Looking to buy your first home? Congratulations! This is a milestone in life that should feel exciting. On the other hand, it can be financially overwhelming as you get deeper into the home buying process past the “window shopping” phase of browsing listings online. You might fear the potential of debt, down payment size, and hidden costs. Our goal is to share realistic strategies to help you see that homeownership can be an affordable option for you.
Have you considered how to calculate a practical budget as a first-time homebuyer (not just what you’re pre-approved for)? Think about the 28/36 rule, which means you shouldn’t spend more than 28% of your income on housing. You can also use online tools and calculators to help, or, if you feel like you need more help, a financial counselor could be a great resource. Some people just work better by talking through their goals and reservations with another person. Scheduling an appointment before you start the process can help you look at the big picture and consider your short-term and long-term goals.
When budgeting for your first home, don’t stop at the listing price; there’s a whole layer of hidden costs that can catch buyers off guard. From closing costs and a home inspection to moving expenses, repairs, property taxes, homeowners' insurance, and even HOA fees, the total price of ownership adds up quickly. That’s why it’s smart to build a post-purchase cushion into your budget to cover surprises without stress. Don’t be afraid to negotiate with the seller either; many buyers successfully request credits toward closing costs or repairs after the inspection. Every dollar saved helps you start your new chapter with more confidence and less financial strain.
Pro Tip: Budget for the monthly payment, not just the price tag. Here at Leaders, we offer a free online loan payment calculator that can give you an idea of how much your monthly mortgage payment will be, so you can budget accordingly before you even step foot in a home to tour. This calculator considers your loan term and rate so you don’t have to figure out the math on your own. Take a look at our other financial wellness tools to see how you can educate yourself while you prepare for your big purchase.
[Download Now: Step-by-Step Guide to Get Pre-Approved]
When it comes to saving for your first home, one of the biggest misconceptions is that you must put down 20%. While putting down more can reduce your monthly payment and help you avoid private mortgage insurance (PMI), it’s not the only path to homeownership, and it’s definitely not the most realistic for many first-time buyers.
The good news? There are plenty of home loan options designed with first-time buyers in mind. It’s worth doing your research (or working with a mortgage advisor) to see what you’re eligible for based on your income, location, and background.
Here in Tennessee, we also have what is called THDA Loans. Leaders Credit Union partners with the Tennessee Housing Development Agency (THDA) to offer affordable Great Choice home loans featuring competitive 30-year fixed rates and flexible down payment assistance.
Through THDA’s Great Choice Plus program, eligible first-time and repeat buyers can receive:
With options available across 43 Tennessee counties (plus select areas) and exclusive programs like Homeownership for Heroes for military veterans, THDA makes homebuying more accessible while requiring only modest credit scores and mandatory homebuyer education
If you’re still working on your savings goal, consider setting up automated transfers from your checking account to a dedicated down payment fund that will make that feel less of a burden upfront. Think of it as paying future-you first. You could also use windfalls like tax refunds, bonuses, or even side hustle income to boost your progress without cutting into your everyday budget.
Pro Tip: Look into additional down payment assistance programs offered by the state or local government. Many of these programs are specifically designed for first-time buyers and can offer grants, forgivable loans, or matching funds that help make your savings go further.
Get Pre-Approved, Not Just Pre-Qualified
Before you start falling in love with homes outside your budget, make sure you’re financially grounded with a pre-approval, not just a pre-qualification. While pre-qualification gives you a general estimate based on self-reported information, pre-approval takes it a step further by verifying your income, credit, and assets through a lender. That makes it much more reliable when setting your home shopping budget.
Even more importantly, a pre-approval strengthens your offer in a competitive market. Sellers and real estate agents take your offer more seriously when they know you’ve already cleared an important financial hurdle. It shows you’re not just browsing, you’re ready to buy! Pre-approval also helps you define a firm, realistic price ceiling, so you don’t stretch beyond what’s affordable in the moment, or in the long run. It’s a smart move for your wallet and your peace of mind.
Pro Tip: Don’t believe the myth that it is fine to shop without a pre-approval; you might fall in love with a home you can’t afford, or risk losing a deal.
The right agent isn’t just someone who knows the local market; it’s someone who understands the emotional and financial experience of buying your first home. They should be ready to educate, advocate, and communicate clearly every step of the way.
Look for an agent who has experience working with first-time buyers and takes the time to explain things like writing offers, negotiating repairs, and understanding contracts. Bonus points if they’re familiar with local down payment assistance programs or special loan types you might qualify for; that kind of guidance can save you serious money.
Pro Tip: A great agent will never pressure you into a decision. They’ll support you in making smart, informed choices because your first home is a big deal, and you deserve to feel good about every step of the journey.
Homeownership is possible without draining your savings or feeling broke. When you budget smart, explore all of the options available to you, know your limits, and lean on the right support system, the keys will be in your hands before you know it. Talking to trusted real estate agents and financial support (like our Mortgage Champions here at Leaders Credit Union) will help you crush the process and enjoy the excitement of the experience as a first-time homebuyer. While we offer various types of home loans to explore, we encourage you to also take the time to read our First Time Homebuyers Guide. It is a great resource for anyone just starting out on planning their next move.
Leaders Credit Union is federally insured by the NCUA and an equal housing lender.