How to Avoid Buying a House That’s Too Big as a First-Time Buyer

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Shopping for your first home can be very exciting. However, you will want to make sure that the home you are shopping for is a home that is too large for you. But to be able to know what you can afford, you'll need to know what homebuyer assistance programs are available to you.

Homebuyer Assistance Programs

Many states have housing assistance agencies that will help you with making your first down payment and pay for closing costs. The US Government also has home buying programs for those who want to purchase homes in rural areas.

As a first-time homebuyer, you will have access to loans, tax breaks, and state programs. You will need to meet one of several conditions to be able to be qualified:

  • You may be a single parent
  • You may be a displaced homemaker
  • You owned a residence that was not permanently fixed to a foundation
  • You owned property but it could not be brought in compliance with local building codes
  • You have not owned a residence at all for three years

Before you begin the process of purchasing a home as a first-time buyer, you will want to calculate your financial health. You must have emergency savings that can cover at least six months of living expenses. You should save up enough to be able to make at least a 20% down payment. To obtain a good loan, you will also need a very good credit score.

Calculating What Home You Can Afford

You will be able to calculate how much of a home you can purchase after you factor in the income you take home after taxes, the debts you currently have, expenses and savings, the monthly payments you will want to make, and other costs associated with owning your home.

Oftentimes, homeowners follow the 25% rule. This means that your household expenses should not be greater than 25% of your take-home pay. However, you will always want to speak with a real estate agent because of how prices and taxes can vary depending on the location. 

Create a Checklist of Must-Haves

You must find a home that meets all of your requirements and also is within your budget. Therefore, you will need to create a checklist and give it to your real estate agent. For example, you might need a home that is close to your place of work or that has five bedrooms. Then, you will be able to take advantage of first-time homebuyer programs.

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