Buying your first home is an exciting milestone, but the financial planning involved can feel overwhelming. With today’s market changes, understanding where your money goes—from the down payment to closing costs—can help you plan wisely and avoid surprises. Here’s a clear guide to help you budget for your first home purchase.

Save for a Down Payment

Saving for a down payment is a crucial step in preparing for homeownership. While the traditional goal is 20% of the home’s price, many first-time buyers can take advantage of programs requiring as little as 3% to 5% down, such as FHA loans, VA loans, or first-time homebuyer assistance programs.

That said, putting down a larger amount can reduce your monthly mortgage payments and may also qualify you for better interest rates. If your financial situation allows, aim for a higher down payment to lessen your long-term costs.

Quick Tips to Save Faster:

Set up automatic transfers to a dedicated savings account to build your down payment fund.Trim unnecessary expenses and explore creative ways to supplement your income.Check out state and local grants, such as down payment assistance programs available in North Carolina.

For a detailed guide to these programs, take a look at our Down Payment Assistance article.

For information on how to improve your credit score for a mortgage click here.

How to Estimate Your Home Budget

Generally, aim for homes priced at three to five times your annual household income if you’re planning a 20% down payment and have moderate debt. For example, if your household income is $80,000 annually, consider homes priced between $240,000 and $400,000, depending on your debt obligations and financial comfort level.

Closing Costs

Upfront Deposits:

Earnest Money Deposit: A good-faith deposit made by the buyer to show serious intent to purchase the home. This money is generally non-refundable after the due diligence period if the buyer decides to back out.

Professional Services:

Broker/Admin Fees: At Brazoban Realty, we charge a $750 fee for broker or administrative services. This fee is paid by the client we represent—whether buyer or seller.

Agent Commissions: The seller typically covers agent commissions. For Brazoban Realty listings, the standard breakdown is 2.6% for listing agents and 2.4% for buyers’ agents. This commission is negotiated during the listing agreement if Brazoban Realty represents the seller.

Additional expenses may include taxes, title insurance, and attorney fees. To read our comprehensive guide on closing costs, click here.

Get Familiar with Mortgage Rates

Mortgage rates play a major role in determining your monthly payments. In today’s market, rates can vary based on credit scores, loan types, and economic conditions.

How to Prepare:

  • Check your credit score and work to improve it for better loan terms. Brazoban Realty will send you the information you need to help you with this if needed.
  • Compare lenders and loan programs to find the best fit for your financial goals. Brazoban Realty will also help you with this.
  • Our online mortgage calculator estimates monthly payments for different home prices and interest rates.

Final Thoughts

Budgeting for your first home can seem daunting, but with careful planning, it’s absolutely achievable. By saving for a down payment, understanding closing costs, and familiarizing yourself with mortgage options, you’ll be well on your way to finding your dream home.

At Brazoban Realty, we’re here to help you every step of the way. Whether you’re buying your first home or navigating the Triangle’s real estate market, we’ve got you covered.

Stay Updated

We’d love to hear from you! Drop your questions or comments below, and let’s start a conversation about your real estate journey.