15 Things You Must Do Before Buying Your First Home

Buying a home for the first time can be exciting but also stressful. There are lots of different aspects of homeownership you'll need to consider -- and you'll need to make sure you're financially ready. Here are some key items worth checking off your list before you become a homeowner.

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Searching for a home can be time-consuming, so it's good to identify the neighborhood you want to move to ahead of time. To that end, research things like schools and property taxes before diving in. And, of course, look at home prices to make sure they're doable for you.

ALSO READ: How to Calculate Property Taxes

As a general rule, your housing costs should not exceed 30% of your take-home pay. Before you start house-hunting, run some numbers and set a budget so that you know what price range you're dealing with.

There's no need to search for a home alone when you can hire a real estate agent at no cost. But talk to friends and neighbors to get recommendations -- you don't want to hire someone who's too pushy.

ALSO READ: Is Your Real Estate Agent Leading You Astray? 3 Red Flags to Look Out For

There may be certain features you’re after in a home. Compile a list in order of priority, as that will help you narrow down your search.

Some first-time buyers want their initial home to be their forever home. But if you're willing to look at a starter home (a smaller property that may need some updates), you could end up spending a lot less.

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Although you can often get away with putting down less than 20% on a conventional mortgage, doing so means getting hit with private mortgage insurance (PMI), a costly premium that makes homeownership more expensive. Aim to save up a decent-sized down payment to avoid PMI and keep your mortgage payments manageable.

ALSO READ: What Is Private Mortgage Insurance?

You may not have the best credit or a lot of money to put down on a home. But there are certain loan types that may be your ticket to buying a home under these circumstances. So, look at borrowing options like Federal Housing Administration (FHA) loans or, if you're a military member, Veterans Affairs (VA) loans.

Red flags on your credit report, like delinquent debts, could stop you from qualifying for a mortgage. Review your credit report before applying for a home loan and aim to address issues that could cause a lender to deny your application.

ALSO READ: 4 Things to Look for on Your Credit Report

The more credit card debt you pay off the more your credit score could climb. And that could make it easier to not only get a mortgage but also snag a favorable interest rate on one.

The less debt you have relative to your income, the easier it becomes to get a mortgage. If you have an outstanding personal loan, for example, paying it off could help you qualify to borrow for a home.

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Buying a home can come with unexpected expenses. It's important to have a healthy emergency fund before diving in so that you can tap that account as needed. Ideally, you should aim to have enough cash to cover at least three full months of bills.

ALSO READ: Should You Have an Emergency Fund for Inflation?

Moving into your new home could end up costing you more money than expected, especially if you have a lot of belongings. Get some quotes from moving companies, and make sure to factor the cost of a move into your budget.

When you sign a mortgage, you're charged fees called closing costs to finalize that loan. Closing costs commonly amount to 2% to 5% of the sum you're borrowing, so come up with a plan for paying those fees -- whether it's writing out a check up front or rolling those costs into your mortgage, which lenders commonly let you do.

ALSO READ: How Much Should You Budget for Closing Costs?

A mortgage preapproval letter isn't the same as an actual mortgage. But it's a good thing to have in your hand when you look at homes. If you decide to make an offer, a seller might take you more seriously if you can show that you've already been preapproved.

When you own a home, all the maintenance is on you. Make sure you're willing to put in the time needed to keep a home in good shape. Neglecting its upkeep could result in costlier issues down the line.

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Buying your first home is an exciting step, but there are a lot of details to work out before you jump in. Make sure to tackle all these items to set yourself up for success.

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