive. (Out of sight, out of mind, right?) But it's not optimal. You'll pay more over the life of the mortgage—sometimes 10 times as much as the amount you save upfront. This extra cost comes in the form of higher interest payments or a higher interest rate.
One little trick to save you a few bucks is scheduling closing for the end of a calendar month. That lowers the prepaid interest charges that may appear on your final closing cost tally. However, if you’re within one to three months of your property taxes being due for the year, your lender may require a first-time buyer to place the entire tax bill into escrow at closing. This could offset any prepaid interest savings.
Points and discounts
When we talk about “points” in a real estate setting, these are amounts equal to one percent of the outstanding balance, or principal, of the mortgage itself. Each one percent is a point. Closing costs and origination fees charged by the lender for processing your loan are generally calculated on a points basis, as are discount points that lenders offer to borrowers.
Borrowers can "buy" discount points from the lender in exchange for a lower interest rate. Yes, you pay more cash upfront at closing, but save more money down the road while also building equity faster. Depending on your lender, overall creditworthiness, and the type of mortgage you get, you may have mortgage discount points available to you.
Typically, the interest rate drops by 25 basis points—or 0.25 percent—for every discount point purchased by the borrower. And here's the best part: Discount points are tax-deductible!
However, if you are considering an adjustable-rate mortgage, be warned: Discount points generally apply only to the beginning period of the adjustable-rate mortgage when the interest rate is fixed. Any lowered interest rate comes off the table once your mortgage interest changes due to market conditions.
These are optional discount points offered to home buyers who want to lower the upfront out-of-pocket costs. "Pay more over time, less at closing" is the mantra here.
Be very wary. Lender credits may seem like a great deal to lower your initial bill. But consider this simple example: A 30-year, $250,000 fixed mortgage at 4.5 percent interest. Just one lender credit (one point) of $2,500 at closing time will mean you pay over $10,000 more for the mortgage over the 30-year life of the loan.
Origination points are generally unavoidable. These fees are charged by lenders for initiating and originating the loan itself. By shopping around you may find lower origination fees with one lender over another, but you’ll definitely pay something. Origination points can be paid either lump sum up front or over time as part of your monthly payments.
A key point to remember is that lenders are obligated by law to not raise the origination points from the time you receive your loan estimate to the final number you see on the closing disclosure. Make sure to watch this figure like a hawk from beginning to end. And if your credit scores are strong and your DTI is low, you may even be able to negotiate a little discount here prior to closing day.
You’ve got your keys to your first home, popped the Champagne, and begun your adventure. Now prepare for success. You’ve already built some equity in your new home via your down payment, and you’ll be adding to your equity each month as you make monthly payments.
In the first few years, don't think about your home as an "investment that produces a return." (Even though that's true in the long run.) Yes, you can add value to your home through renovations and repairs and by making regular payments or prepayments on the mortgage. Value can even be added if the market revalues your geographic area higher.
Building equity takes time. Be prudent about renovations during the first one to two years—you don’t want to drain your savings and you definitely want to keep your emergency fund flush enough to handle random events that may crop up your first year in the home.
First-year tax prep
If you've enjoyed doing “short form” 1040 filings your whole life, prepare for doing the long form as a first time home owner. This allows you to itemize home-related deductions related to your home. You'll lose the standard deduction taken when filing the short form ($12,400 in 2020), but most homeowners find that they get more benefit from itemizing.
Pay attention to your annual 1098 form. This form breaks down your total interest paid toward your mortgage over the past year and is sent to you by your lender or financial institution in January following the tax year.
A great starting point for tax prep is to read through the IRS Publication 530 prior to filing your taxes the first time after buying your first home.
Some key takeaways:
Property tax is generally deductible in most states
Mortgage interest is generally deductible (IRS Form 1098)
Origination points can be tax-deductible if you meet certain conditions outlined in the IRS Publication 530.
In most cases, insurance payments, closing costs, and depreciation cannot be counted as tax deductible.
Buying a Home is Great, but Owning an Investment is Better
We’re going to end this guide with a serving of caution. Because buying a home is such a big, life-altering decision, it’s worth taking a thoughtful review of everything that could change in your life and how that would be affected by your purchase.
Buying a home means cutting back on lifestyle expenses you could afford before you bought the house. How will cutting back on these things will impact you psychologically? How will they impact your spouse, partner, or kids? It’s a complex topic with lots of moving parts, and nobody can clearly see down the road of future outcomes. But it’s a good thought experiment to conduct nonetheless.
Owning your own home is certainly an investment in the purest sense, but it may not feel like it during the first few years. In fact, it may feel like a burden. At BiggerPockets, we take a holistic view of how homeownership can work. We have a wealth of resources aimed at helping people work toward financial freedom from all angles.
Some people want their first home to function as a more practical immediate investment. They purchase property with the intent of renting it out and using the cash flow to build savings while saving on taxes. Others may find value in buying a very small first home, focusing on the basics, with the intent of flipping it within a couple of years to buy a larger home.
Whether you are just starting to budget or already scouting properties by the dozen on your lunch break, the journey to buying your first home is filled with emotions. We’ve discussed good reasons to be both excited and nervous about the process. But it’s important to keep your expectations in check.
Don’t go into the home buying process expecting to make a quick buck. Don’t go into the home buying process if you’re going to spread your budget or your cash flows too thin. And don’t do it to impress anyone else.
Your career expectations, your family and partnership expectations, your life expectations—all these can and will change over time. Don’t attach perfect expectations to your first home purchase, only to find yourself resentful when those expectations turn out differently.
However, owning your own home is still the most quintessential of American dreams. Armed with buying knowledge and strong finances, you can make the best decisions. We are here to support and sponsor that dream for everyone that’s ready.
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