Checklist for first-time home buyers

Buying your first home involves more preparation than most people expect — from checking your credit and saving for a down payment to assembling a team of professionals and navigating loan options. The process typically takes six to 12 months from start to finish, but breaking it into phases makes each step manageable.

This checklist walks you through everything from setting your budget and gathering documents to making competitive offers and preparing for closing day.

Determine your budget and set savings goals

Before you fall in love with a house, figure out what you can actually afford. Lenders use something called the 28/36 rule — your monthly housing costs shouldn't go over 28% of your gross monthly income, and all your debt payments combined shouldn't exceed 36%. If you make $5,000 a month before taxes, that means keeping housing under $1,400 and total debt under $1,800.

Calculate debt-to-income ratio

Your debt-to-income ratio (DTI) tells lenders how much of your monthly income already goes toward debt. To find it, add up all your monthly debt payments — credit cards, car loans, student loans — then divide by your gross monthly income. Multiply by 100 to get a percentage.

Lenders look at two numbers here. The front-end ratio covers just housing costs like your mortgage, property taxes, insurance, and HOA fees. The back-end ratio includes everything — all your debts plus housing. Most conventional loans want to see a back-end DTI below 43%, though some loan programs allow higher.

Estimate down payment and reserves

You've probably heard you need 20% down to buy a home, but that's not always true. Conventional loans can go as low as 3% down, FHA loans ask for 3.5%, and VA or USDA loans sometimes require nothing at all.

Putting down more has real advantages. You'll avoid private mortgage insurance (PMI), get better interest rates, and lower your monthly payment. Beyond the down payment, keep three to six months of expenses in reserve for emergencies once you move in.

Plan for closing fees, taxes, and insurance

Closing costs typically run 2% to 5% of the home's price, averaging $4,661 for single-family homes. This covers loan origination fees, appraisal charges, title insurance, and recording fees — all the paperwork and services that make the sale official.

Gather loan documents early

Getting your paperwork organized before you start looking at homes speeds everything up when you're ready to make an offer, especially when you're working toward mortgage pre-approval. Lenders verify every part of your financial life, and having documents ready shows you're serious.

Income verification

Lenders want proof you earn what you say you earn. Collect your most recent pay stubs from the last 30 days, W-2 forms from the past two years, and tax returns for the same period. If you're self-employed, you'll also need profit and loss statements, business tax returns, and possibly a letter from your CPA. Lenders typically average your income over two years when you work for yourself, so recent ups and downs can affect how much they'll lend you.

Asset statements

Bank statements from the past two to three months prove you have money for your down payment and closing costs. Include checking, savings, retirement accounts, and any investment accounts.

If family members are giving you money for your down payment, you'll need a gift letter stating the funds don't require repayment. Different loan programs have specific rules about gift money, so ask your lender early about what's allowed.

Credit history explanations

Late payments, collections, or bankruptcies on your credit report don't automatically disqualify you. Lenders want context, and a reasonable explanation in writing can sometimes help your case.

Pull your credit report from all three bureaus — Equifax, Experian, and TransUnion — and dispute any errors right away. Even small mistakes can change your interest rate or whether you get approved at all.

Compare first-time buyer loan options

Not all mortgages work the same way, and first-time buyers have access to several programs designed to make homeownership easier. Knowing your options helps you pick the loan that fits your situation.

FHA low-down-payment loans

Federal Housing Administration (FHA) loans allow down payments as low as 3.5% and accept credit scores as low as 580. The government backs FHA loans, which makes lenders more willing to work with buyers who have past credit issues.

The tradeoff is mortgage insurance. You'll pay an upfront premium of 1.75% of the loan amount plus an annual premium that continues for the life of the loan if you put down less than 10%. FHA loans also have borrowing limits that vary by county.

Conventional three percent-down programs

Fannie Mae and Freddie Mac both offer conventional loans with just 3% down for qualified first-time buyers. You'll typically need a credit score of 620 or higher, but the overall costs can be lower than FHA loans.

With a conventional loan, you can cancel PMI once you reach 20% equity. FHA mortgage insurance often lasts the entire loan term, so this difference can save you thousands over time.

VA and USDA zero-down routes

Veterans, active-duty service members, and eligible surviving spouses can get VA loans with no down payment and no PMI. VA loans also tend to have lower interest rates than conventional mortgages.

USDA loans serve buyers in eligible rural and suburban areas, which includes more places than you might expect. Like VA loans, USDA loans require no down payment, though they charge an upfront guarantee fee and annual fee.

State and local grants

Many states and cities offer down payment assistance programs specifically for first-time buyers. Programs might provide grants you don't repay, low-interest loans, or tax credits.

Eligibility requirements vary but often include income limits, homebuyer education courses, and restrictions on which properties qualify. Research programs in your area early because some have limited funding that runs out quickly each year.

Build your home-buying team

The right professionals make the difference between a smooth purchase and a stressful one. Each team member brings specialized knowledge that protects your interests.

Real-estate agent

A buyer's agent represents you throughout the home search and purchase. Look for someone with deep knowledge of your target neighborhoods, strong negotiation skills, and experience working with first-time buyers. Interview at least three agents before choosing one, and ask about their recent transactions, communication style, and whether they work full-time in real estate.

Mortgage lender or broker

You can work directly with a bank or credit union, or use a mortgage broker who shops rates from multiple lenders. Direct lenders may offer relationship discounts, while brokers can compare options more easily.

Get Loan Estimates from at least three lenders. The standardized forms let you compare interest rates, closing costs, and loan terms side-by-side. Total closing costs and lender fees matter just as much as the interest rate.

Home inspector and appraiser

Your lender will order an appraisal to confirm the home's value supports the loan amount, but appraisals don't tell you about the property's condition. A home inspector examines the property's systems and structure, identifying potential problems before you commit to buying. You can't always choose your appraiser because lenders assign them, but you can and should select your own inspector.

Closing attorney or escrow officer

Some states require an attorney to handle your closing, while others use escrow companies. These professionals make sure all documents are properly executed, funds get distributed correctly, and the title transfers cleanly. Your lender or agent can typically recommend qualified attorneys or escrow officers.

Start your home search online and in person

Digital tools let you browse thousands of listings, but walking through a property tells you things photos can't. Balancing online research with in-person visits helps you make informed decisions efficiently.

Define must-have versus nice-to-have features

Start by listing your non-negotiables — the features you absolutely need. This might include the number of bedrooms, proximity to work, or a specific school district. Then create a separate list of nice-to-have features you'd love but can live without.

This exercise keeps you focused when touring properties and prevents you from dismissing good options over minor preferences. You might think you need a two-car garage until you find the perfect house with just one.

Tour homes virtually and schedule showings

Virtual tours and video walkthroughs let you eliminate properties that don't fit before spending time on in-person visits. Pay attention to layout, natural light, and how spaces connect — details that often matter more than finishes you can change later.

When you're ready to see homes in person, schedule several showings in one trip to compare properties while they're fresh in your mind. Take photos and notes at each property because after seeing five or six homes, they start to blur together.

Track market data and price trends

Recent sales in your target neighborhoods help you recognize whether a listing is priced fairly. Look at comparable homes — similar size, age, and condition — that sold in the past three to six months.

Pay attention to how long properties stay on the market in your area. In a hot market, homes might sell in days. Slower markets give you more time to decide. This context shapes your offer strategy.

Write a competitive offer in any market

When you find the right home, crafting a strong offer requires balancing your budget with market realities. Your agent guides this process, but knowing the components helps you make strategic decisions.

Analyze recent sales

Your agent will prepare a comparative market analysis showing what similar homes have sold for recently. This data helps you determine a fair offer price that's likely to get accepted. In a competitive market, you might offer at or above asking price. In a slower market, you may have room to negotiate below the list price.

Decide on contingencies

Contingencies are conditions that have to be met for the sale to go through. Common contingencies include home inspection, appraisal, and financing — each one protects you from specific risks.

An inspection contingency lets you renegotiate or walk away if major problems surface. An appraisal contingency protects you if the home appraises below your offer price. A financing contingency allows you to back out if your loan doesn't get approved.

Consider earnest money and timing

Earnest money — typically 1% to 3% of the purchase price — shows sellers you're serious. This deposit goes toward your down payment at closing, but you could lose it if you back out without a valid contingency.

Your proposed closing date matters too. If sellers need to move quickly, offering a shorter timeline can make your offer more attractive than a higher price from someone who needs 60 days to close.

Complete the inspection and appraisal checklist

Once your offer is accepted, the due diligence period begins. These few weeks determine whether the home's condition and value align with your expectations and the purchase price.

Roof, foundation, and structure

These big-ticket items can cost tens of thousands to repair or replace. Your inspector will assess the roof's age and condition, look for foundation cracks or settling, and examine the home's structural integrity — with 86% of inspections finding issues that need fixing. If the roof needs replacement soon or foundation issues require repair, you can ask the seller to address problems, reduce the price, or provide a credit at closing.

Major systems and appliances

HVAC systems, water heaters, electrical panels, and plumbing all have finite lifespans. Your inspector evaluates whether systems function properly and estimates their remaining useful life. Even if systems work now, knowing a 20-year-old furnace might need replacement soon helps you budget for future expenses.

Neighborhood factors and HOA rules

Drive through the neighborhood at different times of day to assess traffic, noise, and activity levels. Talk to neighbors about their experiences living in the area.

If the property has a homeowners association, review the HOA rules, budget, and meeting minutes. High HOA fees or upcoming special assessments can significantly impact your costs. Some HOAs have strict rules about parking, pets, or exterior modifications that might not fit your lifestyle.

Review closing costs and final walk-through

As closing day approaches, you'll receive detailed information about your loan terms and closing expenses. This is your last chance to verify everything is in order before you take ownership.

Lender fees and prepaid items

Your Closing Disclosure arrives at least three days before closing and breaks down every cost. Lender fees include loan origination charges, discount points if you're buying down your rate, and underwriting fees.

Prepaid items cover expenses you'll pay upfront — property taxes, homeowners insurance, and prepaid interest from closing day until your first mortgage payment. These costs can add several thousand dollars to your closing expenses.

Title, escrow, and transfer taxes

Title insurance protects you and your lender if ownership disputes arise after closing. You'll typically pay for both an owner's policy and a lender's policy. Escrow fees cover the neutral third party managing the transaction, and transfer taxes charged by state or local governments vary widely by location.

Walk-through punch list

Schedule your final walk-through 24 to 48 hours before closing. This isn't another inspection — it's a chance to verify the home's condition hasn't changed and agreed-upon repairs were completed. Bring your inspection report and purchase agreement, and check that appliances included in the sale are still present and working.

Post-closing new homeowner checklist

After you get the keys, several immediate tasks protect your investment and help you settle in smoothly. Tackling items in your first few weeks prevents problems later.

File homestead exemption

Many states offer property tax reductions for primary residences through homestead exemptions. Filing deadlines vary by location, but you typically have several months after purchase to apply. This simple paperwork can save you hundreds or thousands in annual property taxes.

Transfer utilities and services

Contact utility companies to transfer electric, gas, water, and sewer service into your name before closing day. Set up internet, cable, and phone service, and update your address with the post office, banks, credit cards, and subscription services.

Schedule maintenance and warranty checks

Create a home maintenance calendar covering monthly tasks like HVAC filter changes, seasonal jobs like gutter cleaning, and annual services like HVAC tune-ups. Regular maintenance prevents small problems from becoming expensive repairs.

If your home came with warranties on appliances or systems, register them and note expiration dates. Some sellers provide home warranties that cover repairs for the first year.

Move forward with confidence and flexibility

Buying your first home represents a major milestone. The journey from deciding to purchase through closing day teaches you valuable lessons about real estate, financing, and what matters most in a home.

Your first home doesn't have to be your forever home. Many buyers move within five to seven years as their needs change, and the equity you build opens doors to future opportunities. When you're ready for your next move, get a cash offer from Opendoor and experience a simpler way to sell — one that lets you choose your closing date and skip the hassle of traditional listings.

FAQs about buying your first home

When can I refinance to remove mortgage insurance?

For conventional loans, you can request PMI removal once you reach 20% equity through payments or appreciation. Most lenders require an appraisal to confirm your home's current value, and you'll need a good payment history with no recent late payments. FHA loans work differently — if you put down less than 10%, mortgage insurance lasts for the life of the loan, and your only option to eliminate it is refinancing into a conventional loan once you have sufficient equity.

How do I choose the right homeowners insurance policy?

Start by getting quotes from at least three insurers to compare coverage and premiums. Your lender requires enough coverage to rebuild your home, but you'll also want protection for personal belongings and liability. Consider your deductible carefully — higher deductibles lower your premium but mean you'll pay more out-of-pocket if you file a claim.

What if I need to sell my current home before buying the next one?

If you already own a home, coordinating the sale with your purchase can feel like solving a puzzle. Some buyers use a home sale contingency, making their purchase offer conditional on selling their current home, though this makes your offer less competitive. Bridge loans provide temporary financing to cover your down payment before your current home sells, but they come with higher interest rates and fees. Opendoor offers a simpler solution — request a cash offer, choose your closing date, and eliminate the stress of timing two transactions perfectly.

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By Shannon Lattin

Sources and reference links used in the infographic:

• Metropolitan Median Area Prices and Affordability — National Association of Realtors

• 2017 Home Buyer and Seller Generational Trends — National Association of Realtors

• 5 Things You Need to Be Pre-Approved For a Mortgage — Investopedia

• How to determine how much home you can afford — Opendoor

• House hunting tips that help you to make the right choice — Opendoor

• Pre-Qualified Vs. Pre-Approved – What’s The Difference? — Investopedia

• Contingencies in Real Estate Contracts — The Balance

• What Are a Property Disclosure Statements? — Realtor.com

• Real Estate Comps – Comparable Sales for My Area — Home Buying Institute

• Frequently Asked Questions on Home inspections — Homeinspector.org

• Understanding Appraisal Process When Buying or Refinancing a Home — The Balance

• Home Buyers: What Documents to Expect at Your Close of Escrow — Nolo