First-Time Buyer Financial Readiness Checklist

Buying your first home is an exciting milestone—but it’s also a major financial decision that requires preparation and planning. This First-Time Buyer Financial Readiness Checklist is designed to help you understand what you need to do to be financially prepared, from reviewing your credit to saving for a down payment and beyond.

Financial Readiness Checklist for First-Time Homebuyers

1. Review and Strengthen Your Credit Score

Your credit score plays a critical role in mortgage qualification and interest rates. Before applying for a loan, request your credit report from the three major credit bureaus (Equifax, Experian, and TransUnion).

Tips:

• Dispute any errors on your credit report.
  
• Pay down high-interest debt.
  
• Avoid new credit inquiries before applying for a mortgage.
  

Read more on how credit scores impact mortgage rates

2. Set a Realistic Homebuying Budget

Before you start house hunting, determine how much house you can afford.

Consider:

• Your current income and monthly expenses.
  
• Future changes in income or lifestyle.
  
• A mortgage pre-approval to establish your price range.
  

Use the 28/36 rule: No more than 28% of your gross monthly income should go toward housing costs, and total debt payments should not exceed 36%.

Use our Mortgage Calculator to estimate what you can afford.

3. Save for a Down Payment and Closing Costs

While some loans allow low or even zero down payments, putting more down can reduce your monthly payments and eliminate private mortgage insurance (PMI).

Savings targets:

• Down payment: 3% to 20%+ of the home’s purchase price.
  
• Closing costs: 2% to 5% of the purchase price.
  
• Emergency fund: 3–6 months of living expenses post-purchase.
  

Ready to save? Check out our guide on building a home down payment fund.

4. Understand Your Loan Options

First-time buyers may qualify for special programs such as:

• FHA loans: Low down payment options
  
• VA loans: For veterans and service members
  
• USDA loans: For rural homebuyers
  
• Conventional loans: For those with stronger financials
  

Ask lenders about grants and first-time buyer assistance programs available in your area.

Explore first-time buyer mortgage programs

5. Get Pre-Approved for a Mortgage

Getting pre-approved shows sellers you’re a serious buyer and helps you shop within your budget.

Pre-approval requirements:

• Proof of income (pay stubs, tax returns)
  
• Credit report
  
• Employment verification
  
• Debt-to-income ratio
  

6. Plan for Additional Costs

Beyond the home price, first-time buyers often overlook other expenses such as:

• Property taxes
  
• Homeowners insurance
  
• Private mortgage insurance (PMI)
  
• Utilities and maintenance
  
• HOA fees
  

Learn how to plan for ongoing homeownership costs

7. Work With a Real Estate Agent

An experienced buyer’s agent can help you:

• Navigate listings and neighborhoods
  
• Negotiate pricing and contingencies
  
• Handle paperwork and legalities
  

Choose someone familiar with your local market and first-time buyers.

8. Build an Emergency Fund (If You Haven’t Already)

Unexpected repairs and job shifts can happen. Don’t drain your savings on a down payment alone—ensure you have a financial cushion post-purchase.

FAQ: First-Time Homebuyer Financial Readiness

Read Next

• How to Qualify for First-Time Home Buyer Grants and Programs
• First-Time Homebuyer Loan Programs in Georgia – 2025 Guide