First-Time Homebuyer Guide

First-time homebuyer guide

Educational information for prospective homebuyers — not financial or lending advice

Income

Lenders evaluate how much you earn, employment stability, and likelihood of continued income.

Credit score

760+
Excellent
700–759
Very strong
660–699
Good
620–659
Often acceptable
Below 620
Fewer options

Debt-to-income ratio (DTI)

Your DTI is simply the percentage of your monthly paycheck that goes toward paying debts. The lower, the better — it shows a lender you have room in your budget for a mortgage payment.

(monthly debt payments ÷ gross monthly income) × 100
Example: $500 debts ÷ $4,000 income = 12.5% DTI

Try it with your own numbers

$
Don't include groceries, utilities, or everyday expenses — just loan/debt payments.
$
Paid annually? Divide your salary by 12.
Under 36%
Generally considered excellent
Under 43%
Often acceptable

Estimated home price ranges

A common guideline: keep total housing costs around 28–31% of gross monthly income.

$50k/yr
$150k–$200k
$75k/yr
$225k–$325k
$100k/yr
$325k–$450k

Actual affordability varies based on interest rates, taxes, insurance, debts, and down payment.

Common loan programs

Conventional
Often 3%–20% down payment
FHA loans
Often 3.5% down; flexible credit requirements
VA loans
Available to eligible veterans and military families
USDA loans
Often available in rural areas; may require no down payment

Hidden costs buyers often forget

Property taxes
Homeowners insurance
Utilities
Repairs & maintenance
Appliances
Lawn care
Closing costs
Moving expenses

A common rule of thumb: budget 1%–2% of a home's value annually for maintenance.

Five things to do before applying

  • 1
    Check your credit report.
  • 2
    Pay down credit card balances.
  • 3
    Avoid taking on new debt.
  • 4
    Save beyond just the down payment.
  • 5
    Obtain a mortgage pre-approval.

Questions every buyer should ask a lender

  • What loan programs do I qualify for?
  • What will my estimated monthly payment be?
  • How much cash will I need at closing?
  • Are there down-payment assistance programs available?
  • Would improving my credit score help me qualify for a better rate?
  • Is the rate fixed or adjustable?

Homeownership can be a pathway to stability, but preparation matters. Improving credit, reducing debt, building savings, and understanding available programs can help position buyers for success.

Estimated monthly payment

Enter your home details below to see a breakdown of what your monthly payment might look like.

$
$
%
$
$

Estimates only. Actual payments vary based on lender, credit score, location, and other factors.