First-Time Homebuyer's Checklist: What to Prepare Before You Apply

Buying your first home can feel overwhelming. There's a lot of information out there and not all of it is helpful. I've walked hundreds of first-time buyers through this process, and the ones who have the smoothest experience are the ones who come in prepared.

Here's what you should know and have ready before you apply for a mortgage.

Know Where Your Credit Stands

Your credit score is one of the biggest factors in what you qualify for and what rate you'll get. You can check your score for free through your bank or a service like Credit Karma. For most loan programs, you'll want to be at 620 or above. If you're at 740 or higher, you'll generally get the best rates available.

If your score needs work, don't panic. A few months of on-time payments, paying down credit card balances, and avoiding new credit inquiries can make a real difference. It's worth talking to a loan officer early so you know exactly where you stand.

Get Your Documents Together

Lenders are going to ask for documentation. Having it ready upfront speeds everything up. Here's the standard list:

• Last two years of W-2s or 1099s
• Last two years of tax returns (all pages)
• Last 30 days of pay stubs
• Last two months of bank statements (all pages, all accounts)
• A valid photo ID

If you're self-employed, the documentation looks a little different. You may want to look into bank statement loan programs, which I cover in another article on this site.

Understand Your Down Payment Options

You don't necessarily need 20% down. Here are some common options:

• Conventional loans can go as low as 3% down for first-time buyers
• FHA loans require as little as 3.5% down
• VA loans offer zero down payment for eligible military members
• Down payment assistance programs are available in many areas and can help cover some or all of your down payment

Get Pre-Approved Before You Start Shopping

A pre-approval letter tells sellers you're a serious buyer with financing lined up. It also gives you a clear picture of what you can afford so you're not wasting time looking at homes outside your budget. The pre-approval process is usually quick and straightforward once you have your documents ready.

Don't Make Big Financial Moves

Once you start the mortgage process, avoid making any major changes. Don't open new credit cards, don't finance a car, don't make large cash deposits without a paper trail, and don't change jobs if you can avoid it. All of these things can affect your qualification and slow down your closing.

The best thing you can do as a first-time buyer is start the conversation early. Even if you're six months out from buying, a quick call can help you understand your options and put together a game plan.