Remember your first apartment? The excitement of having your own space mixed with the reality of monthly rent? Well, buying your first home is like that – but with way more zeros involved. It’s exciting, overwhelming, and sometimes feels like trying to solve a puzzle while blindfolded. But don’t worry, we’ve got you covered.
Through years of coaching couples and individuals, Jeanine and I have found that successful first-time homebuyers focus on four key areas. Think of these as your foundation – just like you wouldn’t build a house on sand, you don’t want to start your homebuying journey without these basics in place.
Let’s walk through each principle, and by the time you finish reading, you’ll have a practical roadmap for your journey to homeownership. No fluff, just real strategies that work.
🛡️ Survival: First Things First
Here’s something they don’t tell you in those glossy real estate magazines: before you even think about mortgage rates, you need to nail down your basic financial security. It’s like putting on your own oxygen mask before helping others – take care of the essentials first.
- Emergency fund: Build 3-6 months of living expenses. Trust me, homeownership comes with surprises, and not the fun kind.
- Insurance check: Get your coverage sorted – health, auto, renter’s (for now), and life insurance if others depend on you.
- Stable income: Show lenders you’re a safe bet with reliable income. Self-employed? We’ll need two years of tax returns.
🪵 Stability: Building Your Financial House
Let’s talk about something personal – credit scores and debt. I remember when my wife and I bought our first home with zero credit score. Yes, you read that right – zero. We had to show alternative payment history like utility bills and rent payments. While it’s possible to buy a home this way, most folks will want to.
My wife and I had a zero-credit score when we bought our home. We had to show income tax returns, payments to utility companies, and more, but it is possible to be debt-free and have no credit and still get a loan.
- Good credit score: Aim for 680 or higher to get favorable mortgage rates from a standard loan.
- Watch that DTI: Keep debt-to-income under 36%. Less debt means more house options.
- Master your money: Know exactly where every dollar goes. No more “mystery spending.”
🧘 Moderation: Finding Balance (Without Living on Ramen)
Here’s where people often get tripped up – they think preparing for a home means saying goodbye to every small joy in life. Wrong! Moderation isn’t about punishment; it’s about priorities.
Think of it this way: if you’re training for a marathon, you don’t stop eating – you just eat smarter. Same with home buying:
- Set realistic timelines: Want to buy in 12 months? Your savings plan will look different than a 3-year goal.
- Smart saving, not suffering: Keep your daily coffee if it brings you joy – but maybe skip the $200 coffee maker.
- Lifestyle creep check: Got a raise? Great! Now pretend you didn’t and send that extra money straight to savings.
🌱 Future-Mindedness: Looking Beyond Moving Day
This is where experience speaks volumes. After coaching countless homebuyers, I can tell you that buying the home is just chapter one. The story continues with:
- Hidden costs: Budget 2-5% extra for closing costs – they sneak up on everyone.
- Maintenance reality: Set aside 1-2% of home value annually. That “charming older home” might need a new roof sooner than you think.
- Monthly extras: Property taxes and insurance aren’t optional. Plan for them now.
- Future flexibility: Life changes. Make sure your home choice won’t box you in.
💡 Bonus Strategies:
- Get motivated: Create a dedicated high-yield savings account. Name it “Future Home” or “Dream House Fund.” Watching it grow is surprisingly addictive.
- Remember the season: This is temporary. You’re not saying no forever to things you love; you’re saying yes to something bigger.
- Do the math: Every extra dollar in your down payment saves you multiple dollars in interest over your loan. It’s like getting paid to save money.
Enjoy the moment!
Want help building a customized savings plan, keeping the fun while gaining momentum on your home fund, or aligning your financial goals? Jeanine and I work with couples and singles to help optimize budgets and increase your financial agility while making progress towards homeownership.
