First-Time Home Buyer Guide: Everything You Need to Know

Q: What credit score do I need to buy a home?

Most conventional loans require 620 minimum. FHA accepts 580 for 3.5% down. The best rates require 740+. Improving your score 20-40 points before applying can save tens of thousands in interest.

Q: How much money do I need to buy a house?

Budget for down payment (3-20%), closing costs (2-5% of loan), and 3-6 months reserves. On a $350,000 home with 5% down: roughly $17,500 down plus $8,000-15,000 closing costs plus $10,000+ reserves.

Q: How long does it take to buy a house?

From starting your search to closing: 3-6 months is typical. Pre-approval takes 1-3 days. Once under contract, closing takes 30-45 days.

📅 May 15, 2026⏱ 18 min read✍️ MortgageCalPro Editorial Team🔄 Reviewed May 2026

Buying your first home is one of the most significant financial decisions you will ever make. It can also feel overwhelming — new terminology, large sums of money, multiple professionals, and decisions that affect your finances for decades. This guide walks you through every step clearly, from the moment you decide you want to buy to the day you receive your keys.

How to use this guide: Read it start to finish before you begin, or jump to the section covering where you currently are. Every section links to our free tools and deeper articles.

Step 1: Assess Your Financial Readiness

Before you look at a single listing, get an honest picture of your finances across three areas: credit, savings, and income stability.

Credit Score Ranges

760+ — Excellent. Best available rates.
720–759 — Very good. Competitive rates with most lenders.
680–719 — Good. You'll qualify but may pay slightly higher rates.
640–679 — Fair. Conventional loans possible; FHA likely better value.
580–639 — Minimum for FHA with 3.5% down.
Below 580 — Very limited options. Work on improvement first.

Pull your free credit reports at annualcreditreport.com. Up to 34% of reports contain errors. Dispute any inaccuracies at least 60–90 days before applying.

Cash You'll Need

Down payment: 3–20% of purchase price
Closing costs: 2–5% of loan amount — see our closing costs guide
Reserves: 2–6 months of mortgage payments after closing
Moving + initial repairs: $3,000–$15,000

Use our Affordability Calculator to model your real budget. Use our Mortgage Calculator to see what different loan amounts cost monthly.

Step 2: Understand Your Loan Options

Loan Type	Min. Down	Min. Credit	Mortgage Insurance	Best For
Conventional	3%	620	PMI if <20% down (removable)	Good credit, 5%+ down
FHA	3.5%	580	MIP — lifetime if <10% down	580–679 credit or limited down payment
VA	0%	~620 (lender)	None ever	Eligible veterans and service members
USDA	0%	640 (most lenders)	0.35%/yr annual fee	Rural/suburban areas with income limits

Read our complete FHA vs Conventional comparison, VA Loan guide, and USDA Loan guide for full detail on each option.

Step 3: Get Pre-Approved

Before making any offer, get a mortgage pre-approval — not just pre-qualification. Read our Pre-Approval vs Pre-Qualification guide for the critical difference. Get pre-approved by at least 2–3 lenders within the same 14-day window. See our step-by-step pre-approval guide for the complete process and documents needed.

Important: Your pre-approval amount is the maximum the lender will lend — not a recommendation. Use our Mortgage Calculator to model what different loan amounts actually cost monthly, and choose a comfortable amount rather than the maximum.

Step 4: Find Your Home and Make an Offer

Work with a buyer's agent — their commission is typically paid by the seller. A good agent knows the local market, identifies overpriced listings, and protects your interests in negotiations. Your offer should include: purchase price, contingencies (inspection, financing, appraisal), proposed closing date, and earnest money deposit (1–2% of purchase price).

Step 5: Apply for Your Mortgage

Once your offer is accepted, formally apply with your chosen lender and lock your rate. Read our guide on how mortgage rates work to understand when to lock. Keep your finances completely stable from now through closing. Read our common mortgage mistakes guide for the full list of what to avoid.

Step 6: Inspection, Appraisal, and Underwriting

Hire a licensed home inspector — never skip this step. A $400–$600 inspection can reveal issues worth tens of thousands. The lender orders an appraisal to confirm value. Respond promptly to all underwriting requests to avoid delays.

Step 7: Close on Your Home

Review your Closing Disclosure 3 days before closing. Read our complete guide to closing day for what to bring, what to sign, and what to expect. After signing, the deed transfers and you receive your keys.

After Closing: First Steps

Set up automatic mortgage payments
Understand your escrow account and why your payment may change annually
Make extra payments from day one — use our Extra Payment Calculator to see how much you'd save
Track equity — request PMI cancellation at 20%, per our PMI guide
Budget for maintenance: plan 1–2% of home value annually

What credit score do I need to buy a home?

Most conventional loans require 620 minimum. FHA accepts 580 with 3.5% down. The best rates require 740+. Improving your score even 20–40 points before applying can save tens of thousands over the loan term.

How much money do I need to buy a house?

Down payment (3–20%) + closing costs (2–5% of loan) + 3–6 months reserves. On a $350,000 home with 5% down: roughly $17,500 + $8,000–$15,000 closing costs + $10,000+ reserves = $35,000–$42,000+ total cash needed.

Should I buy now or wait for rates to drop?

Nobody can reliably predict rate movements. The right time to buy is when your finances are ready — stable income, solid credit, adequate savings, and plans to stay 5+ years. If rates drop later, you can refinance. 'Marry the home, date the rate.'

How long does it take to buy a house?

From starting your search to closing: 3–6 months is typical. Pre-approval takes 1–3 days. House hunting varies. Once under contract, closing takes 30–45 days.