If you’re buying a home for the first time or havenot purchased a propertyin the past three years, you are considered a first-time homebuyer. Shopping for a home as a first-time buyer is exciting. Still, at the same time, the process can be complicated and intimidating.

Buying a home typically requires securing a mortgage, making a down payment, and paying closing costs. We’ve compiled the tips belowto help serve as a financial guide for first-time buyers.

1. Obtain Mortgage Pre-Approval

Getting pre-approved for a mortgage is an essential first step when you decide you’re ready to buy a home. There are several advantages to having a pre-approval letter from a lender in your hands.

When you submit an offer with pre-approval, it shows the seller that you’ll be able to follow through on the transaction. Additionally, suppose the seller has multiple offers. In that case, your bid will hold more weight over other buyers who have not obtained pre-approval.

When you are pre-approved for a mortgage, you’ll be able to look at homes that you know you can buy without falling in love with a house that you may not be approved to purchase.

Mortgage pre-approval and mortgage pre-qualification are different.Pre-qualification is an evaluation of your creditworthiness at a glance, meaning that you’ll likely qualify for the loan. Pre-approval is when the lender verifies your information, sends it through underwriting, and officially acknowledges that you qualified for a definitive mortgage amount.

2. Understandthe DifferentTypes of Mortgage Programs

There are conventional mortgages, andthen there are several government mortgage programs, including VA loans, USDAloans, and FHA loans. Various loan programs are designed for buyers with different scenarios. Therefore, it’s always best to work with a mortgage loan officer who can help match you with the mortgage that makes the most sense for your situation.

Many buyers choose a fixed-rate mortgage, where the interest rate stays the same for the life of the loan, which is generally 30 years, but 20-year and 15-year loans are also available. The advantage of a fixed-rate mortgage is that your principal and interest payments will always be the same each month. An Adjustable-Rate Mortgage (ARM) is when your interest rate and monthly payments usually start lower than a fixed-rate mortgage but can go up or down each month, based on the U.S. Treasury Securities Index. An ARM’s advantage is that you may be able to afford a higher-priced home because your initial interest rate will be lower.

3. Determine Your Down Payment

When applying for a mortgage, lenders typically require that a borrower provides adown payment, which is a percentageof the home’s purchase price. It usually ranges between 3% and 20%, depending on the loan type. If you are unable to put down 20% with most loans, then lenders will require that you take out mortgage insurance, which is usually paid as a portion of your monthly mortgage payment.

4. Calculate Closing Costs

When purchasing a home, the buyer will have to pay closing costs, which are usually between 2% and 5% of the sale price. Closing costs do not include your down payment and vary based on the lender, market, and size and type of property.

Before closing, your lender is required to provide an estimate of your closing costs, which usually includes loan processing fees, appraisal fees,title insurance, and more.

5. Shop Around for Homeowners Insurance

On average, homeowner insurance is usually 0.6% to 1% of the sales price and typically covers repairs or replacement of the home’s structure and personal possessions; defends you against liability costs if someone is hurt on your property; and pays for a temporary place to live while your home is being repaired or replaced.

It pays to compare rates and get multiple quotes. Premiums vary depending on your home’s size, building costs in your area, local crime rates, and the likelihood of natural disasters, such as hurricanes and tornados.


There are many moving parts to purchasing a home. When you work with a Cross Timbers Mortgage expert, we handle the process for you and ensure that your mortgage application, approval, and closing stay on track.