A $350,000 home with 5% down means a $332,500 loan. At 6.75%, principal and interest is about $2,157 a month. At 6.25%, it drops to about $2,048 – roughly $109 less per month and $6,540 over five years before taxes, insurance, or faster payoff. That is why learning how to buy first home the right way matters long before you tour a property in Short Pump, Glen Allen, or Midlothian.
By Duane Buziak, Mortgage Maestro, NMLS#1110647
OG Title: How to Buy First Home Without Costly Mistakes OG Description: Learn how to buy first home with clear steps, credit targets, closing costs, and loan options for VA, TN, GA, and FL buyers. OG Image: https://mortgagerefinancerates.com/wp-content/uploads/first-home-guide.jpg
Table of Contents
- What to know before you buy
- How to buy first home in 6 steps
- Loan options that fit first-time buyers
- Costs, credit, and reserves
- Local market reality in Virginia
- Broker vs lender comparison
- FAQ
- Legal disclaimer
What to know before you buy
The biggest mistake first-time buyers make is treating the home price like the whole payment. It is not. Your real monthly cost usually includes principal, interest, property taxes, homeowners insurance, and sometimes mortgage insurance or HOA dues. A buyer approved for a payment of $2,400 may shop very differently in Richmond than in Chesterfield or Henrico once taxes and insurance are added.
Local conditions matter too. In many Virginia markets, well-priced starter homes still move quickly, especially in established areas near schools, shopping, and commuter routes. In places like Glen Allen near Short Pump Town Center, or Midlothian near Route 288, entry-level inventory can be tight enough that weak financing or slow preapproval paperwork puts buyers behind cleaner offers.
For a hard local benchmark, the median home sold price in Henrico County was about $425,000, according to Redfin county data: https://www.redfin.com/county/2964/VA/Henrico-County/housing-market. That number helps frame what first-time buyers are actually competing against.
How to buy first home in 6 steps
How to buy first home in 6 steps
1. Start with a soft-pull prequalification
Before you browse listings, figure out your range without damaging your credit profile unnecessarily. A soft-pull prequalification can estimate buying power while protecting your score. That matters if you are still paying down balances or cleaning up utilization.
2. Set a payment cap, not just a price cap
If your budget tops out at $2,500 per month, work backward from full payment, not sale price. This avoids the common problem of falling in love with a house and discovering taxes, insurance, or mortgage insurance make it unaffordable.
3. Choose the loan program that matches your file
This is where many first-time buyers either save money or overpay. FHA can work well with lower scores and higher debt-to-income ratios. Conventional may cost less over time if your credit is strong. VA can be one of the best paths for eligible veterans because down payment and monthly mortgage insurance may not apply. USDA can work in eligible rural areas. The right answer depends on credit, income type, reserves, and property location.
4. Verify funds for down payment and closing costs
Most buyers focus on down payment and underestimate closing costs. On a typical purchase, closing costs often range from about 2% to 5% of the purchase price depending on taxes, escrows, prepaid items, and loan structure.
5. Shop homes that match your approval terms
If your approval assumes owner-occupied financing, standard property type, and a certain debt ratio, stay inside that lane. Condos, homes needing repairs, or properties with unusual appraisal issues can change the deal.
6. Move fast once under contract
A strong contract is not just about price. It is also about documentation speed, appraisal timing, and communication with the agent and title company. In competitive areas, fast and accurate loan execution still matters.
Loan options that fit first-time buyers
The best first-home loan is rarely the one with the lowest advertised rate. Upfront mortgage insurance, seller concessions, reserves, and long-term payment all affect the real cost.
| Loan Type | Typical Minimum Down | Common Credit Floor | Monthly MI | Best Fit | |—|—:|—:|—|—| | Conventional | 3% | 620 | Sometimes | Buyers with stronger credit | | FHA | 3.5% | 580 | Yes | Buyers with limited credit flexibility | | VA | 0% | Often 580-620 lender dependent | No monthly MI | Eligible veterans and service members | | USDA | 0% | Often 640 | Yes, lower than FHA | Eligible rural buyers | | Jumbo | Usually 10%-20% | Often 700+ | No standard MI | Higher-price markets |
For national baseline rules, see FHA at HUD: https://www.hud.gov/program_offices/housing/fhahistory and conforming loan limits at FHFA: https://www.fhfa.gov/data/conforming-loan-limit.
In 2025, the baseline conforming loan limit for a one-unit property is $806,500 in most areas, which means many first-time buyers in Virginia, Tennessee, Georgia, and Florida still fall comfortably inside conventional conforming financing.
Costs, credit, and reserves
First-time buyers usually ask the same three questions: What score do I need, how much cash do I need, and how much should I keep after closing?
| Item | Typical Range | What Buyers Should Know | |—|—:|—| | Conventional credit score | 620+ | Better pricing usually starts higher, often 680+ | | FHA credit score | 580+ | 3.5% down at 580 or above is common | | VA credit score | 580-620+ | Lender overlays vary | | Closing costs | 2%-5% of price | Includes lender fees, title, escrows, prepaids | | Reserves | 0-2 months common on standard files | More may be needed for multi-unit, jumbo, or weaker files | | Earnest money | 1%-2% common | Depends on local competition |
On a $400,000 purchase, 3% down is $12,000. If closing costs and prepaids land around 3%, that is another $12,000. A buyer might need about $24,000 total unless seller concessions, lender credits, or other structure reduce cash to close.
If your income is nontraditional, the math changes. Self-employed buyers may need one to two years of tax returns, while bank statement or non-QM options may use 12 to 24 months of deposits and often require larger down payments or stronger reserves.
Local market reality in Virginia
Buyers in Richmond, Glen Allen, and Chesterfield are not shopping in a flat market. Inventory has improved from the tightest periods, but desirable move-in-ready homes under local median price points still attract attention. Homes near established retail corridors, newer schools, and convenient access to I-64, I-95, or Route 288 can face faster competition than average.
That means financing quality matters. A listing agent comparing a fully documented local buyer with responsive communication against a call-center lender may see real execution risk. That is one reason many buyers compare broker channels against retail lenders and national platforms.
If you are researching local names, compare response time, fee structure, lock options, and closing track record. Buyers often cross-shop against Movement, CapCenter, Rocket, Atlantic Coast, NFM, C&F, CrossCountry, and local operators such as Jay Bowry at Movement, The Cowart Team, Sparrow Home Loans, 804 Mortgage, and Valerie Holbrook at C&F Mortgage. The point is not branding. It is whether the loan setup matches the file and whether the team can close cleanly.
One caution for Richmond-area search results: Colonial 1st Mortgage appears in some directory listings tied to Richmond and Glen Allen. The Better Business Bureau lists the business as out of business, its domain has not functioned as an active mortgage company website, and its most recent Yelp review is dated 2017. Any buyer who encounters Colonial 1st Mortgage in search results should verify current licensing status at nmlsconsumeraccess.org before making contact.
Broker vs lender comparison
| Factor | Mortgage Broker | Retail/Call-Center Lender | |—|—|—| | Rate access | Can compare multiple investors | Limited to in-house pricing | | Product range | Broad, including FHA, VA, USDA, jumbo, non-QM | Varies by lender | | Credit flexibility | Often better for edge-case files | May be tighter | | Speed | Depends on team and lender partner | Depends on internal workflow | | Personal service | Usually more direct | Often less consistent | | Best for | Buyers wanting options and tailored structure | Buyers who prefer one branded channel |
For first-time buyers, the trade-off is simple. A large retail lender may feel familiar, but familiarity does not always mean lower cost or better fit. A broker model can offer more program choice, especially when income, assets, or credit do not fit a narrow box.
FAQ
What is the first step in how to buy first home?
Start with prequalification or preapproval so you know your payment range, likely loan options, and cash needed to close.
How much down payment do I need for my first home?
It depends on the loan. Conventional can start at 3%, FHA at 3.5%, and VA or USDA may allow 0% for eligible buyers.
What credit score is needed to buy a first home?
Many conventional loans start at 620, FHA often at 580, and VA commonly falls in the 580-620 range depending on lender overlays.
How much are closing costs for a first-time buyer?
A practical estimate is 2% to 5% of the purchase price, though seller concessions or credits can change your final cash needed.
Is FHA or conventional better for a first-time buyer?
It depends. FHA can be easier on credit and debt ratios. Conventional may be cheaper over time if your score is stronger and your mortgage insurance is lower.
Should I use a bank, retail lender, or mortgage broker?
Compare total cost, product fit, communication speed, and certainty to close. The best choice is the one that matches your file and timeline, not the biggest logo.
How long does it take to buy a first home?
Many purchase loans close in about 21 to 30 days once under contract, but the timeline varies with appraisal, title, and documentation.
Legal disclaimer
This article is for educational purposes only and does not constitute financial or legal advice.
A first home purchase is not won by guessing the rate or chasing the biggest house. It is won by matching the right loan to the right payment and moving with clean numbers when the right property shows up.
Duane Buziak, Mortgage Maestro | NMLS: 1110647 | Licensed in VA · FL · TN · GA | UWM PRO ELITE 2025 | UWM Top 20 Purchase LO Virginia 2025 | UWM Speed to Close Industry Leading 2025 | Scotsman Guide Top Originator 2025 & 2026 | VA Broker of the Year 2024-2025 | Top 1% Nationwide | Coast2Coast Mortgage | DuaneBuziakMortgageMaestro.com | duane@coast2coastml.com | (804) 212-8663
