Top Tips for First-Time Home Buyers

Like any big project, a successful homebuying experience is all about getting the details right from start to finish. These tips for first-time homebuyers Calgary home finder will help you navigate the process, save money and close the deal. We organized them into four categories:

• Preparing to buy tips.
• Mortgage selection tips.
• Home shopping tips.
• Home purchasing tips.

Preparing to buy tips

1. Start saving early

Here are the main costs to consider when saving for a home:

• Down payment: Your down payment requirement will depend on the type of mortgage you choose and the lender. Some conventional loans aimed at first-time home buyers with excellent credit allow as little as 3% down. But even a small down payment can be challenging to save. For example, a 3% down payment on a $300,000 home is $9,000. Use a down payment calculator to decide a goal, and then set up automatic transfers from checking to savings to get started.
• Closing costs: These are the fees and expenses you pay to finalize your mortgage, and they typically range from 2% to 5% of the loan amount. You can ask the seller to pay a portion of your closing costs, and you can save on some expenses, such as home inspections, by shopping around.
• Move-in expenses: You’ll need some cash after the home purchase. Set some money aside for immediate home repairs, upgrades and furnishings.

2. Decide how much home you can afford

Figure out how much you can safely spend on a house before starting to shop. NerdWallet’s home affordability calculator can help with setting a price range based on your income, debt, down payment, credit score and where you plan to live.

3. Check and strengthen your credit

Your credit score will determine whether you qualify for a mortgage and affect the interest rate lenders will offer. Take these steps to strengthen your credit score to buy a house:

• Get free copies of your credit reports from each of the three credit bureaus — Experian, Equifax and TransUnion — and dispute any errors that could hurt your score.
• Pay all your bills on time, and keep credit card balances as low as possible.
• Keep current credit cards open. Closing a card will increase the portion of available credit you use, which can lower your score.
• Track your credit score. NerdWallet offers a free credit score that updates weekly.

4. Explore mortgage options

A variety of mortgages are available with varying down payment and eligibility requirements. Here are the main categories:

• Conventional mortgages are not guaranteed by the government. Some conventional loans targeted at first-time buyers require as little as 3% down.
• FHA loans are insured by the Federal Housing Administration and allow down payments as low as 3.5%.
• USDA loans are guaranteed by the U.S. Department of Agriculture. They are for rural home buyers and usually require no down payment.
• VA loans are guaranteed by the Department of Veterans Affairs. They are for current and veteran military service members and usually require no down payment.