You Need Less Than You Think, and More Than the Ads Say
Two lies circle every first-time buyer. The old one says you need 20% down, which keeps people renting for years past the point they could have bought. The new one, from the ads, says you can practically buy with pocket change, which sets people up to close broke and panic at the first repair bill.
The truth sits in the middle. Down payments start at 3% on conventional programs, 3.5% on FHA, and zero on VA and USDA for those who qualify. But closing costs add roughly 2% to 5% of the purchase price, and you should land in your new house with savings intact. On a $350,000 home, a sane all-in target is $20,000 to $30,000. Not $70,000. Not $5,000 either.
Here is the sequence that gets you from here to keys without donating money along the way.
Step 1: Fix Your Credit Before Anyone Pulls It
Your credit score prices your entire mortgage: the rate, and the PMI if you put down under 20%. Months before applying, pull your reports, dispute errors, pay balances down, and open nothing new. A score bump before application is worth real money every month for decades. After application, change nothing. No new cards, no financed furniture, no new car until after closing. Lenders re-check, and buyers genuinely lose approvals this way.
Step 2: Pick Your Program
The big four, fast:
- Conventional 3% down (HomeReady / Home Possible). Fannie Mae and Freddie Mac programs for borrowers earning up to 80% of their area’s median income. Down payment can come entirely from gifts and grants, and the mortgage insurance cancels once you build equity. First-timers take a short homeownership course.
- FHA, 3.5% down at a 580 score. The wide-open door for thinner credit, per HUD. The cost: mortgage insurance that, at minimum down payment, runs the life of the loan.
- VA, zero down, no monthly mortgage insurance, for eligible service members, veterans, and certain surviving spouses. If you are eligible, start here.
- USDA, zero down in eligible rural and suburban areas, within household income limits.
If your score is in the 600s, make lenders quote FHA and conventional side by side. The winner flips depending on your score and down payment, and a good lender will show the comparison without being asked twice. Our down payment guide goes deeper.
Ask about state down payment assistance too. Most states run grant or forgivable-loan programs through their housing finance agencies, and lenders who work with them will say so right away.
Step 3: Get Pre-Approved, Then Shop Lenders Anyway
Pre-approval means a lender verified your credit, income, and assets, and it is the ticket sellers expect attached to an offer. Get it before you tour anything.
Then, and almost nobody does this, keep shopping. Pre-approval does not lock you into that lender. Once you have a house under contract, apply with at least three lenders. Each must send a Loan Estimate within three business days, in an identical federal format, per the CFPB. Page one shows the rate. Page two shows the fees. Compare them line by line and tell the losers what the winner offered. Lenders move when they know you are comparing.
This hour of paperwork is routinely worth thousands. Skipping it is the single most expensive shortcut in first-time buying.
Step 4: Protect Yourself Through Closing
Get an inspection, even when the market pressures you to waive it. A $500 inspection that finds a $15,000 foundation problem is the best trade you will ever make. Walking away is a result, not a failure.
Three days before closing, your lender sends the Closing Disclosure, the final version of your costs. Set it next to your Loan Estimate. Lender fees are not allowed to creep, and certain categories are capped. Question every line that grew. Our closing costs guide explains what is negotiable and what is not.
Then sign an alarming number of pages and take the keys.
Do This Next
Check your credit reports this week. Look up whether your income clears the HomeReady or Home Possible limits. Then pull three quotes and compare them properly, starting with our guide to the best lenders for first-time buyers, the payment math in our mortgage calculator, and the full program lineup at the mortgages hub.