First-Time Home Buyer Guide — Step-by-Step

A step-by-step guide for first-time home buyers: affordability, monthly payment, down payment, closing costs, loan types, and what lenders actually check.

How This Guide Works

  • Each step builds on the last — start with affordability so you know your price range before calculating your payment, and calculate your payment before budgeting closing costs.
  • Every step links directly to the relevant calculator so you can run your actual numbers rather than rely on generic examples.
  • The guide covers the six things first-time buyers are most often unprepared for: price range, true monthly cost, PMI, closing costs, loan type, and what lenders actually evaluate.

Frequently Asked Questions

What credit score do I need to buy a house for the first time?

The minimum credit score depends on the loan type. Conventional loans typically require 620+, with the best rates at 740+. FHA loans allow scores as low as 580 (with 3.5% down) or even 500 (with 10% down), though many FHA lenders set a 620 minimum. VA and USDA loans don't have a set minimum but lenders typically want 620+. If your score is below 620, focus on paying down revolving debt and disputing any errors on your credit reports before applying.

How much money do I need saved before buying a home?

Plan for three buckets: down payment (3%–20% of purchase price), closing costs (2%–5% of purchase price), and post-closing reserves (2–3 months of mortgage payments). On a $350,000 home with 5% down, that's roughly $17,500 down + $7,000–$17,500 in closing costs + $4,000–$6,000 in reserves — a total of $28,500–$41,000 in liquid savings before you start shopping.

Should a first-time buyer get an FHA or conventional loan?

If your credit score is below 680 or your down payment is under 5%, FHA is often easier to qualify for. If your score is 680+ and you can put down at least 5%, run the numbers on conventional — you may pay less in total mortgage insurance over time, since conventional PMI cancels at 80% LTV while FHA MIP can be permanent. Use the FHA vs. Conventional Calculator to compare your specific situation.

What is the first step to buying a house?

Get pre-approved — but before you do, use the Affordability Calculator and DTI Calculator to understand your realistic price range. Many buyers get pre-approved at the maximum the lender will offer, then find themselves house-poor. Know your comfortable number first, then get pre-approved. Once you have a pre-approval letter, you're a serious buyer in any seller's eyes.