First-Time Home Buyers Guide

September 10, 2019

Step 1: Determine your budget

Before you buy a home, it’s important to determine what you can afford. You’ll be responsible for the monthly mortgage payments, plus home insurance, maintenance expenses, and possible homeowner association fees.

Saving money to pay for your down payment is important. Lenders have different requirements for down payments, but generally, the higher your down payment, the lower your monthly payments will be. Calculate your monthly income and expenses to see what you can afford for your housing budget. Lenders typically recommend that consumers’ monthly mortgage and housing expenses not exceed 30% of gross monthly income.

housing expenses vs. income ratio

  • Calculator: How much will my fixed-rate payments be?
  • Find out what your total monthly housing cost would be, including taxes and homeowners insurance.
  • Contact your lender and/or insurance agent for an insurance estimate and guidance regarding Homeowner’s insurance, title insurance, and private mortgage insurance (PMI).
  • Ask your bank or lender how much closing costs are likely to be.
  • Add those together and you’ll know about how much your total monthly payments will be.

Step 2: Get organized

Before you start looking for a home or completing a home loan application, it’s a good idea to gather some key information and documents you’ll need when applying for your loan.

Know Your Score: You’re entitled to a free credit report once a year. Get yours, know your FICO score, and identify/fix any issues before you buy a home. We recommend using

Name(s), and work number(s) of employer(s) for the past 2 years.

Monthly income for you and your co-borrower. It’s good to have your most recent pay stubs showing a year-to-date income, bonuses, commissions, and overtime for the past 2 years (a good source for finding this information is on your tax return).

What you need to know to apply for a loan


If you are self-employed,you will need the last 2 years’ personal tax returns (Including K-1s) as well as the last 2 years’ tax returns for the type of business you own:

  • Sole Proprietorship (Schedule C)
  • Partnership (Form 1065)
  • Corporation (Form 1120 or 1120s)
  • Documentation to support credit history problems if applicable, which can be a written explanation of late payments, bankruptcy (petition and discharge papers), defaults, judgments and/or liens.

Having your home loan approved is largely dependent on these four things. Having them ready ahead of time will help streamline the loan process so you aren't making multiple trips to the bank because you didn't know you needed a certain document.

Step 3: Find financing

Once you know your budget, it’s time to find a lender and secure a loan (we’d recommend going with a family-owned bank that’s a leading home lender). Keep your credit report handy – your credit score can play a key role in the type of financing and interest rate you qualify for.

When you and your lender find a mortgage that fits your needs, you can get pre-qualified. This will help you confirm how much home you can afford, plus it will give you a leg up on other buyers. When you find the house you want to call “home,” you’ll be able to act quickly and make an offer with confidence.

Step 4: Find your home

This is the fun part! We'd recommend considering these key points to ensure you find a home that truly suits you. As you consider these features, note which ones are truly needs, and those that you’d be willing to compromise.

  • Check out different styles and floor plans (ranch, 2-story, etc.)
  • Look at various neighborhoods - which ones just feel right to you?
  • Priorities inside the home: number of bedrooms, finished basement, size of kitchen, central heat, air conditioning
  • Priorities outside the home: size of yard, garage, landscaping/trees
  • Neighborhood priorities: proximity to schools, entertainment, shopping, police/fire department
Consider location, price, size, amenities


You can do the searching on your own with websites like, or with the help of a Realtor, who can provide local market expertise and guidance.

Step 5: Make an offer

The next step to buying a home is to make an offer in writing and submit it to the seller. This can be done on your own or through your real estate agent and is accompanied by a deposit. This deposit, called “earnest money,” indicates a serious intent to purchase and is usually a pre-determined amount. This deposit is refundable in most cases and will only be charged if your offer is accepted. Be sure to thoroughly understand the stipulations of the money that’s exchanged as it can vary.

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  • Owning a Home
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