According to the National Association of Realtors, in 2024, the market share for first-time buyers dropped from 32% to 24%. However, the age of first-time buyers increased to 38 years from 35. And despite first-time buyers being older than at any other time in history, the process is just the same, the risks and benefits are still the same, and these tips can help you regardless of whether you’re 18, 28, 38, or even 58, embarking on the journey to become a first-time property owner.
There is a lot involved in preparing to purchase your first property. If this is on the cards for you, it’s really important that you understand what you’re facing and take a hands-on approach to becoming a property owner and still have the best experience possible, avoiding many of the common pitfalls that come with property purchases.Â
Credit and Down Payment
Before you even look at your first house, you need to understand your credit score and how much of a down payment you’re going to need. Typically, you will need around a 10% down payment to secure your property; however, the exact amount will depend on the type of mortgage you are approved for, which will be influenced by your credit score.
The best way to make this process as affordable as possible is to ensure you have a good credit score. So before you do anything, address any issues and inconsistencies with your credit score, pay down your debt, and make sure you’re paying all of your bills on time and in full and in as much amount as possible, i.e., avoiding minimum payments on credit cards. All of this will be reflected in your credit score, helping you secure a more favorable market rate.Â
Mortgages
There are other varieties of mortgages for first-time buyers, and all mortgages will have varying time payments and eligibility requirements.
You may qualify for a VA loan, which is offered by the Department of Veterans Affairs. These mortgages are open for current military service members and veterans and technically require no down payment. Or you might qualify for an FHA loan, which is ensured by the federal housing administration and can access down payments as low as three and a half percent, meaning you can put that extra money towards the costs of the property purchase, for example.
It is really important that you check all of the different mortgage options that are available to you as a first-time buyer and you understand the different interest rates and terms and conditions for your mortgage so that you understand how much you will be paying and when you’ll see what to expect.Â
Costs
There are many costs that will fall outside of your down payment and cannot be paid from your mortgage. While securing approval from a mortgage opens up a line of credit, the reality is that credit cannot be used for anything except paying the cost of the property. Additional costs, such as realtors’ estate agents and conveyancer fees, such as Harper Macleod, and closing costs need to be paid upfront via other means.
So when saving for your down payments, ensure that you not only have the down payment but can also cover all of the associated costs. Closing costs, for instance, are the fees associated with the various services and expenses that are part of the real estate transaction, such as the appraisal, title search, and insurance, and they typically range from 2% to 5% of the home’s purchase price.
