15 first-time home buyer tips

Buying your first home can be an exciting adventure, but like riding a rollercoaster, that adventure can quickly go from thrilling to overwhelming. From getting a mortgage to navigating the real estate market to finally closing on your new home, the process involves many decisions that can feel downright scary.

But with our first-time home buyer tips, you can approach each step with confidence and avoid common pitfalls in the process.

1. Familiarize yourself with loan basics

Understanding the fundamentals helps first-time buyers make more educated decisions along the way. We recommend that a first-time buyer become familiar with typical loan terms, such as a 15-year or a 30-year mortgage. A basic overview of these terms is that a 15-year mortgage will have less interest costs, but the monthly payment will be higher.

The Rocket Mortgage YOURgage program gives you more flexibility to choose a custom term from 8 – 29 years.¹

We suggest that a first-time buyer learn about current interest rates. Let’s assume a $350,000 30-year-fixed mortgage with a 7% interest rate. The monthly payment would be $2,328.56. You pay $488,281.14 in interest over the term of the loan.² If that interest rate is 6%, the payment would be $2,098.43 and you save $82,847.48 in interest.

For the sake of a simplified example, we picked a scenario with a 1% difference in the interest rate. But because mortgages run into the hundreds of thousands of dollars, even a small change in either direction has the potential to make a big difference. You can check your own numbers using our mortgage calculator.

First-time buyers may also want to consider taking a home buying education course to learn more before they start home shopping.

Our RentRewards program matches 10% on up to a year worth of rent payments towards the down payment of a renter looking to buy.³

2. List your needs, nonnegotiables, and nice-to-haves

It helps the home buying process if you have thought about what you want in a home, and you can start by making a list of things called “needs, nonnegotiables, and nice-to-haves.” These are qualities of a home that you seek in order of importance.

• Need: If you’re planning on having children, a home with extra bedrooms may be a need – something that’s utterly essential.
• Nonnegotiable: If you have dogs, for instance, a big yard or a location near plenty of green spaces may be nonnegotiable. This is a value that’s of critical importance to you, but it’s not absolutely necessary.
• Nice-to-have: Qualities like a well-appointed kitchen or proximity to nice restaurants might be nice to have, but they’re not crucial for a home purchase.

Once you have a list of these features, you’ll be less stressed when you compare properties, because you’ll have a foundation of qualities to work from.

3. Get a handle on your credit

When you apply for mortgage preapproval, lenders will pull your credit report and keep an eye on it to see if you have new debt. If they find that you’ve taken out another loan or line of credit, your credit balance has increased, or you’ve started to make late payments, it could risk your final approval.

You should aim for a credit score of at least 620 for a conventional loan or at least 580 for an FHA loan. As of November 2025, Fannie Mae and Freddie Mac no longer automatically disqualify customers with a score below 620 for a conventional loan, but having a higher score can help with getting approved.

While you can technically qualify for an FHA loan with a credit score of as low as 500, it requires a 10% down payment. Additionally, these loans are considered subprime and come with higher interest rates. Rocket Mortgage requires a 580 credit score because we would rather work with you to bring your score up than put you in a disadvantageous loan.⁴

4. Save for a down payment

One of the biggest tips for first-time home buyers is to save as much as you can for a down payment as it leads to lower loan amounts and interest rates because lenders aren’t taking as big a risk.

If you put down less than 20% for a down payment on conventional loans, you have to pay private mortgage insurance (PMI). You can, however, usually cancel it once you've built 20% equity through payments and home appreciation.

5. Explore first-time home buyer programs and their benefits

As a first-time home buyer, you may be eligible for one of the programs and benefits that can make purchasing a home achievable. Here are some key options to consider:

• State and local assistance programs: Many states and local governments offer down payment assistance, closing cost aid, and other benefits to help first-time buyers. These programs can vary widely depending on your location, so research what’s available in your area.
• Low-down payment options: Both Fannie Mae and Freddie Mac offer 3% down payment options for first-time home buyers.⁵
• Good Neighbor Next Door program: Offered through the U.S. Department of Housing and Urban Development (HUD), this program offers significant discounts on homes in revitalization areas for law enforcement officers, teachers, firefighters, and emergency medical technicians.
• First-time home buyer tax credits: Some federal and state programs offer tax credits for first-time buyers, which can reduce your overall tax liability. For example, the Mortgage Credit Certificate (MCC) program allows first-time buyers to claim a credit on a portion of the mortgage interest paid each year.

As with much of the home buying process, you will need extensive paperwork to complete these programs. So research what documents you’ll need and have them ready when you begin. The more prepared you are, the less arduous the process will be.

6. Learn the difference between a preapproval and prequalification

Before you get too far into the process, it’s a good idea to consider a mortgage preapproval – and knowing how prequalification differs from preapproval is important:

• Prequalification letter: A prequalification is an estimate of the amount of home loan you can get. It’s based on an informal evaluation of your income and other information.
• Preapproval letter: A mortgage preapproval is an official document from a lender that tells you exactly how much loan money you can get based on your financial information, such as W-2s, bank statements, and your credit score.

A preapproval shows you’re a qualified buyer who can close on the purchase, giving you a competitive edge in bidding situations. If you’re just getting started and not fully ready to commit, a prequalification might be all you need. But being preapproved helps you avoid last-minute surprises.

Because seasoned professionals mess up the terms, Rocket Mortgage calls our preapprovals Verified Approvals.⁶

7. Decide which type of mortgage you need

When you are a buyer, there are multiple types of mortgage loans you can choose from. The type of loan you choose will influence your down payment amount, the type of home you can buy, and more.

Here are the most common mortgage loan types:

• Conventional loans: A conventional loan is the most common type of home loan. It is essentially a loan between you and a private entity, like a bank or another lending institution. In some cases, you can purchase a home with as little as 3% down.
• FHA loans: FHA loans are backed by the Federal Housing Administration, an agency under the U.S. Department of Housing and Urban Development.⁷ FHA loans are insured by that institution, which means that the owners of your mortgage are protected against loss if you default on your loan. An FHA loan can allow you to buy a home with less strict financial and credit score requirements than a conventional loan.
• Department of Veterans Affairs loans: VA loans are exclusively for veterans, active-duty members of the armed forces and National Guard, and qualified spouses.⁸ You can buy a home with 0% down if you qualify for a VA loan.
• U.S. Department of Agriculture loans: USDA loans are for people who want to buy a home in a qualified rural area. You can get a USDA loan with 0% down, subject to household income restrictions. (Note: Rocket Mortgage doesn’t offer USDA loans at this time.)

8. Compare mortgage lenders

Choosing the right mortgage lender can save you thousands of dollars over the life of your loan, so it's worth shopping around rather than going with the first lender you find.

When comparing lenders, request Loan Estimates from at least three companies and look at the interest rate and the annual percentage rate (APR), which includes additional fees. Getting a Loan Estimate requires sharing some financial information, but it’s critical for comparing offers.

You can also expect to find key differences between lenders in addition to interest rate and APR, such as communication styles, loan options, and origination fees.

Consider lenders like Rocket Mortgage that offer streamlined digital experiences, allowing you to manage your application online and get a smoother approval experience.

9. Find the right real estate agent

Now that you have your list of what you want out of a home, you can start looking to find the right agent to move you forward. Steps to find the right agent for you include asking friends for referrals, doing research online, and interviewing multiple agents.

You can interview potential agents by asking what services they offer, what experience they have in the local market, how long homes are typically on the market in this neighborhood, what their fee is, and if they have reviews from previous clients.

Once you’ve found the right agent, present your list of preferred home qualities and they can tell you what’s available. Your agent will likely ask you pragmatic questions about home features, such as what type of home you want, how many bedrooms and bathrooms you need, how many cars you have, and what amenities, like nearby parks and grocery stores, are important to you.

Interviewing multiple real estate agents and picking the right one may be extremely important. Not only do they find homes that meet your needs and attend showings, but they also negotiate on your behalf and work out all the contract terms.

It may be cheaper, but we would caution against using the seller’s agent. You want your own representation. Make sure you’re clear on how and when your agent will be paid. You can negotiate, but having good representation is value in itself.

10. Consider future value when shopping for a home

First-time buyers should pay attention to the likelihood that their home’s value will increase over time. When your property value increases, you build home equity. Home equity is the percentage of your home that you own outright and its associated value.

Make sure your real estate agent checks comps (comparable homes) and you aren’t paying more than you should for the neighborhood.

You might also consider buying a fixer-upper at a low cost in a good neighborhood. However, note the importance of a robust inspection so you aren’t buying a money pit that will lose value.

11. Make a responsible offer

You don’t want to pay more than you can afford for your dream home. If you borrow too much, you risk being "house poor," which occurs when a higher-than-recommended percentage of your income is going to housing costs.

Note that you will likely need to put down a good faith deposit when you make an offer. Buyers should make sure they have it written in their offer contract that they get these funds back if the deal falls through. We recommend the Rocket Mortgage home affordability calculator for first-time buyers to see how much they can realistically afford.

12. Prepare for closing costs

Most people probably think first about the down payment when it comes to a mortgage, but closing costs shouldn’t be overlooked.

These are up-front expenses that go to your lender in exchange for arranging certain loan services, and you’ll see your exact closing costs on a document called a Closing Disclosure. Generally, you can expect to pay 3% – 6% of your total loan amount in closing costs.

Common closing costs include:

• Attorney fees
• Pest inspection fees
• Appraisal fees
• Escrow fees
• Homeowners insurance
• Title insurance expenses
• Discount points

As a first-time buyer, you may qualify for government-backed grants or loans that help pay closing costs. You can also ask the seller to help cover closing costs. Seller concessions could be a flat percentage of the total closing costs, or the seller could cover specific fees, like appraisal or attorney fees. Sellers are less likely to agree to these in highly competitive markets.

13. Hire an inspector and appraiser

A home inspection and appraisal are two critical steps that protect both you and your lender before closing on a mortgage.

• Appraisal: This determines the home’s market value based on its features, local market trends, and recent sales of similar properties, ensuring the lender isn’t loaning more money than the house is worth.
• Home inspection: This process involves a qualified professional who closely examines the property’s condition, from the foundation to the roof, identifying potential problems like electrical issues, plumbing leaks, or structural damage.

Mortgage lenders will order the appraisal themselves from an impartial third party. Home inspection is optional, but recommended so that you have an idea of any issues prior to your purchase.

When you begin this process, hire licensed professionals with a strong local reputation and ask for references from your real estate agent.

Include an inspection contingency in your purchase offer so you can negotiate repairs with the seller or walk away without losing your deposit if major issues are discovered. Remember that while an appraisal protects the bank's investment, the inspection protects yours.

14. Plan for home maintenance

Even the most thorough inspection won’t catch every potential issue, so create a budget for both routine maintenance and unexpected home repairs. It’s a good idea to create a separate savings account for home expenses and start funding it before you even close, since costly home issues don’t tend to announce their appearance.

15. Save physical copies of your paperwork

Once you get moving on a house purchase, the paperwork is absolutely essential. We recommend keeping a physical copy of your mortgage statements, Closing Disclosure, deed, and other related documents in a safe place.

Consider purchasing a fireproof-waterproof safe to secure these documents inside. Let anyone else named on your loan know where the documents are and how to access them in the event of an emergency. If you get a safe, let them know how to get into it.

The bottom line: Preparation can help first-time buyers

Buying your first home can be an incredibly rewarding milestone, made easier by taking the time to prepare. Knowing your loan options and finding a real estate professional who aligns with your goals will set you up for long-term success. Careful planning and a clear understanding of your budget can help you navigate this exciting process with confidence.

Ready to make a move? Apply for a mortgage online with Rocket Mortgage today.

¹ Not available on FHA, VA, or adjustable-rate mortgages. Available for fixed-rate conventional products only.

² Any figures, interest rates, loan examples, and market data referenced in this article are hypothetical or aggregated for educational purposes only. They are not intended to reflect current pricing, available terms, or personalized loan options for any consumer. This content does not constitute an advertisement of credit terms, a solicitation or offer to extend credit, or a rate quote under federal or state lending laws. Actual mortgage rates and terms are determined by individual financial qualifications, property characteristics, market conditions, and other factors, and are subject to change without notice. If you are seeking current, real-time mortgage rate information please refer to the official live rate information and product details published at RocketMortgage.com/mortgage-rates, where current pricing and various loan terms are made available.

³ Clients who are current renters will receive a lender credit toward closing equivalent to 10% of the total amount of their 12-month rental payment, up to $5,000. Current renters are defined as individuals who are currently under a lease agreement. Offer only valid on primary residences. Offer valid only through retail channels and on loans that are locked on or after February 11, 2025. Offer not available for Non-Occupant Co-Clients. Offer not available for partnerships. Offer not valid on Jumbo loans, Schwab products or previously locked or closed loans. Offer is nontransferable. Offer is not valid with any other discounts or promotions. Additional restrictions/conditions apply. Rocket Mortgage reserves the right to modify/cancel this offer at any time. This is not a commitment to lend.

⁴ To qualify for this offer, you must meet all standard FHA eligibility requirements. In addition, your total mortgage payment, including taxes and insurance, cannot exceed 38% of your income, your debt-to-income (DTI) ratio cannot exceed 45%, and you must have 12 months of verifiable housing history immediately prior to your application, no late payments 30 days or greater in the last 12-months, and no derogatory marks on your credit report. Not available on jumbo loans. Asset statements may be needed, no more than 1 day of non-sufficient fund fees are allowed in the most recent 2 months prior to application. Additional restrictions/conditions may apply.

⁵ The 3% down payment option is only available on certain conventional loan products and is not available in all states. Additional terms and conditions may apply.

⁶ Participation in the Verified Approval program is based on an underwriter’s comprehensive analysis of your credit, income, employment status, assets and debt. If new information materially changes the underwriting decision resulting in a denial of your credit request, if the loan fails to close for a reason outside of Rocket Mortgage’s control, including, but not limited to satisfactory insurance, appraisal and title report/search, or if you no longer want to proceed with the loan, your participation in the program will be discontinued. If your eligibility in the program does not change and your mortgage loan does not close due to a Rocket Mortgage error, you will receive the $1,000. This offer does not apply to new purchase loans submitted to Rocket Mortgage through a mortgage broker. Rocket Mortgage reserves the right to cancel this offer at any time. Acceptance of this offer constitutes the acceptance of these terms and conditions, which are subject to change at the sole discretion of Rocket Mortgage. Additional conditions or exclusions may apply.

⁷ Rocket Mortgage is not acting on behalf of FHA or HUD.

⁸ Rocket Mortgage is a VA-approved lender, not endorsed or sponsored by the Dept. of Veterans Affairs or any government agency.

Rocket Mortgage and YOURgage are trademarks or service marks of Rocket Mortgage LLC or its affiliates.