First-Time Homebuyer -checklist

Guidance and perspectives

Spending more time at home last year has many Americans trading in their rentals for something more permanent. If owning a home is one of your goals, here are some tips to help you get started.

Create a budget for your monthly mortgage payment

Add up what you currently spend on rent, utilities, other home expenses and the amounts you're saving for a down payment. Then consider whether additional costs like homeowner association (HOA) fees, property taxes, additional utilities or insurance needs will increase your home expenses. If there is a gap, look to reduce spending in other parts of your budget or reduce your future home costs.

Check your credit score.

A high credit score could mean the opportunity for a lower interest rate. If your score needs improvement, you may want to delay your home purchase and work on that first.

Understand how much you qualify for – and want to spend

Meet with lenders before you start shopping to determine the loan amount you qualify for and get pre-approved. But remember, just because a lender approves you for a certain amount doesn't mean you should borrow that amount. If having an expensive home means sacrificing other priorities – like saving for a child's education or your retirement – you may want to rethink your home purchase budget.

Save for your down payment

Having a down payment of more than 20% allows you to avoid paying for private mortgage insurance (PMI) in addition to your monthly loan payments. First-time home buyers may qualify for down payment assistance, so be sure to explore that option.

Plan for unexpected expenses

Homeownership is a dream come true for many, but it can be a nightmare if you're not prepared. Appliances break. Trees fall. Drains back up. Having an emergency fund can ensure you don't tap into your long-term investments or take on debt to pay for them. Ideally, you'll want to have three to six months' worth of living expenses in your emergency fund.