🏠 Home Buying From Scratch

Before looking at listings, you need to answer the honest question: can you afford to buy right now? Here's the checklist:

• Credit score 620+ (for FHA) or 740+ (for the best conventional rates)
• Down payment saved — 3.5% minimum (FHA), 5-20% (conventional)
• Closing costs saved — 2-5% of purchase price in a separate fund
• Emergency fund intact — 3-6 months of expenses that you won't touch for the house
• Debt-to-income ratio under 43% — total monthly debts (including future mortgage) divided by gross monthly income
• Stable income for 2+ years — lenders want employment history

If you don't meet all of these yet, that's fine — this course will help you get there. If you do meet them, you're ahead of most first-time buyers.

The down payment is the biggest barrier — but it's often smaller than people assume.

Down Payment Options

• FHA: 3.5% — On a $300K house, that's $10,500
• Conventional: 5% — $15,000 on $300K (with PMI)
• Conventional: 20% — $60,000 (no PMI required)

Where to Find Help

Most states have down payment assistance programs — grants or low-interest loans specifically for first-time buyers. Check your state's housing finance authority. Many programs offer $5,000-$15,000 in assistance.

Keep your down payment in a high-yield savings account, not invested — you need it available on a specific date and can't afford market risk.

Pre-qualification is a rough estimate. Pre-approval is a commitment from a lender after verifying your finances. You want pre-approval before house hunting — it tells sellers you're serious and ready to close.

What Lenders Need

• Last 2 years of tax returns
• Last 2 months of pay stubs
• Last 2-3 months of bank statements
• Employment verification
• Credit check authorization

Get pre-approved by 2-3 lenders. Their rates and fees will differ. Each credit pull within a 45-day window counts as one inquiry, so shop around.

Now the fun part — and the part where emotions can override math. Stay disciplined.

Rules for Smart Home Shopping

• Buy below your pre-approval amount — the bank says you can afford more than you actually can
• The 28/36 rule: Housing costs under 28% of gross income; total debt under 36%
• Factor in the hidden costs: Property taxes, insurance, HOA, maintenance (budget 1% of home value/year)
• Visit at different times: A quiet street at noon might be a racetrack at 5pm

Negotiation Power Moves

In a buyer's market: ask for closing cost credits, home warranty, or price reductions based on inspection findings. In a seller's market: focus on clean offers with fewer contingencies and flexible closing dates.

You're in the home stretch. Here's what happens at closing and what to do after you get the keys.

Closing Day Checklist

• Review the Closing Disclosure (you get this 3 days before closing)
• Compare every number to your Loan Estimate — flag discrepancies
• Do the final walkthrough — verify repairs were made and nothing changed
• Bring certified check or wire funds (your lender will tell you the exact amount)
• Bring government-issued photo ID
• Sign approximately 47,000 documents (only slight exaggeration)

After Closing

• Change locks immediately
• Set up utilities in your name
• Update your address everywhere
• Start your home maintenance fund (1% of home value per year)
• Don't buy furniture on credit — you just made the biggest purchase of your life