Tips for First-Time Home Buyers

Learn strategies for saving a down payment, applying for a mortgage, shopping for a house and more.

Preparing to buy tips

1. Start saving early

Here are the main costs to consider when saving for a home:

• Down payment: Your down payment requirement will depend on the type of mortgage you choose and the lender. Some conventional loans aimed at first-time home buyers with excellent credit require as little as 3% down. But even a small down payment can be challenging to save. For example, a 3% down payment on a $300,000 home is $9,000. Use a down payment calculator to decide on a goal, and then set up automatic transfers from checking to savings to get started.

• Closing costs: These are the fees and expenses you pay to finalize your mortgage, and they typically range from 2% to 5% of the loan amount. If you were making a 3% down payment on that $300,000 home, your closing costs could be between $5,820 and $14,550. That’s additional money you’d have to pay, on top of your down payment. In a buyer's market, you can often ask the seller to pay a portion of your closing costs, and you can save on some expenses, such as home inspections, by shopping around.

• Move-in expenses: You'll need some cash after the home purchase. Set some money aside for immediate home repairs, upgrades and furnishings.

» MORE: How to save money for a house

2. Decide how much home you can afford

Figure out how much you can safely spend on a house before starting to shop. NerdWallet's home affordability calculator can help with setting a price range based on your income, debt, down payment, credit score and where you plan to live.

» MORE: Learn about how to save for a down payment

3. Check and strengthen your credit

Your credit score will determine whether you qualify for a mortgage and affect the interest rate lenders will offer. Having a higher score will generally get you a lower interest rate, so take these steps to strengthen your credit score to buy a house:

• Get free copies of your credit reports from each of the three credit bureaus — Experian, Equifax and TransUnion — and dispute any errors that could hurt your score.

• Pay all your bills on time, and keep credit card balances as low as possible.

• Keep current credit cards open. Closing a card will increase the portion of available credit you use, which can lower your score.

• Track your credit score. NerdWallet offers a free credit score that updates weekly.