How to Get a Mortgage as a First-Time Home Buyer

Buying your first home is exciting, and the mortgage process can feel like a maze of paperwork, jargon and big numbers. Knowing the steps in advance can save you money and stress. This guide explains how to get a mortgage as a first-time buyer, from checking your credit to closing day.

Step 1: Check Your Finances and Credit

Lenders look at your credit score, income, debts and savings to decide whether to lend to you and at what rate. Start by pulling your credit reports for free at annualcreditreport.com and fixing any errors. Conventional loans generally favor scores in the mid-600s and higher, while some government-backed loans allow lower scores. Higher scores usually earn lower rates. Our guide on improving your credit score can help you prepare.

Next, calculate your debt-to-income ratio (DTI), which divides your monthly debt payments by your gross monthly income. Many lenders prefer a total DTI at or below roughly 43 to 45 percent, although limits vary.

Step 2: Decide How Much You Can Afford

Lenders may approve you for more than is comfortable. Decide on a monthly payment that fits your budget, including principal, interest, property taxes, homeowners insurance and any mortgage insurance or HOA fees. Our guide on how much house you can afford provides a detailed approach.

Step 3: Save for the Down Payment and Closing Costs

Down payments do not always need to be 20 percent. Many first-time buyers put down 3 to 10 percent. If you put down less than 20 percent on a conventional loan, you will usually pay private mortgage insurance (PMI) until you reach enough equity. Closing costs typically add 2 to 5 percent of the loan amount, covering fees such as lender charges, appraisal, title insurance and prepaid taxes and insurance. Keep a cash reserve for moving costs and repairs after closing.

Step 4: Learn the Main Loan Types

Conventional loans. Not government-backed. Often require good credit and offer low down payment options for qualified buyers.
FHA loans. Backed by the Federal Housing Administration, with lower credit score and down payment requirements and mortgage insurance premiums.
VA loans. For eligible veterans, service members and some spouses, often with no down payment and no monthly mortgage insurance.
USDA loans. For eligible rural and suburban areas, with no down payment for qualified low- to moderate-income buyers.
Jumbo loans. For amounts above conforming loan limits, with stricter requirements.

You will also choose between fixed and adjustable rates. Read fixed-rate vs. adjustable-rate mortgages to learn the differences.

Step 5: Get Pre-Approved

A pre-approval letter shows sellers you are a serious buyer. The lender reviews your income, assets, debts and credit and states how much it is willing to lend, subject to conditions. Pre-qualification is a looser estimate, while pre-approval involves documents and a credit check. Typical documents include pay stubs, W-2s or tax returns, bank statements, ID and a list of debts.

Step 6: Shop Multiple Lenders

Rates and fees vary by lender. Compare offers from banks, credit unions, mortgage brokers and online lenders. Request a Loan Estimate from each, a standardized form that shows the rate, monthly payment and closing costs. Credit scoring models usually treat multiple mortgage inquiries within a short window as a single inquiry, so shopping around should not seriously damage your score. The Consumer Financial Protection Bureau offers tools and guides at consumerfinance.gov.

Step 7: Make an Offer and Go Under Contract

Work with a real estate agent to find a home and make an offer. After your offer is accepted, you will formally apply with your chosen lender and lock your interest rate. You will pay for an appraisal, and typically a home inspection, which you should not skip.

Step 8: Underwriting

During underwriting, the lender verifies your finances and the property’s value. You may be asked for additional documents. Avoid major financial changes during this time. Do not open new credit, change jobs without notice, make large unexplained deposits or buy a car.

Step 9: Closing

You will receive a Closing Disclosure at least three business days before closing. Compare it with your Loan Estimate. At closing, you will sign documents, pay closing costs and down payment, and receive the keys. Arrange homeowners insurance beforehand; see our guide on homeowners insurance.

Down Payment Assistance and Programs

Many state and local housing agencies offer down payment assistance, grants and special loan programs for first-time buyers. Eligibility often depends on income, location and home price. Ask lenders and your state housing finance agency about available programs.

Common First-Time Buyer Mistakes

Shopping for homes before getting pre-approved.
Focusing only on the monthly payment and ignoring taxes, insurance and maintenance.
Not comparing lenders.
Draining all savings for the down payment and leaving no cushion.
Skipping the inspection.
Making major purchases during underwriting.
Forgetting about refinancing options later. See when to refinance.

Build a Team You Trust

A good mortgage experience often comes from the people involved. Interview at least two or three loan officers, ask how quickly they respond and how they communicate during underwriting. A buyer’s agent who knows the neighborhood, a thorough home inspector and a responsive closing attorney or title company all help the process go smoothly. Ask friends and family for recommendations and check licenses and reviews.

Plan for Life After Closing

Once you have the keys, set up an automatic payment, schedule an annual review of your insurance and create a maintenance calendar for tasks like gutter cleaning and filter changes. Keep a repair fund separate from your emergency savings. If you are paying PMI, track your equity so that you can request removal as soon as you reach the required level.

Frequently Asked Questions

How much do I need for a down payment?

It depends on the loan type. Options range from 0 percent for VA and USDA loans to 3 to 3.5 percent for some conventional and FHA loans, but a larger down payment lowers your monthly cost.

What credit score do I need?

Requirements vary. Many lenders look for scores in the 600s or higher, with the best rates for scores above 740.

How long does the process take?

From application to closing often takes 30 to 45 days, though it can vary.

Should I lock my rate?

A rate lock protects you from increases for a set period. Ask about lock terms and fees.

Bottom Line

To get a mortgage as a first-time buyer, build your credit, save for the down payment and closing costs, get pre-approved, compare lenders and avoid financial changes before closing. Careful preparation can save you thousands of dollars over the life of your loan.

Related guides

This article is for general education only and is not financial, tax, legal or insurance advice. Rates, limits and rules change, so confirm current details with the provider or a licensed professional before you decide.