Are you thinking about buying your first-ever home? Even though there is a wealth of information readily available at your fingertips, make sure not to forget these important tips all first-time homebuyers should know.
How much house can you afford?
Many first-time homebuyers get excited about the loan amount they get approved for. Forget about the total amount of house you qualify for, and instead, calculate the amount of home you can afford. What’s the difference? Many banks will qualify you for the maximum amount for your income bracket. This is how they make their money after all, and the longer it takes you to pay off your home loan, the more interest a company can charge you.
It’s important to remember that a bank will only look at your outstanding debts when evaluating you for a loan. They do not account for any money you want to save, and therefore the number you qualify for may be much bigger than what is actually feasible for your lifestyle.
Many first-time homebuyers get excited to see what they can actually afford, but it’s important to remember to be careful. Don’t choose a house solely based on an emotional response, and remember to do your research!

The most exciting part of being a first-time homebuyer is getting the keys!
Down Payment
How much money should you put down on a new house? The standard recommendation has long been to put down 20% of the total home cost, although whether or not you want to do this depends on your personal goals.
Why 20% down? Well, one reason for this is that you will have more actual money invested in the house, and therefore will have lower monthly mortgage payments. For any amount under 20% that you put down on a house, you will have to buy PMI, or private mortgage insurance. Mortgage insurance protects the lender if you default on your loan.
Why opt for less than 20%? Many times people opt for less than 20% down because it can be challenging and time-consuming just to save up the funds. There are a few different types of mortgage loans you can get that would enable you not to have to put the “normal” amount of money down. These include:
VA loans: This type of mortgage loan is granted through the Department of Veterans Affairs, and requires 0% down and no private mortgage insurance.
USDA loans: Issued through the US Department of Agriculture, a USDA loan is for rural homebuyers. This loan requires 0% down, offers low-interest rates, and has income limits to apply, making it an ideal choice for people without a lot of money. It is also called the USDA Rural Development Guaranteed Housing Loan Program.
FHA loans: The US Federal Housing Commission (FHA) guarantees this loan, and often you can put down as little as 3.5% down.
FHA 203k Rehab Loan: This is a type of home renovation loan.
ARM: Adjustable Rate Mortgage. These interest rates usually start very low and adjust over time.
For more information on different ways to finance a first time home purchase, check out this article.
Nest Egg
It’s important to have some money saved for the future after you purchase your house. You don’t want to clean out your savings just to get a house, because what will you do if and when something happens?
When you own a home, you are the one responsible for all maintenance and upkeep to protect your investment. That means if your hot water heater blows, or your roof is destroyed, you have to pay for the cost to repair it, out of your own pocket.

First-time homebuyers should maintain a nest egg as well.
First-Time Homebuyers Insurance From Effective Coverage
First-time homebuyers can buy homeowners insurance policies to provide coverage for a number of situations:
Dwelling Coverage: helps pay for the cost to repair damage to your home’s physical structure
Other Structures Coverage: covers damage to other structures on your property, such as a garage, shed, or fence.
Personal Property Coverage: protects your personal belongings – whether they are located in your home or elsewhere.
Loss of Use Coverage: covers additional living expenses over what you would normally spend in the event of a covered loss – like if you are displaced from your home due to fire, for example, and need to stay in a hotel.
Liability Coverage: If you are at fault for someone injured on your property, or if or their property is damaged by you or a family member, liability pays to cover the cost of these expenses. It also covers the cost of going to court.
Valuable Items: expensive jewelry on your homeowners policy (such as a wedding ring) and expensive collections (like artwork) are protected under this coverage.

All first-time homebuyers should protect their investment with a homeowners insurance policy from Effective Coverage.
Your home is probably the biggest purchase you will ever make, which makes insuring it properly a must. A homeowners insurance policy with the broadest coverage and sufficient limits will ensure that you are not at a loss if your home is damaged, even in the worst-case scenario.
Not sure how much coverage you need, or where to start? Just give one of our insurance experts a call at (800)892-4308 or click to get covered - whether you need renters insurance quotes online or coverage anywhere else!
Effective Coverage offers the nation's only completely mobile platform to quote and purchase renters insurance right from your phone or tablet in just one minute. Get an online renters insurance quote today and protect your family.
Photo Credit: “Davis and Kara Buy a House” by Nan Palmero is licensed under CC BY 2.0