First-Time Homebuyer's Mortgage Guide: Step by Step
8 min read · by the FindLocalBrokers team
Buying your first home is mostly a financing project with a house attached. Get the mortgage right and everything else gets easier. Here's the whole process, in order.
Step 1: Know your numbers before anyone else does
Three numbers drive everything: your credit score, your debt-to-income ratio (monthly debt payments ÷ gross monthly income), and your available cash for down payment and closing costs. Pull your free credit reports, fix errors, and avoid opening new credit for six months before applying. Here's how to raise your score before applying.
Step 2: Get pre-approved — not just pre-qualified
A pre-qualification is an estimate; a pre-approval means a lender has verified your income, assets and credit. Sellers take pre-approved offers seriously and often ignore the rest. Full pre-approval walkthrough here.
Step 3: Pick the right loan type
- Conventional (3–5% down): best pricing for scores of roughly 680+; mortgage insurance drops off once you reach 20% equity.
- FHA (3.5% down): friendlier on credit scores and debt ratios; mortgage insurance runs longer. FHA vs. conventional compared.
- VA (0% down): for eligible veterans and service members — usually the best deal available when you qualify. VA loans explained.
- USDA (0% down): for homes in eligible rural and some suburban areas, with income limits.
Step 4: Look into first-time buyer assistance
Nearly every state runs down-payment-assistance programs — grants, forgivable second loans, or below-market rates through state housing finance agencies. Many go unused because buyers don't know they exist. A local broker who works these programs weekly can tell you in one conversation what you'd qualify for.
Step 5: Shop the loan, not just the house
Get Loan Estimates from at least two sources — say, your bank and a local broker — on the same day, and compare rate, points and total closing costs. Quotes within a short shopping window count as one credit inquiry.
Step 6: Protect your closing
Between contract and closing, underwriters re-check everything. The classic self-inflicted wounds: financing furniture, opening a new credit card, switching jobs, or moving large unexplained deposits between accounts. Keep your finances boring until the keys are in your hand.
The short version
Check credit → get pre-approved → choose loan type → hunt assistance programs → compare two Loan Estimates → change nothing until closing. And get local help: find a first-time-buyer specialist near you — their service usually costs you nothing.
Frequently asked questions
How much down payment does a first-time buyer really need?
Less than most people think. Conventional loans allow 3% down for qualifying first-time buyers, FHA requires 3.5%, and VA and USDA loans can be 0% down for eligible borrowers. The 20% figure only matters for avoiding mortgage insurance — it is not an entry requirement.
What credit score do I need to buy my first home?
FHA loans are available with scores as low as 580 (and sometimes lower with larger down payments). Conventional loans generally want 620+. Higher scores earn better rates, so if you are close to a threshold like 680 or 740, a few months of credit work can pay off substantially.
Should a first-time buyer use a mortgage broker?
First-time buyers often benefit most, because brokers know which lenders offer the strongest first-time programs and down payment assistance in your state, and can compare FHA vs. conventional pricing for your exact profile instead of one bank’s menu.
Talk to a local expert
Compare licensed mortgage brokers in your city — see specialties, verify licensing, and contact them directly. Free for homebuyers.
More guides
Mortgage Pre-Approval: What It Is and How to Get It · Mortgage Broker vs. Bank: Which Should You Use? · How to Choose a Mortgage Broker: 9 Questions to Ask · How Do Mortgage Brokers Get Paid? (Are They Really Free?)