16 Tips for First-Time Homebuyers in 2025
Buying your first home in 2025 takes more than just saving for a down payment — it takes smart planning, a strong team, and a clear understanding of your options. These tips will help you navigate each step with more confidence and avoid costly missteps along the way.
Becoming a first-time homeowner is an exciting time. However, since it’s one of the most significant purchases you’ll ever make, it can also be one of the most stressful times.
With elevated housing prices and interest rates still at multi-year highs, jumping into homeownership requires more planning and patience. Following are the best first-time home buyer tips that will make the entire process smoother and less stressful.
1. Focus on a Percentage, Not Flat Amount With Your Down Payment
Most home buyers focus on saving a specific dollar amount for their down payment — say $10,000 or $75,000. But it can be more helpful to think in terms of a percentage of the home price.
Lenders often offer better terms based on your down payment percentage, not just the total amount. For example, putting 20% down allows you to avoid private mortgage insurance (PMI) entirely. But there are also smaller milestones — or "tiers" — that can lead to lower rates or reduced PMI.
Here’s a simplified breakdown of common down payment tiers:
3% – Typically the minimum for conventional loans
5% – May lower your PMI cost compared to 3%
10% – Can lead to further rate or PMI reductions
20% – Eliminates PMI altogether
For example, you might save over $100 per month on a $400,000 home by putting 5% down instead of 3%. However, going from 5% to 8% might not move the needle much — most lenders don’t offer better terms until you hit the 10% mark.
Example: Let’s say you’ve saved $25,000 with plans to put 10% down on a $250,000 home. But after shopping around, you fall in love with a $300,000 home instead. Do you still put the full $25,000 down? You certainly can — but on a $300,000 purchase, that amount equals just 8.3%.
The catch? You’d likely be getting the same loan terms as someone putting down just 5%.
At that point, you might consider:
Putting down just 5% ($15,000) and keeping the remaining $10,000 as an emergency fund, or
Waiting until you can put down 10% on the $300,000 home to potentially unlock better pricing
2. Understand How Much You Can Afford
Consider the costs of homeownership beyond just your monthly mortgage payment. As a homeowner, you’re also responsible for things like home maintenance and repairs, insurance, and property taxes.
“Homeownership comes with a lot of responsibility, beyond the mortgage payment, such as repair and maintenance costs, property taxes, etc,” said Felton Ellington, Vice President and Community Lending Manager at Chase Home Lending. “Before you purchase, prospective buyers should ‘practice their payment’ to prepare themselves for what it will be like to have a mortgage. This can help get you financially and mentally prepared for the investment.”
3. Understand Your Mortgage Options
Your loan program will impact your down payment, mortgage insurance, and rate. Your lender will guide you through loan selection. You may only qualify for one. Those who qualify for two or more will need to select the best one for their situation.
Conventional Loans: The most common type of home loan is a conventional loan. These are best for individuals with solid employment history, higher income, and excellent credit.
FHA Loans: FHA loans are common for first-time homebuyers because they have more lenient credit score and financial requirements. You may qualify for an FHA loan with a down payment as low as 3.5%. Lower-income individuals can qualify more easily than with conventional.
VA Loans: If you’re in the military or now separated from service, you may be able to access home loans through the Department of Veterans Affairs VA loan program. These loans require no money down and often come with better rates than conventional loans offer.
USDA Loans: If you’re considering purchasing a home in a rural or suburban area and meet certain income limits, you may qualify for a USDA loan. This allows buyers to purchase a house with a 0% down payment.
4. Save for a Down Payment, Closing Costs, and Reserves
If you qualify, you can purchase a home with as little as 3% down on a conventional mortgage or 3.5% with an FHA loan. That means you could purchase a $300,000 home using a conventional loan and only need to save $9,000 for the down payment.
But you’ll also need money available for closing costs. Expect to pay anywhere from 2% to 5% of your loan amount.
Plus, many lenders will require you to have a certain amount of reserve money. This will allow you to continue making monthly mortgage payments if you lose your job or have another financial setback. It can also provide you with the funds needed if repairs need to be made on the home.
“Beyond a down payment, homebuyers must consider closing costs, which are used to pay for appraisals, inspections, and other fees and can amount to up to three percent or more of the final purchase price,” said Ellington. “These services are crucial in the homebuying process. First-time homebuyers should research the assistance programs they may be eligible for to assist with the cost of down payments and closing costs.”
Related: What's the Average Down Payment on a House?
5. Shop Around For Lenders
Many people likely shop for a hotel room or wristwatch longer than they shop for a lender. But the stakes are much higher with housing-related decisions.
Even saving a quarter-percent on your interest rate can mean thousands in savings over the life of the loan, not to mention extra slack in your monthly budget.
“Some buyers are reluctant to shop around for rates because they fear it will impact their credit score,” said Ellington. “However, credit checks from different mortgage lenders are treated as a single inquiry on your credit report as long as all the inquiries are made within the same 45-day window. This means five different lenders could pull your credit within a week or two of each other and the impact would be the same as one lender pulling your credit.”
As you shop around, compare interest rates and fees from each lender. While one lender might have the lowest rates, it might also have high fees. The goal is to find the lender with the lowest borrowing costs.
6. Get Your Loan Documents Together
Some items you’ll need include:
Bank account statements
Investment account statements
Two years of W-2s and tax returns
Previous two pay stubs
1099 forms (if self-employed)
Proof of additional income
7. Get Preapproved
You can’t view homes or even talk to a real estate agent at length without a pre-approval letter from a reputable lender.
Mortgage pre-approval gives you a realistic picture of what you can qualify for. While you might think you can afford a $300,000 loan, your lender might be willing to approve you up to $350,000. Or they might think you’d be better off sticking to $250,000.
Preapproval will also show sellers that you’re a serious buyer. This is important when the housing market is strong and it’s a seller's market. But in any market, a seller won’t consider an offer without an accompanying pre-approval.
8. Preapproval Interest Rates Aren’t Final
When you go through the preapproval process, your lender will provide you with an interest rate that you’re approved for. However, it’s important to understand that this is just a best guess and your final interest rate could be different.
Interest rates are based on current market conditions and can change quickly. You won’t actually lock in a rate until you’re under contract to purchase a home. If there’s a period of time between when you get your preapproval and actually find a home, the lender could adjust the interest rate accordingly.
9. Avoid New Credit
If you’re going to purchase a home, avoid any changes to your credit report. Don’t take out a new auto loan or apply for a credit card, and make sure you continue keeping your balances low and your payments on time.
When buying a home, having a boring credit report is the best scenario. If lenders see that you’re applying for other loans, or you’re charging up your credit cards, it could risk your loan approval.
10. Work With a Real Estate Agent
Having an experienced team to work with will make the entire process easier and less stressful. Good real estate agents understand the local market and can provide guidance on what to expect throughout the process. Although the seller may not agree to pay for your buyer’s agent, it’s still a good idea not to go it alone.
“While agents help throughout the entire buying process, so much of their value is provided in the weeks leading up to the actual search,” said Nick Boniakowski, Head of Agent Partnership at Opendoor. “For example, agents can help clients draw up their wishlist of non-negotiables in a home so they prioritize must-haves over nice-to-haves. An agent can be your confidant, advisor, consultant, and coordinator.”
11. Narrow Down Your List of Neighborhoods and Home Types
As you begin your home search, you might have some neighborhoods that you prefer. Work with your agent to understand how property values have changed in recent years. You might find that prices have appreciated more in one area than others. Plus, you’ll want to pay attention to the schools if you have kids.
While many people choose to purchase a single-family home, first-time homebuyers should consider condos and townhomes, which could be more affordable.
Another decision you’ll want to make is whether you want to purchase a move-in-ready home or would prefer to buy a fixer-upper. While a move-in-ready home will require little to no work, a fixer-upper will give you the chance to boost the value of your home quickly by making any needed upgrades.
12. Leverage Grants and First-Time Homebuyer Programs
Programs are available to make homeownership more accessible to first-time homebuyers. Many states, counties, and cities provide down payment and closing costs assistance.
Here are seven places to find down payment assistance.
13. Submit an Offer With Confidence
When you find a home you want to purchase, you must be 100% sure you want to move forward to the end. The reason is that when you put an offer in on a home, you’ll need to provide the sellers with earnest money, which goes toward your down payment. This is usually anywhere from 1% to 3% of the sale price and shows the sellers you’re serious about purchasing their home. You'll lose this money if you change your mind and want to back out of the deal without a provision in the contract to do so.
14. Negotiate With The Sellers
Buyers tend to have more negotiating power when the housing market is slow. Don’t be afraid to negotiate the sales price on the home as long as it still aligns with market value. If the house needs work, you could ask the sellers to cover some of the costs. For example, maybe the windows are getting old and need to be replaced. This is an expensive job, so you could ask the sellers to cover $5,000 of the work.
Work with your real estate agent to understand your local market and help you determine what a reasonable negotiation would look like.
15. Don’t Skip The Home Inspection
Once you’ve found a home you want to purchase, one of the most important things you can do is have an inspection completed, even on new construction. Your real estate agent will be able to recommend a home inspector they’ve used in the past.
Home inspectors will walk through the home and ensure there are no hidden issues you should be aware of. Roof, structural issues, electrical, and HVAC can all be expensive to repair or replace. Having your inspector ensure these are all in good working condition can help alleviate any worries after closing.
However, you should be aware that some things might not be included in standard home inspections. One of these items is radon, which can be more common and dangerous depending on where you live. If your inspector doesn’t test for radon, make sure you discuss this with your agent so you can have someone else come in to complete a radon test.
Related: Home Inspection Checklist: What to Look For
16. Make Sure Your Homeowners Insurance is Enough
Lenders will require you to have homeowners insurance in place before you close on your loan. This insurance will protect you if your home or belongings are damaged or destroyed due to a covered cause. Make sure your homeowners insurance policy is large enough to cover the cost of rebuilding your house and replacing your belongings if you suffer a total loss.
Final Thoughts
Buying your first home is a major milestone, and while it can feel overwhelming at times, the right preparation can make all the difference. From understanding down payment tiers to getting preapproved and negotiating with sellers, each step offers a chance to make smarter choices that support your long-term goals.
One of the most important moves you can make? Shop around for lenders. Comparing rates, fees, and programs can uncover meaningful savings — and help you find a mortgage that truly fits your financial picture. With the right lender on your side, you’ll be well on your way to turning homeownership from a goal into a reality.
