Go easy on yourself: All first-time homebuyers face some unknowns. Friends and family might offer advice, but it may not be relevant to the challenges of today’s housing market.
If you’re trying to identify what you don’t know, you’re already off to a smart start. Here are 12 common mistakes that first-time home buyers make — and what to do instead.
1. Not knowing how much house you can afford
Without first figuring out how much house you can afford, you might waste time. You could end up looking at houses that you can't afford yet or visiting homes below your price range that don’t meet your needs.
For many first-time buyers, the goal is to buy a house and get a loan with a monthly payment that fits comfortably into your overall household budget. If you aren’t sure, sometimes it's a good idea to aim low.
How to avoid this mistake: Use a mortgage affordability calculator to help you know what price range is affordable, what's a stretch and what's aggressive.
» CALCULATE: How much house can I afford?
DATA: What's the Homebuying Climate this month?
NerdWallet's Homebuying Climate Index puts a familiar weather label on how favorable conditions are for home buyers.
For August, our analysis puts the Climate Index at 53.2 out of 100, keeping the index in Partly Cloudy territory for the 49th straight month as most variables hold relatively steady.
Read more about the factors affecting this month's index to gauge how they might affect your homebuying plans.
Explore NerdWallet's Homebuying Climate Index
Proprietary research based on the latest federal data
2. Shopping for a house before a mortgage
It’s more fun to look at homes than it is to talk about your finances with a lender. So that’s what some first-time home buyers do: They start walking through houses for sale but put off the mortgage preapproval. When a great place pops up, however, it’s wise to have that preapproval in hand; that way, your offer is as strong as possible.
How to avoid this mistake: Talk to a mortgage professional about getting preapproved for a home loan before you start to seriously shop for a place. The preapproval process involves a review of your income and expenses, and it can make your bid more competitive because you’ll be able to show sellers that you can back up your offer.
3. Getting just one quote for mortgage rates
Shopping for a mortgage is like shopping for a car or any other expensive item: It pays to compare offers. Mortgage interest rates vary from lender to lender, and so do fees such as closing costs and discount points.
Getting just one additional rate quote could save you an average of $1,500 over the life of your mortgage, while getting five more quotes can save you an average of about $3,000, according to Freddie Mac.
How to avoid this mistake: Apply with multiple mortgage lenders for preapproval. All mortgage applications made within a 45-day window will count as just one credit inquiry.
4. Not checking credit reports and correcting errors
Mortgage lenders will scrutinize your credit reports when deciding whether to approve a loan and at what interest rate. If your credit report contains errors — like a loan wrongly taken out in your name — you might get quoted an interest rate that's higher than you deserve. That's why it pays to make sure your credit report is accurate.
How to avoid this mistake: You may request a free credit report as often as every week from each of the three main credit bureaus. You may dispute any errors you find.
5. Not having enough saved for a down payment
First, the good news: You don't necessarily need to make a 20% down payment to buy a home. In fact, most people don’t. The average down payment on a house might be lower than you think: First-time buyers put down a median 10% in 2025, according to the National Association of Realtors.
Some loan programs allow you to buy a home with zero down or as little as 3.5% down. So you may not need to save as much as you think. Still, not having enough savings remains a barrier to buying a home for many people. In a survey commissioned by NerdWallet, 33% of non-homeowners say their lack of savings for a down payment is preventing them from buying a home.
How to avoid this mistake: Look at your finances and set a target that fits your financial situation rather than assuming you need 20%. Depending on your loan, that might be 3% to 5%, 10% or more.
If you're struggling to reach your target, consider low-down-payment loan programs, down-payment assistance or gift funds from eligible family members. You can also automate transfers into a dedicated savings account to make progress consistently.
Although a bigger down payment will give you lower monthly payments, you don't want to be left without an emergency fund or cash for closing and moving costs. The goal is to figure out what monthly payment is manageable for you that will still leave you with a comfortable amount of equity and enough financial security.
6. Missing out on first-time home buyer programs
If you need a little help reaching your savings goals, see if you qualify for first-time home buyer benefits like grants or forgivable loans. There are plenty of first-time home buyer loan programs out there, including state programs that offer down payment assistance and competitive mortgage rates for first-time home buyers.
How to avoid this mistake: Ask a mortgage lender about your first-time home buyer options and look for programs in your state. Your employer or labor union might offer financial assistance to buy your first home, too. Some programs have income or sales price limits, so make sure you read the fine print.
7. Ignoring VA, USDA and FHA loan programs
A lot of first-time home buyers want to or need to make small down payments. But they don't always know the details of government programs that make it easy to buy a home with zero or little down.
How to avoid this mistake: Learn about the following loan programs to understand eligibility requirements:
- VA loans are mortgages guaranteed by the U.S. Department of Veterans Affairs. They're for people who have served in the military. VA loans allow qualified home buyers to put 0 percent down and get 100% financing. Borrowers pay a funding fee in lieu of mortgage insurance.
» MORE: The basics of VA loans
- USDA loans can be used to buy homes in areas that are designated rural by the U.S. Department of Agriculture, although some suburbs qualify, too. Qualified borrowers can put 0 percent down and get 100% financing. You pay a guarantee fee and an annual fee in lieu of mortgage insurance.
- FHA loans allow for down payments as small as 3.5%. What's more, the Federal Housing Administration can be forgiving of imperfect credit. When you get an FHA loan, you pay an upfront mortgage insurance premium, as well as monthly mortgage insurance payments.
» MORE: All about FHA loans
8. Not knowing whether to pay discount points
Mortgage discount points are fees you pay upfront to reduce your mortgage interest rate. Interest rate savings can add up to a lot of money over the life of a mortgage, and discount points are one way to gain those rate savings if you’re in the right position to purchase them.
As a general rule of thumb, if you don’t expect to keep the loan for at least three to five years, be cautious about paying points. The longer you expect to stay, the more time you have to recover the upfront cost and benefit from the lower interest rate.
How to avoid this mistake: If you have enough cash on hand, first calculate your break-even period. Start by dividing the cost of the points by your monthly payment savings. For example, if points cost $4,000 and lower your payment by $100 a month, your break-even point is 40 months, or about 3.3 years. If you expect to keep the mortgage for longer than that, the points may save you money. However, if you expect to move or refinance sooner, they probably aren’t worth it.
9. Emptying your savings to make a down payment
The down payment isn’t the only thing you’ll need to pay upfront. You’ll have closing costs and moving expenses, too. If you buy a previously owned home, it almost inevitably will need an unexpected repair not long after. Maybe you’ll need to replace a water heater or pay a homeowners insurance deductible after bad weather.
How to avoid this mistake: Save enough money to make a down payment, pay for closing costs and moving expenses, and take care of repairs that may come up. Lenders will give you estimates of closing costs, and you can call around for quotes to see how much it costs to move.
10. Applying for credit before the sale is final
One day, you apply for a mortgage. A few weeks later, you close, or finalize, the loan and get the keys to the house. The period between is critical: You want to leave your credit alone as much as possible.
Why? The lender’s mortgage decision is based on your credit score and your debt-to-income ratio, which is the percentage of your income that goes toward monthly debt payments. Applying for credit can reduce your credit score a few points. Getting a new loan, or adding to your monthly debt payments, will increase your debt-to-income ratio. Neither of those is good from the mortgage lender’s perspective.
» MORE: Why debt-to-income ratio matters
Within about a week of the closing, the lender will check your credit one last time. If your credit score has fallen, or if your debt-to-income ratio has gone up, the lender might change the interest rate or fees on the mortgage. It could cause a delay in your closing, or even result in a canceled mortgage.
How to avoid this mistake: Wait until after closing to open new credit accounts or to charge furniture, appliances or tools to your credit cards. It’s OK to have all those things picked out ahead of time, just don’t buy them on credit until after you have the keys in hand.
11. Underestimating the recurring costs of homeownership
After you buy a home, the monthly bills keep stacking up. This can come as a surprise if you’re not ready.
Renters often pay monthly utilities, too. But a new home could have higher costs — and it might come with entirely new bills, such as homeowners association fees.
How to avoid this mistake: Work with a real estate agent who can tell you how much the neighborhood’s property taxes and insurance typically cost. Ask to see the seller’s utility bills for the last 12 months the home was occupied so you have an idea how much they will cost after you move in.
12. Miscalculating repair and renovation costs
First-time home buyers are frequently surprised by high repair and renovation costs. Buyers can make two mistakes: First, they get a repair estimate from just one contractor, and the estimate is unrealistically low. Second, their perspective is distorted by reality TV shows that make renovations look faster, cheaper and easier than they are in the real world.
How to avoid this mistake: Assume that all repair estimates are low.
Seek more than one estimate for expensive repairs, such as roof replacements. A good real estate agent should be able to give you referrals to contractors who can give you estimates. But you also should seek independent referrals from friends, family and co-workers so you can compare those estimates against ones you receive from contractors your agent refers.
The bottom line: Don’t stretch yourself too far
The biggest mistakes are the ones that leave you with no room to recover. Buying your first home comes with plenty of opportunities to overspend, but the most costly mistakes tend to leave you with less financial room than you expected.
Don't drain your savings just to make a larger down payment. Don't assume your first mortgage quote is the best one you'll get. And don't underestimate what it can cost to repair and maintain the home once you own it.
The goal isn't to spend as little as possible upfront. It's to make sure you can still afford the home after you get the keys. Keep cash in reserve, shop your financing and budget for the house you actually own, not the best-case version of it. Those three takeaways alone can prevent a manageable home purchase from turning into a financial disaster.
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