Buying Your First Home
What to check, save, and decide before getting your mortgage
Buying your first home is one of the biggest financial moves you will make.
Most first-time buyers start in the wrong place by looking at homes before they know their numbers.
This guide is for buyers who want to understand the process before they get started.
It covers what lenders check, what you need saved, and which loans fit first-time buyers best.
By the end, you will know exactly where to start and what to watch out for.
In This Article
What Lenders Check When Buying Your First Home
Two numbers matter most before you start looking at houses: your credit score and your debt-to-income ratio, which the industry calls DTI. These two numbers shape everything that follows. They determine which loan programs you can use, what interest rate you get, and how much home you can realistically afford.
Your credit score tells lenders how risky it is to lend to you. For most first-time buyer programs, you need at least a 580 to qualify for FHA and a 620 for conventional loans. A higher score opens better rates. On a $400,000 mortgage, the difference between a 6.5% rate and a 7.0% rate adds up to about $130 per month. Over 30 years, that gap costs more than $46,000. That math makes the time spent improving your score worth it before you apply.
Your DTI is the share of your gross monthly income that goes toward debt payments. Most programs want your total DTI below 43% to 45%. Student loans, car payments, and credit card minimums all count. If those already take up a large portion of your income, your buying power shrinks quickly. This is the number buyers underestimate most often, and the one that causes the most frustrating surprises late in the process.
Beyond credit and DTI, lenders want two years of steady employment in the same field. Income that looks simple often is not. Overtime, commissions, and bonuses each have specific documentation requirements and both need at least a two-year history to count in full. If your income is anything other than a straightforward salary, bring that up early. It affects which programs you qualify for and how your qualifying income gets calculated.
Pull your free credit report before you meet with any lender. Reports are available at AnnualCreditReport.com. Look for errors. A corrected mistake can sometimes change your score enough to shift which loan options are available to you. For a full breakdown of what lenders review when evaluating your file, our mortgage approval factors page covers each element in detail.
Why Pre-Approval Comes Before House Hunting
This is the step most first-time buyers skip or do too late. Pre-approval is not the same as pre-qualification. Pre-qualification is a rough estimate based on what you tell a lender. Pre-approval means a lender has reviewed your actual documents, verified your income and assets, and given you a written commitment. One is a guess. The other is real.
Sellers and their agents take pre-approval letters seriously. In Colorado Springs, Castle Rock, Lakewood, and other Front Range communities, homes regularly draw multiple offers. Buyers without a full pre-approval letter routinely lose deals to buyers who have one. Colorado inventory has stayed competitive enough that sellers can still choose the most prepared buyer, not just the highest price. Florida buyers face similar dynamics in markets like the Orlando metro and Tampa Bay area.
Shopping your rate matters just as much as getting pre-approved. About one-third of homebuyers receive only one mortgage quote before moving forward, according to Fannie Mae’s National Housing Survey. That decision can cost thousands. Even a 0.25% difference in rate on a 30-year loan changes your total interest paid by tens of thousands of dollars. Shopping two or three lenders takes a few days. It is almost always worth the time. Working with a Colorado mortgage broker means your lender compares rates across multiple sources, not just one bank’s product lineup.
“The buyers who have the smoothest experience are the ones who talk to a lender before they ever walk into an open house. They know their number, they know their options, and when the right house comes along, they can move fast. The buyers who come to us after they’re already under contract almost always see surprises.”
— Reed Letson, Owner, Elevation Mortgage
What You Actually Need Saved Before Buying a House
The down payment gets most of the attention. But it is only part of what you need to have ready. Closing costs catch first-time buyers off guard more often than almost anything else in the process.
Closing costs typically run 2% to 5% of the purchase price, according to the Consumer Financial Protection Bureau. On a $450,000 home, that comes to $9,000 to $22,500 on top of your down payment. These cover lender fees, title insurance, appraisal, and prepaid items like property taxes and homeowner’s insurance. They come due at closing, separate from your down payment. Many buyers save carefully for one number and show up at the closing table short on the other.
Beyond closing costs, most lenders want to see one to two months of mortgage payments in reserves after you close. Home repairs start quickly for most buyers too. A small emergency fund before closing day is practical planning, not optional. Buyers who drain every account to get to closing often face stress within the first few months of ownership.
Here is a rough estimate of what you need saved to purchase a $450,000 home in Colorado:
| Cost Item | Estimated Range | Notes |
|---|---|---|
| Down Payment (3%) | $13,500 | Conventional minimum (620+ credit score) |
| Down Payment (3.5%) | $15,750 | FHA minimum (580+ credit score) |
| Down Payment (20%) | $90,000 | Avoids mortgage insurance on conventional |
| Closing Costs | $9,000 – $22,500 | 2–5% of purchase price |
| Cash Reserves | $2,500 – $5,000 | 1–2 months of mortgage payments |
| Initial Repairs / Move-In | $1,000 – $5,000 | Varies widely by home condition |
Some sellers will contribute to your closing costs as part of a negotiated offer. State assistance programs can also cover closing costs alongside down payment help. The down payment options page covers the programs most relevant to Colorado and Florida buyers.
What This Means for Your Situation
Your savings target depends on which loan you use and which programs you can layer on top. A buyer in Colorado Springs closing on a $450,000 home with a 3.5% FHA loan needs $15,750 down before closing costs. Stack a CHFA down payment assistance grant on top and that number drops. The only way to know your exact target is to run the numbers with your specific credit score, income, and county in mind. Getting that picture early keeps you from saving toward the wrong goal.
Loan Options for First-Time Buyers
You do not need 20% down to buy your first home. Multiple loan programs exist for first-time buyers, and each one fits a different financial situation. The right choice depends on your credit score, how much you have saved, and whether you have served in the military.
FHA loans are the most common choice for first-time buyers. They allow down payments as low as 3.5% with a credit score of 580 or higher. According to HUD’s fiscal year 2025 annual report, first-time buyers accounted for 83% of all FHA forward purchase mortgage endorsements that year. The program is built for this group. The trade-off is mortgage insurance. FHA loans carry both an upfront premium and an annual premium. If you put down less than 10%, that insurance stays for the life of the loan.
Conventional loans require a 620 credit score and allow down payments starting at 3%. You can remove mortgage insurance on a conventional loan once you build 20% equity. So with stronger credit and a bit more saved, conventional often costs less over time. For veterans and active-duty service members, VA loans allow zero down and charge no monthly mortgage insurance. That combination is hard to beat. USDA loans cover buyers in eligible rural and suburban areas with zero down payment and competitive rates.
| Loan Type | Min. Down Payment | Min. Credit Score | Mortgage Insurance | Best For |
|---|---|---|---|---|
| FHA | 3.5% | 580 | Yes (lifetime if <10% down) | Lower credit, limited savings |
| Conventional (3%) | 3% | 620 | Yes (removable at 20% equity) | Good credit, lower savings |
| VA | 0% | Varies (typically 620) | No | Veterans, active duty |
| USDA | 0% | Varies (typically 640) | Yes (low annual fee) | Rural/suburban eligible areas |
State Programs for Colorado and Florida Buyers
Loan limits vary by county in both states. The 2026 FHA loan limit for El Paso County is $541,650 for a single-family home. The 2026 conventional conforming loan limit for El Paso County is $832,750. In Florida, most counties sit at $541,287 for FHA and $832,750 for conventional, with higher limits in areas like Monroe County and the South Florida tri-county area. Use the lookup tools below to find the limits for your county.
Colorado FHA Loan Limits (2026)
| Property Type | 2026 FHA Limit |
|---|
Colorado Conforming Loan Limits (2026)
| Property Type | 2026 Limit |
|---|
Florida FHA Loan Limits (2026)
| Property Type | 2026 Loan Limit |
|---|
Florida Conforming Loan Limits (2026)
| Property Type | 2026 Loan Limit |
|---|
Colorado buyers should know that CHFA programs layer on top of federal loan programs. A first-time buyer using an FHA loan can also qualify for CHFA’s down payment assistance. CHFA’s grant program offers up to 3% of the loan amount with no repayment required. Its second mortgage option covers up to 4%. Since 1974, CHFA has helped more than 160,000 Colorado homebuyers achieve homeownership. Not every lender participates in CHFA, so confirm your lender is approved before you start. Buyers in El Paso County can also access the Turnkey Plus program, which offers 0% interest soft loans up to 5% of the mortgage. Florida buyers have similar options through the Florida Housing Finance Corporation. Getting the right combination of federal loan and state assistance requires a lender who knows both sets of rules, which is why local expertise matters for first-time buyers navigating multiple program layers.
Choosing the Right First-Time Buyer Loan in Pueblo West
A first-time buyer in Pueblo West pre-qualified at a local credit union for a conventional loan with 3% down. The monthly payment looked manageable, and they had about $12,000 saved, just enough to cover the down payment on the home they wanted.
When a broker pulled the full credit file, the mid score came back at 608. Conventional loans require a 620 minimum. The credit union had not flagged this because pre-qualification does not require a hard credit pull. The buyer was ready to make offers but could not use the loan they had planned on.
Switching to FHA solved the problem. The 3.5% down payment was slightly higher than 3%, but a CHFA down payment assistance grant covered the difference. They closed on a three-bedroom home in Pueblo West with less cash out of pocket than their original plan would have required, and with a clear path to removing mortgage insurance once they built equity.
What Happens From Offer to Closing
Once your offer is accepted, the underwriting and inspection phase begins. Your lender will order an appraisal to confirm the home’s value matches the purchase price. Schedule a home inspection too. Budget $300 to $600 for it. It surfaces issues that show up in negotiation or help you plan for repairs in the first year.
Underwriting is where your lender verifies everything in your file. Do not open new credit accounts, change jobs, or make large deposits without documentation during this period. We see buyers deposit a work bonus without explanation and watch their closing timeline stall while the lender reverifies their assets. We also see buyers co-sign on a family member’s loan during this window and disqualify themselves from their own purchase. If anything changes in your finances between pre-approval and closing, tell your lender immediately. These are exactly the situations where having a lender who stays in close contact through the process can mean the difference between closing on time and losing the house.
Wire fraud targeting homebuyers is a real and growing risk. Never send a wire without calling your title company or escrow officer directly to verify the instructions. Use a phone number you find yourself, not one from an email. Wired funds are nearly impossible to recover.
From offer to closing, the typical timeline runs 30 to 60 days once you are under contract. Getting fully pre-approved before you start shopping means you can move quickly when the right house comes along. The home buying process guide walks through every step from pre-approval to keys. For a deeper look at the closing disclosure and what to expect at the closing table, the Consumer Financial Protection Bureau’s homebuying guide covers it in plain language.
Working with a buyer’s agent matters, especially for first-time buyers. An experienced buyer’s agent guides your search, helps you write a competitive offer, and negotiates on your behalf. In most cases, the seller pays the buyer’s agent commission, though your agent should explain the current arrangement clearly upfront since industry practices have changed in recent years.
Run the Numbers Before You Start Shopping
Our first-time buyer tools let you estimate your payment, check affordability based on your income, and compare loan options side by side — before you ever talk to a lender.
Open the First-Time Buyer ToolsCommon Mistakes First-Time Buyers Make
Skipping Pre-Approval Until After Falling in Love With a House
This is the most common one. A buyer tours homes, finds one they want, then discovers they do not qualify at that price or with that lender. Getting fully pre-approved before house hunting eliminates this entirely and sets a real budget, not a rough guess.
Forgetting That Closing Costs Are a Separate Number
Buyers save carefully for the down payment and show up at the closing table surprised by $10,000 or more in additional costs. Budget 2% to 5% of the purchase price separately from your down payment. These are two different buckets, and both come due at closing.
Accepting the First Rate Without Shopping
About one-third of homebuyers receive only one mortgage quote before moving forward, according to Fannie Mae’s National Housing Survey. Even a 0.25% rate difference on a 30-year loan changes your total interest paid by thousands of dollars. Shopping two or three lenders takes a few days and is almost always worth it.
Questions to Ask Your Lender
- What loan programs do I qualify for based on my credit score and income?
- Am I being pre-qualified or fully pre-approved, and what is the difference in your process?
- What is the annual percentage rate (APR) on this loan, not just the interest rate?
- Are there any first-time buyer or down payment assistance programs I should apply for?
- What could change between now and closing that might affect my approval?
- How long does your typical closing timeline take from pre-approval to keys?
See the Full Picture Before You Start
The home buying process has more moving parts than most people expect. Our road map walks you through every step so nothing catches you off guard.
View the Home Buyer Road MapFrequently Asked Questions
No. Several programs allow you to buy with much less. FHA loans require as little as 3.5% down with a 580 credit score. Conventional loans have options starting at 3% with a 620 score. VA and USDA loans allow zero down for eligible borrowers. The 20% figure relates to avoiding private mortgage insurance on a conventional loan, not a requirement to purchase a home.
Most loan programs start at 580 to 620. FHA loans accept a 580 score with 3.5% down. Conventional loans generally require a 620 minimum. A higher score, 700 or above, gives you access to better rates and lower mortgage insurance costs. If your score is below 580, spending a few months improving it before applying is often the better move.
From pre-approval to closing, the typical process takes 30 to 60 days once you are under contract. Finding the right house can take anywhere from a few weeks to several months depending on the market and your criteria. Getting pre-approved first means you can move quickly when the right home comes along.
Closing costs cover lender fees, title insurance, appraisal, and prepaid items like property taxes and homeowner’s insurance. They typically run 2% to 5% of the purchase price and come due separately from your down payment. Buyers usually pay them, but sellers can contribute to closing costs as part of a negotiated offer. Some state assistance programs also cover closing costs alongside down payment help.
Yes. Colorado’s CHFA program offers down payment assistance grants up to 3% of the loan amount with no repayment required, and second mortgage options up to 4%. These programs layer on top of FHA and conventional loans, so a buyer using an FHA loan can also access CHFA assistance. Florida buyers have similar options through the Florida Housing Finance Corporation. Not every lender participates in these programs, so confirm your lender is approved before starting your application.
