Where to start when buying a home

Buying a home is a big step, and it’s normal to have questions along the way. If you’re wondering where to start when buying a home, focus on the basics first: your budget, your savings plan and what to expect before you shop.

These early steps can help you feel more prepared and confident as you move toward homeownership.

Create a budget

First, determine if it makes financial sense to buy a new home. Will you save more money by owning your home, or is it actually to your benefit to continue renting? Typically, it’s a better investment to own your home, as you immediately build equity. It is a big investment and you should take into account home property taxes, insurance premiums, maintenance expenses, homeowner’s association fees and potential home repair costs.

Home expenses

According to the 1% rule, you should set aside 1% of your home’s value each year for home maintenance and repairs. Based on this rule, if you buy a home valued at $250,000, you will want to ensure that you have $2,500 set aside annually for home repair costs. Of course, this amount may vary. For instance, if you are looking to buy an older home, you may need to set aside more money for repairs than you would need to for a modern home outfitted with new appliances.

Plan for more than the mortgage payment

A mortgage calculator like Solarity’s can help you estimate your monthly home loan payment based on the purchase price, down payment, loan term and interest rate.

As you plan your budget, remember that your monthly housing costs may include more than principal and interest. Depending on your loan and escrow setup, you may also need to account for property taxes and homeowners insurance. Other recurring costs, such as utilities or possible HOA dues, can also affect how much home you can comfortably afford.

The goal is to find a payment that feels manageable while still leaving room in your budget for the other costs that come with owning a home.

Saving

Once you have a sense of your budget, the next step is to think about what you may need to save for a down payment and closing costs.

Down payment requirements can vary based on the loan program, property type and your financial situation. Some home loans may require as little as 3% down, while others may require more. For example, on a $250,000 home, a 3% down payment would be $7,500 and a 20% down payment would be $50,000.

If your down payment is less than 20%, you may need to pay private mortgage insurance, also known as PMI, depending on the type of loan you choose. PMI is designed to protect the lender and is often required until you reach a certain amount of equity in your home.

Solarity offers low-down-payment and zero-down home loan options for qualified buyers, which may help make buying a home more achievable. We can help you compare your options, understand what you may need upfront and choose a loan that fits your budget.

Start your home search

Now comes the fun part - the adventure of finding your new home! Think about where you would like to live. Write down three features that are most important to you, such as location, yard space and an open floor plan, for example. If you have kids, you may want to find an area with top-rated schools. Communicate your priorities to your realtor, get pre-qualified to show sellers you are serious, and then let the fun house hunting begin.

Selecting the right lender

Learning where to start when buying a home also involves finding the right financial partner. Choosing a lender is about more than getting the lowest interest rate. It’s also important to compare fees, closing costs, loan options and the level of support you’ll receive throughout the process. A good lender should explain your choices clearly, answer your questions and help you understand what to expect from application to closing.

As you compare lenders, ask what types of home loans are available, how much you may need for a down payment and closing costs, and how long the process typically takes. The right lender should help you feel informed and confident, so you can choose a home loan that fits your budget, goals and timeline.