Buying your first home is one of the biggest financial decisions you will ever make. For most people, it is also the largest purchase of their lifetime. That combination of excitement and stakes can make the process feel overwhelming, especially when you are not sure what to expect at each turn.

This guide helps first-time homebuyers at every stage. It covers financial prep and steps after closing. It helps you move forward with clarity and confidence.

What to Do Before You Even Start Looking for Your First Home

Most people jump straight to browsing listings. That is completely understandable. But the work you do before you start touring homes will determine how smoothly everything else goes.

Start with your credit. Your credit score is one of the most important numbers in the homebuying process. Lenders use it to decide whether to approve your loan and at what interest rate. A higher score generally means a lower rate, which can save you thousands of dollars over the life of the loan.

Pull your credit report and review it carefully for errors. Dispute anything that looks incorrect. If your score needs work, pay down balances and make on-time payments. Avoid new credit applications for several months before you apply for a mortgage.

Next, get honest about your finances. What do you actually bring in each month? What goes out? A good rule of thumb is to keep your total housing costs at or below 28 percent of your gross monthly income.

Your total debt load, including car payments, student loans, and the new mortgage, should stay at or below 36 percent. This is known as the 28/36 Rule.

These front-end and back-end ratios are what lenders will calculate when reviewing your application.

It is also the right time to get clear on what you have saved. You will need money for a down payment, closing costs, and reserves. More on those costs in a moment.

Getting Pre-Approved: Why It Matters More Than You Think

Pre-approval is not just a formality. It tells you exactly how much a lender is willing to lend you based on your actual financial picture. It also signals to sellers that you are a serious buyer, not just browsing. In a competitive market, sellers often give priority to pre-approved buyers.

To get pre-approved, your lender will review your income, job history, credit score, debt-to-income ratio, and assets. You will need to provide documents such as recent pay stubs, W-2s from the last two years, bank statements, and tax returns. Self-employed borrowers typically need two years of business and personal tax returns as well.

One important note: getting pre-approved is not the same as getting pre-qualified. Pre-qualification is a quick estimate based on self-reported information. Pre-approval involves actual verification. When you are ready to make an offer, pre-approval carries far more weight.

Getting pre-approved at TelComm Credit Union is a great first step. We will walk you through the numbers and help you understand what loan options make the most sense for your situation.

Understanding Your Mortgage Options

A mortgage is a loan secured by the property you are purchasing. But not all mortgages are the same, and the one you choose will affect your monthly payment and overall cost for years to come.

The most fundamental choice is between a fixed-rate and an adjustable-rate mortgage. A fixed-rate mortgage locks in your interest rate for the life of the loan. Your payment stays the same every month, which makes budgeting straightforward.

An adjustable-rate mortgage, or ARM, starts with a lower rate that can change after an initial period, usually based on market indexes. ARMs can be a fit for buyers who plan to sell or refinance before the rate adjusts, but they carry more uncertainty over time.

The next major decision is loan term. A 30-year mortgage spreads payments over a longer period, which keeps the monthly payment lower but means you pay more interest in total.

A 15-year mortgage has higher monthly payments. But it charges much less interest over the life of the loan. You also build equity faster.

Many buyers choose the 30-year for the breathing room it provides month to month, then pay extra toward principal when they can.

There are also different loan programs to be aware of. The federal government does not back conventional loans, and they typically require a stronger credit profile.

FHA loans are insured by the Federal Housing Administration. They allow lower down payments and lower credit scores. This makes them accessible to more buyers.

VA loans are available to eligible veterans and active-duty service members. Your lender can help you identify which program fits your situation best.

The Real Costs of Buying a Home

One of the biggest surprises for first-time homebuyers is the full scope of costs involved. The down payment is just the beginning.

Down payment amounts vary by loan type. Conventional loans often require 5% to 20% down. FHA loans can be as low as 3.5% down with qualifying credit. Putting down 20% removes private mortgage insurance (PMI). PMI is a monthly cost that protects the lender if you default.

If you put down less than 20% on a conventional loan, PMI is usually required. It stays in place until you reach 20% equity.

Closing costs are a separate expense that many buyers do not fully anticipate. These typically range from 2% to 5% of the loan amount. They cover loan origination fees, the appraisal, and title insurance. They also include prepaid homeowners insurance, property taxes, and prepaid interest.

On a $200,000 home, that could mean $4,000 to $10,000 due at closing on top of your down payment.

Beyond closing, plan for ongoing monthly costs: property taxes, homeowners insurance, and possible HOA fees.

New homeowners should also set aside money for maintenance and repairs. A general guideline is to budget 1% to 2% of the home’s value annually for upkeep. Older homes may require more.

What to Know When You Are Searching for a Home

Once you are pre-approved and have a realistic budget in mind, the home search can begin. This stage is exciting, but it comes with decisions that will affect your loan and your finances.

Be strategic about what you need versus what you want. Create two lists before you start touring. One for non-negotiables (location, number of bedrooms, school district) and one for nice-to-haves. This will help you stay grounded when you fall in love with a home that is slightly over budget or missing something important.

Pay attention to the neighborhood, not just the house. Look into flood zones, property tax rates, proximity to employers, and the general condition of surrounding properties. These factors affect both your daily life and the home’s resale value.

Do not skip a home inspection. After the seller accepts your offer, a professional inspector will check the home. The inspector will look at the structure, systems, roof, and plumbing. The inspector will also check other parts of the home. You don’t need an inspection, but you take a significant risk if you skip it.

If the inspector finds problems, you can negotiate repairs with the seller, ask for a price reduction, or walk away. Without an inspection, those issues become yours the moment you close.

Also understand that during the search and offer process, you should avoid making any major financial moves. Do not open new credit accounts or make large credit purchases. Do not change jobs. Do not deposit large, unusual cash amounts without documents.

Lenders will verify your financials again before closing, and unexpected changes can delay or derail your approval.

Making an Offer and Navigating the Contract

When you find the right home, your real estate agent will help you put together an offer. The offer includes the price you are willing to pay, contingencies, and proposed timelines.

Common contingencies include a financing contingency. Your offer depends on getting your loan approved.

They also include an inspection contingency. You can back out or renegotiate if major issues are found.

Another is an appraisal contingency. If the home appraises below the price, you have options. These protect you. Understand each one before you sign.

If the seller counters, negotiate thoughtfully. Price matters, but so do terms. Sometimes a seller will accept a lower price in exchange for a faster closing or fewer contingencies. A trusted real estate agent can help you read the situation.

Once an offer is accepted, you will typically put down earnest money, a deposit that shows your commitment to the purchase. This is held in escrow and applied toward your down payment or closing costs at closing. If you back out for reasons not covered by your contingencies, you may lose this deposit.

What Happens Between Offer and Closing

This period is often called “under contract” and it is busier than most first-time buyers expect. Your lender will order an appraisal to confirm the home is worth the purchase price.

Underwriting will review your financial documents in detail and may ask for additional information, sometimes more than once. Respond to all lender requests quickly. Delays here can push back your closing date.

You will also need to secure homeowners insurance well before closing, typically at least 10 days in advance. Your lender will require proof of coverage before they will finalize the loan.

Shortly before closing, you will receive a Closing Disclosure, a document that outlines your final loan terms, monthly payment, closing costs, and cash to close. Review it carefully and compare it to the Loan Estimate you received earlier in the process. If anything looks different, ask questions before closing day.

A final walk-through of the property usually happens within 24 to 48 hours of closing. This is your chance to verify the home is in the agreed-upon condition and any negotiated repairs have been completed.

Closing Day: What to Expect

Closing is when ownership officially transfers to you. You will sign a significant amount of paperwork, pay your closing costs and any remaining down payment funds, and receive the keys. Bring a valid government-issued ID and a cashier’s check or proof of wire transfer for any funds due. Closing typically takes one to two hours.

Read everything before you sign. It is your right to ask questions or request clarification on any document. Your title company, real estate agent, and lender will all be there to help.

After Closing: What New Homeowners Often Overlook

The work is not quite done once you have the keys. Here are a few things to handle in the weeks following your closing.

• Change the locks. You do not know how many keys existed before you moved in.
• Set up your mortgage payment. Confirm the servicer (sometimes the lender sells loans to a servicer), due dates, and how to pay. Setting up automatic payments can help you avoid missed payments that could affect your credit.
• File for your homestead exemption if you are eligible. Many states and counties offer property tax reductions for primary residences. Deadlines vary, so check with your local assessor’s office early.
• Update your address with the post office, your employer, financial institutions, and any other accounts or subscriptions. Notify your insurance carrier of any changes to your coverage needs.
• Start building your home maintenance fund. Even if the inspection came back clean, things will eventually need attention. Having a dedicated savings account for home expenses means you are prepared when the time comes.

First-Time Homebuyer Checklist

Use this as a reference throughout your journey.

Before You Apply

• Check your credit report and dispute any errors
• Pay down existing debt to improve your debt-to-income ratio
• Save for a down payment, closing costs, and reserves
• Gather financial documents (pay stubs, W-2s, tax returns, bank statements)
• Avoid opening new credit accounts or making major purchases

During the Process

• Get pre-approved before starting your home search
• Work with a trusted real estate agent
• Stick to your budget, not your maximum loan amount
• Schedule a professional home inspection
• Respond quickly to all lender requests
• Secure homeowners insurance before closing
• Review your Closing Disclosure thoroughly

At and After Closing

• Bring valid ID and certified funds to closing
• Complete your final walk-through
• Change locks on your new home
• Set up your mortgage payment
• File for homestead exemption if eligible
• Build a home maintenance savings fund

Tips to Keep in Mind Throughout

Do not spend up to your maximum loan amount. Just because a lender approves you for a certain amount does not mean you should borrow all of it. Leave room in your budget for life’s other priorities.

Work with a lender you trust. Not all lenders offer the same rates, fees, or level of service. A credit union like TelComm is member-owned, which means we work for you, not shareholders.

Ask questions at every stage. There is no such thing as a question that is too basic when it comes to a purchase this significant. A good lender and agent will welcome them.

Plan for the long term. Your first home does not have to be your forever home. Think about how long you realistically plan to stay, and let that guide decisions about loan type, neighborhood, and how much to spend.

Ready to Take the First Step?

At TelComm Credit Union, we believe everyone deserves access to straightforward, member-first guidance on their path to homeownership. Whether you are just starting to think about buying or you are ready to get pre-approved, our team is here to help.

Get pre-approved now or reach out to us at 417.886.5355 to learn more about our home loan options. We would love to walk through the numbers with you and help you understand what is possible.