First-Time Home Buyer Checklist: What You Need Before Buying a Home
Buying your first home is exciting and, for most people, genuinely overwhelming. There’s a vocabulary to learn, a stack of documents to gather, and a sequence of steps that has to happen in a specific order.
The good news is that it is a sequence. Once you can see the whole process laid out, it stops feeling like chaos and starts feeling like a project. This first-time home buyer checklist walks through every phase, preparing your finances, getting pre-approved, finding a home, making an offer, and closing, so you know what’s coming and what to do next.
Phase 1: Prepare Your Finances (6–12 Months Before)
Check and improve your credit
- Pull all three credit reports free at AnnualCreditReport.com
- Dispute any errors, mistakes are common and take time to correct
- Pay every bill on time; payment history carries the most weight
- Pay down revolving balances to lower your credit utilization
- Don’t open new credit accounts or close old ones while you’re preparing
- Avoid financing a car or large purchase in the months before applying
Understand your debt-to-income ratio
Lenders compare your total monthly debt payments to your gross monthly income. Add up your minimum payments on credit cards, student loans, auto loans, and personal loans, then divide by your gross monthly income.
Lower is better. If yours is high, paying down debt will often do more for your buying power than saving an extra few thousand dollars. Specific DTI requirements vary by loan program and lender.
Save for the down payment, and everything else
The down payment gets all the attention, but it’s one of four things you need cash for:
- Down payment. Requirements vary widely by loan program; some options for first-time buyers allow well under 20%. Putting down less than 20% on a conventional loan typically means paying private mortgage insurance.
- Closing costs. Commonly in the range of 2–5% of the purchase price, covering origination, appraisal, title, and prepaid items.
- Emergency fund. Keep three to six months of expenses intact. Don’t drain your savings into the down payment.
- Move-in and immediate repairs. Appliances, basic furniture, a locksmith, paint, and whatever the inspection turns up.
Figure out how much home you can actually afford
- Principal and interest
- Property taxes
- Homeowners insurance
- Mortgage insurance, if applicable
- HOA dues, if applicable
- Maintenance, a common planning figure is roughly 1% of the home’s value per year
- Utilities, which are often higher than in a rental
Phase 2: Get Pre-Approved (3–6 Months Before)
Documents you'll need
Gather these before you apply and the process moves much faster:
- Two years of W-2s and federal tax returns
- Recent pay stubs (typically the last 30 days)
- Two to three months of bank and investment statements
- Photo ID and Social Security number
- Employment history for the past two years
- If self-employed: profit-and-loss statements and business tax returns
- Documentation for any gift funds being used toward the down payment
- Records of any other debts, and divorce or child-support orders if applicable
Requirements vary by lender and loan program, your loan officer will confirm the exact list.
Pre-qualification vs. pre-approval
Pre-qualification is a quick estimate based on information you provide. Pre-approval involves verified documentation and a credit check, and carries real weight with sellers.
In a competitive market, a pre-approval letter is often the difference between an offer being considered and being set aside. Get the pre-approval.
Compare loan options and lenders
Loan programs differ meaningfully in down payment requirements, mortgage insurance, and eligibility, conventional, FHA, VA, and USDA loans all serve different situations, and many states offer first-time buyer assistance programs worth researching.
When you compare offers, compare the APR and total cost, not just the rate, and get quotes within a short window so credit inquiries are treated as a single event.
Credit unions are member-owned and not-for-profit, which often translates to competitive mortgage rates and lower fees. You can review options on our home loans page. Policemen’s Federal Credit Union is federally insured by NCUA.
Phase 3: Find the Right Home
Work with a buyer's agent
Choose your must-haves
- Commute time and transportation access
- School district quality, it affects resale value even if you don’t have children
- Neighborhood safety, walkability, and amenities
- Property taxes, which vary sharply between adjacent areas
- Bedroom and bathroom count, and space you’ll actually use
- Whether you want a project or a move-in-ready home
- Flood zone status and insurance implications
Phase 4: Make an Offer
- Offer price, based on recent comparable sales
- Earnest money deposit, held in escrow as good-faith evidence
- Contingencies, financing, inspection, and appraisal contingencies are your protection; waiving them increases risk
- Requested closing date
- Items included, such as appliances or fixtures
- Any seller concessions toward closing costs
Phase 5: Under Contract to Closing (30–45 Days)
- Complete your full mortgage application and respond to lender requests quickly, delays here delay closing
- Schedule a home inspection. Attend it. Ask questions. Use significant findings to negotiate repairs or a credit.
- Consider specialized inspections, radon, sewer scope, pest, or structural, depending on the property
- The lender orders an appraisal. If it comes in below the contract price, you'll need to renegotiate, cover the gap, or use your appraisal contingency.
- Title search and title insurance confirm clear ownership
- Secure homeowners insurance, required before closing
- Review the Closing Disclosure, which you receive at least three business days before closing. Compare it line by line against your Loan Estimate.
- Do a final walkthrough to confirm agreed repairs were completed and the home is in expected condition
- Avoid any financial changes, don't change jobs, open credit, or make large deposits or purchases while under contract
Common First-Time Buyer Mistakes
- Shopping before getting pre-approved, then falling for a home outside your range
- Skipping the home inspection to make an offer more attractive
- Emptying savings into the down payment with nothing left for repairs
- Budgeting only for the mortgage payment and forgetting taxes, insurance, and maintenance
- Opening new credit during the process
- Only getting one loan quote
- Making an emotional decision and overbidding
- Ignoring resale factors like layout, location, and school district
Frequently Asked Questions
Stable income and employment history, a credit profile that qualifies for your chosen loan program, cash for a down payment and closing costs, a manageable debt-to-income ratio, and the documentation listed above.
Enough for your down payment, closing costs of roughly 2–5% of the price, an intact emergency fund, and move-in expenses. The total depends heavily on your loan program and local prices.
No. Several programs allow substantially less, though putting down under 20% on a conventional loan generally means paying mortgage insurance.
Financial preparation often takes six months to a year. Once you're pre-approved, house hunting varies widely, and closing typically takes 30–45 days after an accepted offer.
Minimums vary by loan program and lender. Higher scores generally mean better rates, talk to a loan officer about where you stand.
Yes. It defines your budget and makes your offers competitive.
Frequently Asked Questions
Stable income and employment history, a credit profile that qualifies for your chosen loan program, cash for a down payment and closing costs, a manageable debt-to-income ratio, and the documentation listed above.
Enough for your down payment, closing costs of roughly 2–5% of the price, an intact emergency fund, and move-in expenses. The total depends heavily on your loan program and local prices.
No. Several programs allow substantially less, though putting down under 20% on a conventional loan generally means paying mortgage insurance.
Financial preparation often takes six months to a year. Once you're pre-approved, house hunting varies widely, and closing typically takes 30–45 days after an accepted offer.
Minimums vary by loan program and lender. Higher scores generally mean better rates, talk to a loan officer about where you stand.
Yes. It defines your budget and makes your offers competitive.
