How To Buy A House First Time With No Money In 2024

Home buying tips 2024. How To Buy A House First Time 2024. — How much money do you need to Buy a House for the First Time.

The lure of first-time homeownership is powerful. Your focus could be building generational wealth or creating an investment to sell when you retire. Learn how to buy a house first time in 2024.

Whatever your reasons for buying a house, you may be quite a few steps from the moment you can kick back and enjoy your home purchase.

Here’s our best advice for first-time home buyers looking to embark on the journey to homeownership. Buying a Home is a huge deal, young guys. And when you throw a crazy Real Estate Market on top of it.

Shopping for a home can feel like buckling up for an emotional roller coaster.

But I’m here to share a step-by-step process for How To Buy a House first time in 2024. We’ll go over things like figuring out if you’re:

Ready to buy,
Saving for a down payment, and
Getting preapproved for a mortgage.

Then we’ll look at what you need to know about finding a Real Estate Agent, putting in offers, and making it all the way to closing day.

Tips For First-Time Home Buyers

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

How To Buy a House For The First Time in 2024

1. 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.

2. Make Sure You’re Actually Ready To Buy

I know.

The Housing Market seems insane right now. Like, it’s crazy town. But the basics for figuring out if you’re ready to buy a house are the same no matter what’s going on out there.

First things first:

Before you jump into the home-buying process, I want you to be debt-free with 3–6 months of expenses saved up in an emergency fund.

Think of this money like an insurance policy against life. It’s important to have this safety net when you get ready to make a big purchase like a house.

Picture This:

When you buy a home, your landlord is you! That means paying for repairs is your responsibility.

So, if the hot water heater springs a leak two weeks after moving in. It’ll be no big deal because you have an emergency fund to cover the repairs.

But when your budget is eaten up by debt payments and you don’t have any savings to fall back on. You might be eating ramen for the rest of the month just to get that water heater fixed.

That’s not fun . . . or tasty.

With a full emergency fund and no debt draining your monthly budget. An unexpected repair will just be an inconvenience—not the end of the world.

3. Figure Out How Much House You Can Afford

If you’re ready to buy, your next step is figuring out your home-buying budget.

I tell people to buy a house only when the monthly payment is no more than 25% of their monthly take-home pay. Anything more than that and you risk being house poor.

Sticking to a 25% monthly payment leaves plenty of room in your budget to cover home maintenance and repairs while hitting your other money goals, like saving for retirement.

To be clear, that 25% limit includes principal, interest, property taxes, home insurance and private mortgage insurance (PMI)—and don’t forget to take homeowners association (HOA) fees into consideration.

4. 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 6% of the loan amount. Your closing costs on a $240,000 loan could be between $4,800 and $14,400. 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.

5. Save For a Down Payment – How To Buy a House For The First Time

Real Talk:

Shopping for a home is way more fun than patiently saving up enough money to buy it. (Delayed gratification doesn’t feel fun, but it sure pays off!)

But Here’s a Tip: how to buy a house first time

Don’t give in to the temptation of looking at house listings before you have a solid down payment saved up. Because guess what could happen?

You’ll find a dream home way outside of your budget, and you’ll try to convince yourself your down payment is enough. Don’t Do This! A flimsy down payment is a recipe for regret when it comes to buying a home.

How Much Should You Save To Buy A House For The First time 2024?

Just like any goal, buying a home the smart way takes planning and preparation.

The most time-consuming part of this whole process is saving cash for the down payment, closing costs and other moving expenses.

If you’re not sure how much is enough to save, here are some good starting points:

Down Payment: I want you to put down a minimum of 10% on your new home, but 20% or more is even better because you’ll avoid PMI. PMI is a fee added to your monthly mortgage payment to protect your lender in case you default on your loan, and it won’t go away until you have at least 20% equity in your home. If you’re a first-time home buyer, a 5–10% down payment will be enough, but it means you’ll be paying PMI a little bit longer.
Closing costs: One of our Endorsed Local Providers (ELPs) tells his clients to save around 3% of a home’s purchase price for closing costs and prepaids. Closing costs cover any property taxes, insurance items, or fees charged by your title company and lender. That percentage might vary depending on what area you’re buying in.
Moving and other expenses: Moving expenses can vary from hundreds to thousands of dollars depending on how much stuff you’re moving and how far away your new home is from your current place. To help with budgeting, call a few moving companies in your area for quotes ahead of time. If you plan to make updates to your home—like painting, installing new carpet or buying furniture—you’ll need cash for that too.

Ready to get your savings rolling? Saving for a down payment isn’t rocket science. But you do need to be intentional about it.

Set a plan and focus on your milestones, and you’ll have that down payment before you know it. You’ve got what it takes!

6. Get Preapproved For A Mortgage To Buy A House First Time

The best way to buy a home is with cash. But if you have to get a mortgage, there’s nothing wrong with that. Getting preapproved is the first step to securing a home loan.

Benefits Of Preapproval

Some of the benefits of getting preapproved include:

You Know Exactly How Much Home You Can Afford. You and your real estate agent know your home-purchasing power once you have a preapproval letter in hand. This will help you shop within your budget.
You Can Make a Stronger Offer. Sellers need to know that the buyer they choose can afford their home. A preapproval shows a seller that you have the money needed to purchase the home.
You’ll Experience Fewer Surprises. When you’re preapproved, you’re less likely to run into last-minute surprises or delays with your mortgage lender.

The bottom line? Request a preapproval before you start shopping for a home. Read on to learn why a preapproval may not reflect the final loan offer.

How Do You Get Preapproved?

A mortgage lender can prequalify you to buy a house with a simple conversation about your income, assets and down payment. But getting prequalified isn’t the same as getting preapproved.

Preapproval takes a little more work. A lender will need to take a look at your paycheck stubs, tax returns and bank statements to figure out how big of a mortgage you can afford.

But it pays off when you start your home search because a preapproval letter shows that you’re a serious buyer. Sellers like serious buyers!

Which Mortgage Option Is Right for You?

Bad financing turns your biggest asset—your home—into a liability.

That’s why getting the right mortgage is so important. Setting your boundaries on the front end makes it easier to find a home you love that’s also in your budget.

Here are the guidelines we recommend:

A Fixed-Rate Conventional Loan: With this option, your interest rate is secure for the life of the loan, leaving you protected from rising rates. Adjustable-rate mortgages are a terrible idea because you could get stuck paying a much higher interest rate. Also, steer clear of FHA and VA loans because they have high fees attached to them.

A 15-Year Term: Your mortgage payment will be higher with a 15-year term than a 30-year term, but you’ll knock out your mortgage in half the time—and save tens of thousands of dollars in interest. That’s a win for me!

Mortgage Selection Tips To Buy a House First Time

Explore Mortgage Options

A variety of mortgages are available with varying down payment and eligibility requirements. Here are the main categories:

Conventional mortgages are not guaranteed by the government. Some conventional loans targeted at first-time buyers require as little as 3% down.
FHA loans are insured by the Federal Housing Administration and allow down payments as low as 3.5%.
USDA loans are guaranteed by the U.S. Department of Agriculture. They are for rural home buyers and usually require no down payment.
VA loans are guaranteed by the Department of Veterans Affairs. They are for current and veteran military service members and usually require no down payment.

You also have options when it comes to the mortgage term.

Most home buyers opt for a 30-year fixed-rate mortgage, which is paid off in 30 years and has an interest rate that stays the same.

A 15-year loan typically has a lower interest rate than a 30-year mortgage, but the monthly payments are larger.

When interest rates are increasing, you might consider an adjustable-rate mortgage, or ARM.

ARM rates are often lower than fixed rates, enabling you to buy a more expensive home for the same monthly payment, but they can also increase (or decrease) over time.

7. Find The Right Real Estate Agent – Buying a House For The First Time

Your home search might start with some online window shopping, but it shouldn’t end there. You can do a lot of research on your own. But you’ll need the help of an expert when it comes to finding and securing your perfect home.

A buyer’s agent can help you navigate the home-buying process. In some cases, they can even help you find a great house before it hits the market, giving you a competitive edge.

How’s that for being a smart shopper? And when it comes to making an offer, your agent will negotiate on your behalf so you won’t pay a penny more than you have to.

How Much Does a Buyer’s Agent Cost?

A real estate agent will put your best interests first, and they’re a crucial part of your home-buying team. So, how much should you be prepared to pay for an agent?

How does nothing sound?

That’s right! In most cases, the seller pays your real estate agent’s fees, so using a buyer’s agent is usually free to you. Why wouldn’t you want a pro in your corner as you make your biggest investment?

How to Choose the Best Buyer’s Agent – how to buy a house first time

You may know a lot of real estate agents in your area. But keep in mind, not all agents bring the same knowledge and experience to the table.

Don’t work with an amateur just because you want to be nice, and don’t give your business to a friend or family member. Ever. A home is the biggest purchase you’ll ever make, and you need a pro on your side.

That means you’ll want to interview a few agents before you hire one. Yep, make them show you why they deserve your business.

Choose a Real Estate Agent Carefully

A good real estate agent will scour the market for homes that meet your needs and guide you through the negotiation and closing process.

Get agent referrals from other recent home buyers.

Interview at least a few agents, and request references. When speaking with potential agents, ask about their experience helping first-time home buyers in your market and how they plan to help you find a home.

You might also ask how they find homes that aren’t yet on the market, which can be a handy skill when buyer competition is fierce.

8. Go House Hunting

After you’ve been preapproved for a mortgage, you’re ready for the fun part: shopping for your perfect home! (This was my favorite part of the process.)

To get started, make a list of must-have home features. When you’re buying a home with your spouse, make separate lists and compare.

For example, I valued a bright kitchen with lots of counter space, and Winston wanted a big backyard. A nonnegotiable for both of us was a good school district. Knowing what you and your spouse want will help with the selection process.

Once you have a clear picture of the features you both want, share them with your real estate agent and use them as the foundation of your home search.

Your agent will help you set realistic expectations and target your search to areas and homes you can afford.

9. Think Long Term – Buying a House For The First Time

You might think you’re shopping for your forever home. But remember to shop with resale value in mind because no one knows what the future will bring.

A job opportunity in another state or a growing family could change your idea of a forever home. Here are some House-Hunting Tips to help you make a smart investment:

Don’t Compromise On Location or Layout. These are two things you can’t change about the home you buy. No amount of curb appeal can make up for a truly terrible floor plan. And buying a great house in a not-so-great neighborhood is a bad idea. If you don’t love the location or layout, chances are, buyers years from now won’t either.

Look Past The Surface. Don’t let a lime-green bathroom keep you from an otherwise great home. Other buyers may not be able to look past those easy-to-fix details (like décor and paint color), which could score you a deal. That lime-green bathroom could mean more green in your pocket.

Buy The Least Expensive Home In The Best Neighborhood You Can Afford. That gives your home’s value room to grow in the future. Keep in mind, future buyers shopping in an inexpensive neighborhood won’t be looking for an expensive home.

Pay Attention To Home Values In That Area. Are they rising or falling? Are businesses booming or closing? You can tell a lot about home values in a neighborhood by what’s happening in the community.

Research The School Districts. Even if you don’t have kids, school districts can be an important factor when you sell. Homes in neighborhoods near great schools are generally known to sell for more money due to high competition—home-buying parents will move heaven and earth to snag those prime locations!

And One More Thing:

When you start house hunting. You need to be prepared for it to take a while. It could take months before you find a house that’s right for you and your budget.

Now there’s a chance (since you’re so prepared from doing your homework on the front end) that a great agent could find you a house the next day.

But you shouldn’t count on that happening. Just make sure you’re ready to go either way. Hang in there, and don’t compromise on your must-haves.

10. Make An Offer On A House – How To Buy a House For The First Time

Once you’ve found the right home, it’s time to get serious. That means submitting your offer and signing a purchase agreement with the sellers.

What’s Included In Your Offer?

Your real estate agent will work with you to submit a solid offer. If you end up in a bidding war with other buyers, keep a cool head and put your best foot forward.

Being preapproved with your lender and having a flexible closing date can make your offer stand out. Your purchase agreement will include other details of the real estate transaction, like:

Buyer and seller information
Property address
Purchase price, lender information and down payment amount
Earnest money deposit (similar to a security deposit)
Items to be left with the home (like appliances or furniture)
Contingencies (more on this later) like the home inspection, appraisal and final mortgage approval
Closing date

Sometimes agreeing on terms is quick and painless, but it can also be one of the hardest parts of the home-buying process.

If your negotiations get intense, remind yourself that both parties want the same thing. The sellers want to sell their house, and you want to buy it!

And Remember: how to buy a house first time

Sometimes it pays to compromise on little details if that’ll move the process forward.

A good real estate agent will give you advice about when to give in and when to hold firm.

11. Get a Home Inspection And Appraisal

Once you get to this step, you’ll officially be under contract on your new home. (By the way, under contract means the seller has accepted your offer but nothing is final yet.) That’s something to celebrate.

This also means you’re done with the most time-consuming stages of the home-buying process. Cheers to that!

12. Home Inspection – How To Buy a House For The First Time

As a buyer, you have the right to a professional home inspection before you purchase the house, and it would be crazy not to do it.

This is one of the most important precautions you can take before purchasing a home because it keeps you from being blindsided by structural issues or expensive repairs.

If the inspection reveals major problems with the home, you can ask the seller to fix the problem, reduce the price, or cancel the contract.

You can also consider getting other pros involved so they can run other tests. Like a termite inspection or a radon test. Depending on your real estate agent’s advice and the age and condition of the home you’re purchasing.

Your new home could look perfect from the outside, but you never know what’s going on under the foundation or in the walls.

13. Appraisal – how to buy a house first time

If you’re getting a home loan, your lender will require an appraisal to assess the value of the property. An appraisal protects you from paying more than the home’s true value.

If the appraisal comes in lower than your offer price, your real estate agent can provide the best guidance for what to do next.

14. Be Patient Getting Your Mortgage Finalized

If you did get a mortgage, you’ll have another step before you can close on your home: Getting final loan approval. Prepare to be patient for this part.

Your lender will be digging through a ton of your financial details to finalize your mortgage. Which could take more than a month to hammer out before your closing date.

Whatever you do, don’t open a credit card. Go out and buy a bunch of new furniture on credit, or change jobs once you’re under contract.

Doing stuff like this affects your debt-to-income ratio and could lower how much of a loan you qualify for. Taking on more debt is always a bad idea. But any changes in your financial situation can jeopardize your loan process.

15. Close On Your House – How To Buy a House For The First Time

You did it! All the planning, saving, house hunting and waiting are over. The final step in the home-buying process is closing on your new place.

Before you get the keys for your new home and officially call it your own, you have one more sprint ahead of you. Paperwork. Bring on the hand cramps . . .

You should receive a copy of your closing documents to review ahead of time so there are no surprises on closing day. Most likely, you’ll pay for:

Closing costs
Property taxes
HOA fees (if this applies to your neighborhood)
Home Insurance

If there are any confusing terms or conditions as you work through the paperwork, don’t be shy about asking questions. This is one of the biggest purchases you’ll ever make, and you should know exactly what you’re signing up for.

Once you sign all the paperwork, it’s time to breathe a sigh of relief. Ahh. You’re officially a homeowner. Congratulations! The home-buying process may not be easy, but having a beautiful new home to call your own is worth it in the end.

Get More Resources on How to Buy a Home First Time

I know this is a lot of information.

That’s why we packaged this info into a single guide for you—along with bonus resources and tools to set you up for success on your home-buying journey.

Get your free Home Buyers Guide here.

Ready to Start the Home-Buying Process?

If you’re ready to get the ball rolling on your home purchase, finding a real estate agent is your next step.

But how do you find an agent you can trust? Try our Endorsed Local Providers (ELP) program. We’ve been vetting agents who meet our high standards for excellence for decades.

The agents we recommend are Trusted, and they’ll walk you through the home-buying process so you can make a smart investment that fits your needs and your budget.

Find a Real Estate Pro Today!

Frequently Asked Questions

How do I Buy A House For The First Time?

Before you do anything else as a first-time home buyer, make sure you’re debt-free and have an emergency fund of 3–6 months of expenses.

That can be a tough pill to swallow, but it’s a proven way to set yourself up for homeownership. With that emergency fund in place, you’ll be ready to take care of your home without slipping back into debt.

Ideally, you’ll want to save a down payment of at least 20% of the home price to avoid private mortgage insurance (PMI).

What Are The 3 Main Steps To Prepare For When Buying a House?

The first step to prepare for when buying a house is to save a big down payment.

To free up your income and protect your savings from life’s unexpected costs, make sure you’re debt-free and have an emergency fund of 3–6 months of expenses built up before saving for a house.

The second step is to get your finances in order. If you’re going the mortgage route, work with a home loan provider you can trust to get a preapproval letter—not having this could cause sellers to overlook your offer.

For the approval process, organize all the documents you need to get a mortgage so they’re easily available for your lender.

What Are The Requirements To Buy a House First Time?

The main requirements to buy a house include:

A down payment,
Money for closing costs and
Proof that a lender can trust you to make mortgage payments.

This proof could be in the form of a good credit score in the mid-600s or higher. But really, you don’t need a credit score to buy a house.

If you’ve been living a debt-free lifestyle, you probably don’t even have a credit score—and that’s a good thing!

Keep In Mind: how to buy a house first time

No credit isn’t the same as bad credit. Buying a house first time with bad credit is a terrible idea.

If your credit score is lower than the mid-600 range, you’ll only be eligible for loans with super high interest rates and risky features.

If you have bad credit, first cut up your credit cards and cancel the accounts. Then, be patient as you focus on paying off all your debt before buying a house. You’ll thank yourself later!

Home Purchasing Tips – How To Buy a House First Time 2024

Pay For Home Inspections

A home inspection is a thorough assessment of the structure and mechanical systems. Professional inspectors look for potential problems, so you can make an informed decision about buying the property.

Here are some things to keep in mind:

Standard inspections don’t test for things like radon, mold or pests. Understand what’s included in the inspection and ask your agent what other inspections you might need.
Make sure the inspectors can get to every part of the house, such as the roof and any crawl spaces.
It’s usually helpful if the buyer attends any inspections. By following the inspectors around you can get a better understanding of the home and ask questions on the spot. If you can’t attend the inspections, review the reports carefully and ask about anything that’s unclear.

Negotiate With The Seller

You may be able to save money by asking the seller to pay for repairs in advance or lower the price to cover the cost of repairs you’ll have to make later.

You may also ask the seller to pay some of the closing costs. But keep in mind that lenders may limit the portion of closing costs the seller can pay.

Your negotiating power will depend on the local market. It’s tougher to drive a hard bargain when there are more buyers than homes for sale.

Work with your real estate agent to understand the local market and strategize accordingly.

Buy Adequate Home Insurance

Your lender will require you to buy homeowners insurance before closing the deal.

Home insurance covers the cost to repair or replace your home and belongings if they’re damaged by an incident covered in the policy.

It also provides liability insurance if you’re held responsible for an injury or accident. Buy enough home insurance to cover the cost of rebuilding the home if it’s destroyed.

It may be worth buying an umbrella policy if you need to cover your home, cars and other major assets.

The Bottom Line: Plan Ahead When Buying A House For The First Time

Buying a home for the first time doesn’t have to be overwhelming. Wherever you land, it’s you and your loved ones who bring a home to life.

Maintain your financial health so that your quality of life increases with the purchase, rather than decreases. If you’re a first-time home buyer, explore your options with the experts. We’re here to help you every step of the way!

Now you have it, How To Buy A House First Time With No Money In 2024. Good luck.