Home is where the heart is, but house buying tips are right in this feature. Starting the journey to homeownership can be really overwhelming for first-time buyers, but it’s super important to prepare yourself for the process. Afterall, buying a 🏠 is kinda a big deal. So, we asked Nikki R. Thomas (she/her), NYC real estate broker, for advice that’ll have you ready to take the next step from endlessly scrolling through Zillow (or TikTok).

This guide aims to get you off on the right foot with some practical tips. From financial considerations to navigating your local real estate market, I’ve compiled a set of insights from my years of experience as an agent who’s worked with many first-time buyers.

1. Figure Out If Homeownership Makes Financial Sense.
Homeownership is a worthwhile goal, but it needs to be done responsibly. This means taking a look at your financial situation and figuring out whether or not homeownership actually makes financial sense for you at this time. Ask these questions to help you decide:

  • Will you have money left over after your down payment? Buying a home doesn’t just involve the down payment. You also need to be able to afford closing costs, mortgage origination fees, title fees and other fees, depending on the type of home you’re buying. You also need to think about what may happen after you purchase the home. Homes require ongoing maintenance, and you’re bound to have a home related emergency at some point. You also want to make sure you still have a cushion for other types of emergencies as well.
  • How are your income and career trajectory looking? Has your income been pretty stable for several years? Is it expected to stay that way for the foreseeable future? Or maybe you’re looking at increasing income? If so, then all of that is great and argues in favor of homeownership. But if your income is quite unpredictable or your career prospects are looking murky, the commitment involved in owning a home may not be for you right now.
  • What’s your five year plus plan? How long do you think you’re going to stay in the place once you buy? If it’s more than five years, then homeownership may make more sense. The reason? With a shorter time horizon, you’re more likely to get caught in a real estate “down” cycle. And this means you’re more likely to sell your home for a loss.
  • How does owning compare to renting? Contrary to popular belief, renting isn’t necessarily throwing money away. Yes, you’re paying your landlord’s mortgage. But the monthly cost of homeownership can sometimes be a lot more than monthly rent. You can check out the cost difference using rent vs. buy calculators. It’s true that homeownership builds equity, but you might be able to do better by putting your money to work for you in the stock market.

2. Determine How Much You May Be Able to Afford.
When looking to buy a home, start by determining how much you can afford. Contact a mortgage professional for a pre-approval, which will indicate the loan amount and interest rate the bank may offer. Keep in mind that your housing costs should ideally stay below 30% of your gross income. Additionally, consider your overall debt-to-income ratio, aiming for a maximum of 43% to improve your chances of mortgage approval and ensure you’re not over-stretching yourself financially as a homeowner.

Finally, be on the lookout for first-time home buyer programs at the local, state, and federal level. For example, in New York, there’s the State of New York Mortgage Agency (SONYMA). SONYMA offers low cost home mortgages and down payment assistance for first-time buyers. And in New York City, there’s the HomeFirst down payment assistance program which provides large grants to qualifying buyers for long term, primary residences. These programs can be a great way to amp up your existing down payment or help cover closing costs. However, it’s still a good idea to get a sense of what you could afford without them, since getting approved for any down payment assistance isn’t guaranteed.

3. Get Your Credit in Check.
Your credit score is an important factor when it comes to getting a mortgage. While lenders don’t necessarily have hard “cut offs” for credit scores, a lower score makes it less likely that you’ll get approved for a mortgage. Credit scores also impact your mortgage interest rate. Having a higher rate will equal thousands of dollars more paid over the life of your loan. If you have high credit balances, consider paying some of them off, starting with higher interest stuff. You should also check your full credit reports in addition to your scores. Many people don’t realize that they have errors on their reports which are impacting their scores and could affect their chances of getting a mortgage. Review the reports carefully and get any inconsistencies cleared up ASAP.

4. Get Clear on Your Short, Medium, and Long-Term Housing Needs.
Is this meant to be your starter home? Just the spot you want to land so you can stop renting? Or would you like for this to be a place you stay in for some time to come? If you’re thinking that this is going to be your starter home, then it makes less sense for you to “stretch” your budget to afford a place. Focus more on finding a place that fits your short and medium term needs that stays squarely within what you can afford. If you think you want this home to be your forever home, then stretching your budget is a move you may want to bring out of your back pocket. Staying longer term means you need to really love the place you’re going to be in. And if you stay in your home for 10+ years, you’re much more likely to realize property appreciation.

5. Line Up Your Professionals.
Your real estate team is a crucial part of ensuring that your transaction goes as smoothly as possible. Depending upon your market, your team may consist of your real estate agent, your mortgage professional, title professionals, a real estate attorney, and a home inspector. They often can make the difference between a deal making it to the closing table or not. So don’t take this decision lightly. You need to be very comfortable with them. That may seem like obvious advice, but it’s critical. These folks are helping you with one of the most important financial transactions of your life. They’re also going to be privy to lots of sensitive information about you. You need to trust them. They should communicate well and be responsive to you and others involved in the transaction. Getting a deal to the closing table requires a high degree of coordination among everyone, and a deal can fall apart quickly due to a lack of communication and responsiveness.

Finally, they also should inspire confidence. You need to feel secure that whomever you hire has the talent, experience, and knowledge you need to get the results you want. You should have your team lined up before you find a place.

6. Get Familiar with the Market—Online and Offline.
Your real estate agent will help you to understand what’s happening in your market and what you can expect in terms of market value. And it’s important that you pay close attention to the information they provide you with. And be sure to do research on neighborhood aspects that are important to you like schools, local amenities, and parks. Sites like WalkScore can be an excellent starting point. That said, nothing really beats seeing listings and neighborhoods in person. Photos and floor plans simply can’t tell the full story. And you can’t fully tell how you’ll feel in a space until you’re actually there. Seeing things in person also helps you to more quickly understand what it is that you do (and don’t) want.

7. Be Realistic About Your Search.
Searching for a home can be a difficult process. And the tighter the market, the more fraught the experience may be. That’s why it’s crucial to stay rooted in what’s important to you but also to be realistic about what’s out there. If you’re hoping to find a four-bedroom home for $400k but everything in your desired area is north of $600k, then you have to adjust. Either lower your budget and look in other areas or put your search on hold until you can afford the area you want. You should also get more clarity about your “needs” in a home versus your “wants.” They aren’t the same thing and conflating the two could lead you to pass on great homes. It’s rarely the case that a homeowner gets every single thing they want in a home. So if a home checks off all of your actual needs, then it’s worth checking out to see if it could actually be the one for you.