First Time Home Buyer

First-Time Home Buying 101: Making Your First House a Reality

By David DeCubellis, Vice President, Navigant Credit Union


Buying a home, especially your first home, is a huge life milestone – a milestone that requires a great deal of patience, hard work and big-picture thinking to accomplish.

First-time home buyers need to search extensively to find a budget-friendly house, and do research to find a loan product they qualify for from a mortgage lender they trust. And most prospective home buyers need to do all of this in between working full-time jobs, balancing their personal lives and relationships, and financially preparing to make the largest investment of their lives. Indeed, the process can be intimidating – and for many, it’s downright scary. But it doesn’t have to be! It should be exciting.

With the right planning and the right research, first-time home buyers can get approved for a loan and close on a house efficiently and painlessly, and—most importantly—they can walk away from the process with a set of keys to their very own front door. 

So, what does a prospective first-time home buyer need to do to prepare?

Assess Your Financial Situation

Before attending neighborhood Open Houses or shopping around for various mortgage loans, first-time home buyers need to take a hard, objective look at their financial situations and general lifestyles to make sure they’re ready to take this next step.

If you’re thinking about buying a house, you should start developing a plan and creating a budget. Start by:

  • Tracking your spending: In order to create a strict budget that allows you to reach your savings goals while maintaining your lifestyle, you need to know exactly where you’re spending your money. Spend two or three months meticulously recording where your cash is going, and see if there are any realistic opportunities to cut back on spending.
  • Understand your debt: Prospective home buyers should not try to enter the housing market if they have excessive debt. From a financial responsibility standpoint, adding a home loan on top of existing loans will make it more difficult for the buyer to pay off their debt and achieve financial independence. Plus, most lenders require applicants to have a debt-to-income ratio of 43% or less. So, if you’ve accumulated too much debt, you likely won’t get approved for your mortgage loan.

In addition to tracking your spending and managing your debt, first-time home buyers should make sure to establish a strong credit history.  A strong credit score will be part of a successful loan approval.  It is also recommended that a first-time home buyer take a home buyers’ education course (a step many lenders require applicants take during the application process).

How Much House Can You Afford?

Once you’re comfortable with the personal budget you set for yourself, and you’ve worked to bring your debt-to-income ratio to a level that allows you to apply for a loan, you’re ready to sit down with a financial institution to discuss available loan options.

Most, if not all, lenders will require applicants to provide a packet of financial information once they officially intend to proceed with the application. At Navigant Credit Union, we ask for:

  • Two most recent pay stubs
  • W-2 forms for the past two years
  • Two most recent monthly bank statements
  • Tax returns for the most recent past two years

Find a House!

Once you get approved for a loan and have a price range, you’re ready to start looking at houses. First-time home buyers should find a Realtor they trust, and then start visiting potential new homes. When visiting available homes, it’s important to stay objective – and once you finally buy a house, it’s more important to continue tracking your spending, budgeting, and thinking about the future.

Remember, buying the house is just the first step of becoming a homeowner. After you sign the final paperwork, the house is yours. As the homeowner, you’ll be financially responsible for any damages. Make sure you have enough “emergency cash” saved to prepare for any unforeseen leaky pipes. 

Finally, Buy a Lawnmower

As we mentioned above, first-time home buying involves a lengthy, and occasionally stressful, process. But for many homeowners, the result – a piece of land and a house that belongs to you – is well worth the time and effort.

David DeCubellis is a Vice President of Residential Lending at Navigant Credit Union. Based in Smithfield, R.I., Navigant Credit Union is Rhode Island's oldest credit union. Navigant Credit Union has provided its members with unparalleled financial products and services, as well as community support, for over 100 years. With more than $1.7 billion in assets, more than 75,000 members and 15 branches, Navigant Credit Union supports its members through access to products and services, conservative financial management and commitment to the communities where we operate. The Providence Business News named Navigant Credit Union one of the 2016 Best Places to Work in Rhode Island. Visit to learn more.