First-Time Home Buyer's Guide

Buying a home is one of the most exciting—and daunting—things you'll ever do. With so many choices to make and so much at stake, it's essential that you be prepared. Check out these expert-vetted secrets to find your dream home, land a loan, and ace your home-buying adventure without a hitch. 

1. CLEAN UP YOUR CREDIT SCORE - Step 1 is to clean up your credit score, also called a FICO score—a simplified calculation of your history of paying back debts and making regular payments on loans. If you're borrowing money to buy a home (as most do), lenders want to know you'll pay them back in a timely manner, and a credit score is an easy estimate of those odds.

2. It's about a lifestyle change," says Travis Sickle, a financial adviser with Sickle Hunter Financial Advisors in Tampa, FL. A more sustainable strategy, he says, is to pinpoint your silent money siphons that you barely notice. Odds are you could try some of the following cost-cutting measures without feeling the pinch:

   • Replace your $250 monthly cable service with a $10 Netflix standard streaming account, and you'll save $2,880 per year.
   • Cut that languishing gym membership—at $50 per month, you'd save $600 a year. Go running instead!
   • Packing lunch will save you about $60 a month—or $720 a year.
   • Bike to work. For a 10-mile commute, biking can save you around $5 a day, according to Kiplinger—or $1,250 a year.
   • Start a coin jar. Saving all your loose change can have a big impact—up to $700, according to financial blogger J.D. Roth.
   • Turning down your thermostat just 3 degrees could shave almost 10% off your electrical bill, netting you $20 a month on a $200 bill, or $240 a year.
   • Curb those dinners and drinks out at restaurants, which can quickly add up. If you typically shell out $40 three times a week, reduce that to one evening a week, and you'll save $80—or $4,160 per year. (Bonus: It'll make those times you do indulge more special!)

   And if you and your significant other team up and try all of the above, that would amount to $10,550 per person, or $21,100 in one year's time. Just remember that when you're thinking of ordering a second glass of artisanal craft beer.

   Open a dedicated account

   Find homes for sale on

   If you don't have a savings account, now's the time to open one. A checking account is great for daily expenses, but when it comes to saving money—well, they don't call them savings accounts for nothing. You'll earn interest on your balance, plus there's a lot to be said for the mental benefit of having a specific place to stash your down payment. While interest rates haven't been very impressive in recent years (though, you'll be grateful for that when it comes time to get a mortgage), it's still great to have a dedicated account where you can see how you're progressing toward your goal.

   Financial planner Bob Forrest of Mutual of Omaha points out that CDs and money market accounts offer higher gains than savings. You'll need a larger minimum balance than for a regular savings account, but your goal is to make it grow, not shrink, right? If you're using a CD, just make sure you don't withdraw the money before the time is up or else you'll face some stiff penalties.

   Automate your savings

   If you're struggling to put enough money away because of the constant temptations to blow your paycheck, consider automating the process. Ask your employer if you can have your paycheck deposited into multiple accounts—if so, instruct it to send a certain percentage of your salary directly into your savings account. Or go through your bank, setting up automatic withdrawals from your checking to savings account that will force you to keep spending in check.

   Tap into your IRA

   Another great place to stash your cash? A traditional or Roth IRA, says Forrest. In addition to being a tax-friendly retirement vehicle, it allows you to withdraw up to $10,000 for a home. While withdrawals from a traditional IRA will be taxed, a Roth IRA you've owned for more than five years won't be taxed at all, as long as you're a first-time home buyer. Just be careful with this method, though, as you will be denting your retirement funds. But combined with other savings, it can quickly add some heft to your growing nest egg.

   Check out down payment assistance programs

   Depending on the city and state you live in, you may be eligible for down payment assistance programs, which provide money to help people buy a home. Most offer up to $15,000, typically in the form of a grant or low-interest loan. Most require your income to be below the area median. But even if you make more, do your research—there are programs that provide funds for higher-income households.

   Once your down payment is on a roll, it's time to start looking for a home—and to do that, you'll need to determine exactly how much house you can afford.

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