Avoiding common first-time homebuyer mistakes can help you save money, reduce stress, and start your homeownership journey on the right foot. A little planning now can prevent big regrets later.
Buying your first home is both exciting and nerve-wracking. With hundreds of thousands of dollars on the line, you want to ensure you’re making a wise financial investment that won’t leave you with first-time home-buying regrets later.
You also want to be confident in your home-buying decisions. A recent study from Clever Real Estate found that 82% of Americans who purchased a home in 2023 or 2024 have at least one regret about their purchase, with 43% saying saying they’ve struggled to make their mortgage payment and another 44% lamenting that they’ve had to take on additional debt to maintain their lifestyle.
To avoid winding up with your own case of buyer’s remorse, we’ll dive into the top home-buying mistakes first-timers make — and how to avoid them.
Common First-Time Home Buying Mistakes
First-time homebuyers accounted for a record-low 24% of all buyers in 2024, down from 32% in 2023, with the age of the typical first-time buyer shooting to 38, up from 35 the year before, according to the National Association of Realtors.
The numbers indicate that homeownership is getting harder. It can come with unexpected hurdles and learning opportunities, but knowing them ahead of time can help you beat the averages. Here are the top first-time homebuyer mistakes and action steps to speed up and smooth out your journey to homeownership.
1. Starting the Loan Approval Process Too Late
A lot of buyers tend to put the cart before the horse and look at homes before speaking to a mortgage lender. While you might fall in love with flashy new homes, the amount you qualify to borrow might not match your champagne taste.
“It's like driving a new car. As soon as you drive the new car and get the smell of the new car, all of your financial wits kind of go out the window,” says Emily Bort, a senior loan advisor with Movement Mortgage in Seattle.
Action step: Get preapproved for a mortgage at least three to six months in advance, advises Bort. If you know you have some credit challenges, such as a lower credit score, you might need even more lead time to work on those issues to qualify for more competitive rates and loan terms.
2. Not Knowing All the Costs Involved
You might be proud of saving up a lot of cash for your down payment, but there are other costs to factor into your home-buying budget. Closing costs, which include loan origination fees, discount points, the appraisal, title insurance and other third-party fees, can amount to 2% to 5% of the loan amount. Then there’s the home inspection, moving expenses and new furniture.
Additionally, experts recommend setting aside about 1% to 2% of your home's price annually to pay for maintenance expenses. The more expensive your home, the more you’ll need to save.
Action step: Create a detailed budget that accounts for all potential homeownership costs — both upfront at closing and after move-in. Don’t forget to account for all of your other monthly debt obligations, including those that appear on your credit report and those that don’t (childcare, food, utilities, gas, healthcare, etc.).
Related: What’s the Best Down Payment for First-Time Homebuyers?
3. Using Your Entire Savings
Emptying your bank account to buy a home leaves you house-poor and financially vulnerable. After purchasing, you’ll need some cash reserves for emergency repairs, maintenance and unexpected life events.
Financial experts recommend having an emergency fund equal to at least six months of living expenses after your home purchase. This provides a critical safety net as you adjust to your new responsibilities of homeownership.
Action step: Save around six months' worth of living expenses in a high-yield savings account just in case something comes up. If you don’t have it at closing, prioritize building this cushion to carry you through a job loss or major life event.
4. Thinking You Need 20% Down on Your Home Loan
The age-old myth of the 20% down payment is just that: fiction. The reality? You can get into a home with 0% down for certain government-backed loans like VA and USDA, and as little as 3% with some conventional first-time buyer programs.
While it’s true that the more you put down, the less you’ll pay in interest, a 20% down payment also means you avoid the added PMI costs. But with today’s high home prices, it could take much longer to save up that 20%.
According to the Federal Reserve Bank of St. Louis analysis, the U.S. average home price reached nearly $504,000 in Q1 2025, meaning you’d need to save up more than $100,000 for a 20% down payment. Depending on your income and monthly debts, that could take years during which rents and home prices could climb.
Action step: Look at various down payment options based on your financial situation rather than fixating on the 20% benchmark. If a higher down payment is going to stretch your budget too far, you might be better off putting down less; your lender can explain various options and crunch numbers on interest rates.
5. Overlooking First-Time Buyer Assistance Programs
Many assistance programs can help you with your down payment and closing costs, usually through your state housing agency, local governments and nonprofit organizations. These programs are typically offered as piggyback second-lien mortgages, or as non-repayable grants, so long as you meet certain income and residency requirements, such as staying in the home for a certain amount of time.
Action step: Research first-time homebuyer assistance programs at the state and local levels. Your lender or real estate agent can point you in the right direction, or check with your local housing agency. Make sure you understand key requirements to use these programs, such as minimum occupancy and under what conditions the assistance has to be repaid.
6. Making a Lump-Sum Down Payment Instead of a Percentage
Many first-time homebuyers save up a down payment lump sum and put the full thing down, regardless of what percentage their loan program requires. As noted in tip No. 4, making the minimum down payment can help you pocket the extra cash you’ve saved for other expenses and an emergency fund. Let’s face it: your home will likely need repairs and maintenance, and you’ll want to customize it after moving in.
Let’s say you have $25,000 saved up for a $300,000 house with a conventional loan. That down payment would be around 8%. Instead, put $15,000 down (5%) and save the other $10,000 for home improvements, cushioning your savings account and other financial goals.
7. Not Taking Advantage of Government-Backed Loans
Certain government-backed loans, such as FHA, VA and USDA loans, can help make buying a home more affordable and attainable, especially if you have a lower credit score or have little saved up for a down payment. FHA loans, for instance, require just 3.5% down and a minimum 580 credit score. With 10% down, you can qualify with a credit score as low as 500.
Meanwhile, zero-down VA financing for eligible military borrowers and USDA loans in certain approved rural areas are great options if you qualify.
Action step: Not all lenders offer government-backed loans, so shop around with several to ask if a government loan is right for you if you don’t qualify for conventional financing. Plus, you can usually combine down payment assistance programs with most of these loans.
8. Not Shopping Around With Multiple Lenders
Looking at multiple lenders allows you to get the best possible interest rates and financing terms; even a small difference in interest rate can dramatically impact your payments for the life of the loan. You also want to ensure your loan officer is responsive and thorough in explaining the ins and outs of your new mortgage.
Alternatively, you can also tap a mortgage broker to do the shopping for you. Mortgage brokers are independent loan professionals who work with several different lenders, serving as a matchmaker between you and the best-fit lender.
Action step: Shop around with at least three or four lenders, or speak with a mortgage broker, to compare loan programs, rates, fees and borrowing requirements.
9. Not Asking Your Loan Officer Enough Questions
Your loan officer isn’t just there to intake your loan information and process paperwork; their knowledge can be an invaluable help in building long-term wealth through homeownership. But they can’t help if you don’t ask questions.
Many first-time buyers don’t realize that certain things can be negotiated or worked around, like lender fees, debt-to-income ratio hurdles or credit-related concerns.
Action step: Speak up and ask questions; no question is off limits with your lender. You may uncover special programs, better options or strategies to improve your approval odds and loan terms.
10. Overlooking Adjustable-Rate Mortgages (ARMs)
With home rates hovering around the 7% mark, ARMs can be a great tool to buy your first home, as long as you know the risks involved. ARMs come with a low, fixed-rate period for a few years before the mortgage resets to a variable rate for the life of the loan, meaning your payments can go up if rates rise. This can potentially make it harder to budget for and afford your loan payments in the future.
Action step: Have your lender work through the math to see if an ARM is beneficial for you, especially if you plan to sell and move before the loan resets in a few years (usually five or seven). Otherwise, you can refinance before the loan resets to snag a more stable, lower rate long term.
11. Not Keeping Track of Your Credit and Credit Score
Your credit score is a major contributor to getting preapproved and the interest rate offers you’ll receive. Lenders do a hard credit check at preapproval and then once more before your closing date to ensure your credit profile hasn’t changed in the interim. If you suddenly take on new debt before your loan closes or close accounts with a long history, your credit score could take a hit and sabotage your final loan approval.
Action step: Check your credit report for free at AnnualCreditReport.com before starting the house-hunting process. Your bank or credit card company might offer free access to your credit score, however, the scoring model that mortgage lenders use might be slightly lower.
12. Focusing on Aesthetics and Not Location
You can always change your home’s look, but you can’t change its location. As you shop for homes, focus on the neighborhood and things like noise, safety, commuting time and whether or not target properties belong to a homeowners association. HOAs can make updating your home more cumbersome, requiring approval and complying with specific guidelines.
You can always update your home after move-in and customize it exactly the way you want. Don’t let ugly carpet or an off-putting paint color or flooring choice dissuade you from a home’s potential, especially if it has good bones and it’s in a great location. Remember, there are low-down-payment renovation loans that can take care of cosmetic as well as structural issues.
Action step: Make a list of location-specific requirements that are most important to you, such as proximity to work, shopping, dining, recreation and other amenities. If you have kids (or plan to), pay attention to school districts and individual school quality, along with access to daycare facilities.
13. Purchasing a Home You Can’t Afford
To calculate your loan, a lender will look at your debt-to-income ratio to determine how much of your gross monthly income (before taxes) is going toward your total monthly debts — including your new mortgage payment.
However, your DTI isn’t the full picture; it doesn’t include ongoing expenses like childcare, healthcare, utilities, groceries and recreational spending.
Aside from the home’s price tag, there are property taxes, HOA fees, closing costs, home inspections and real estate agent fees to factor into the equation.
“You really need to have a separate conversation around budgeting and not just the preapproval amount, because they’re two different things,” Bort says.
Action step: Bort recommends not worrying about the loan amount you’re approved for and instead focusing on the monthly mortgage payment you can actually afford once you factor in all other monthly expenses, including the lifestyle you want to maintain versus the necessities.
14. Skipping the Home Inspection
Forgoing the home inspection can save time and a few hundred dollars, but it’s one of the biggest mistakes you can make as a first-time buyer, especially if you don’t have the DIY chops to make major repairs on your own. Ask your agent and loan officer for a few options to compare inspection services and pricing.
Action step: Just get the home inspection. You either pay a few hundred dollars now or potentially risk paying thousands of dollars after closing if major repairs pop up. Use the inspection report as a bargaining tool with the seller to make certain repairs or provide seller credits at closing.
15. Being Too Hasty
It’s natural to want to buy a home before home prices or mortgage rates rise even more. Or maybe you have a timeline in your mind to snag the perfect place. But if you move too quickly through the home-buying process, it could cost you dearly.
Taking your time not only helps you work on your credit and finances, it also allows you to beef up your savings for a down payment and closing costs.
Action step: Give yourself a one-year lead time to buy a home, starting with checking your credit report and score and having a preliminary discussion with a mortgage lender about what items you might need to work on now to put yourself in the best position possible to qualify for competitive loan terms and rates.
16. Taking On More Debt or Changing Jobs Before Closing
One of the most common (and deal-killing) mistakes homebuyers often make is making major financial purchases or taking out a loan after their offer is accepted but before closing. This can sabotage your final loan approval because lenders often check your credit score and report as well as verify your employment again just before closing, Bort says.
“I always encourage borrowers, once I've reviewed their bank statements and their contract, to not move money around until we give them the instructions on where to move it,” Bort says, noting that lenders scrutinize large transactions and DTI closely to ensure you can afford your new loan.
Your lender might delay closing to gather additional explanation or documentation from you, and you potentially risk being denied for a loan if your credit score or DTI changes significantly before closing, Bort adds.
Action step: Keep the status quo in your finances and employment after you’re preapproved and before closing on your loan. That means don’t make large credit card purchases, move money around in your bank account or have unsourced large deposits in your checking or savings account.
17. Skimping on Hiring a Real Estate Agent
With NAR’s recent real estate commission policy changes, homebuyers might be on the hook for compensating their real estate agent directly. Previously, sellers paid the full agent commission in their closing costs, rolling that expense into their asking price.
The buyer’s agent commission fee is usually about 2.5% of the final sales price, according to data from Clever Real Estate, a discount real estate agent matching service. Hiring a real estate agent for your first home purchase can help you navigate a sometimes complex process and negotiate the finer points of the deal. Otherwise, the seller’s agent, who works in their client’s best interest, runs the show.
Action step: Interview a few real estate agents and ask what services they provide and what their fees are. Ask for solid recommendations from your lender and friends/family members, and check recent online reviews. You can also request that sellers pay the full agent commission as a condition of your offer.
18. Underestimating Maintenance and Repair Costs
Owning a home means you're the landlord now. First-time buyers often underestimate the ongoing cost of maintenance and routine repairs. Whether it’s storm damage, leaky plumbing or insulation, there’s a whole host of items in a home that require additional budgeting.
Action step: Budget at least 1% of your home's purchase price per year for maintenance and unexpected repairs. If your home is older or larger, you may need to set aside even more, especially if you plan to hire out help.
19. Not Planning for Life After Move-In
It’s easy to get caught up in the excitement of buying your first home, but don’t forget to think about what comes next. Your new place may not have all the necessities for day-to-day life, such as appliances, window coverings, lawn equipment, decorations and furniture.
You might also have to bump up your budget to account for a longer work commute, higher utility or internet/cable bills and household services like trash or snow removal. Consider what household tasks you’re able to do on your own versus what you’d prefer to hire out — and how much life after move-in will cost.
Action step: Build an added cushion into your budget for post-move expenses to reduce financial strain. Consider buying items second-hand or used or at discount stores to reduce costs, and shop around for household service providers to ensure you’re getting the best deals.
Final Thoughts
Buying a home can come with twists and turns you might not expect. Set yourself up for success by being prepared and savvy about each decision you make along the way.
Your first home purchase will likely have some bumps in the road, and it won’t be perfect. It just needs to be right for your current situation. By avoiding these common first-time homebuyer mistakes, you’ll position yourself to have a smoother journey to homeownership.
