Are you ready to buy your first home?
Enter your income, savings, and credit profile to see your readiness score, estimated buying power, and how you compare to the typical first-time buyer in the US.
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Can you afford to buy?
House-price-to-income ratio for your area.
Who is the typical first-time home buyer in 2024?
The median first-time buyer in 2024 is 35 years old, has a household income of $97,000, and puts down 8% on their purchase, according to the National Association of Realtors. The typical first-time buyer home costs $310,000 compared to $415,000 for a repeat buyer. First-time buyers represent 26% of all home purchases in 2024, down from a historical norm of around 40% and the lowest proportion since NAR began tracking in 1981. Rising mortgage rates and home prices have effectively priced out a significant portion of the first-time buyer pool. (Source: NAR 2024 Profile of Home Buyers and Sellers)
What first-time buyer programmes are available?
Down payment assistance is available in every US state, though eligibility, amount, and structure vary significantly. Federal options include FHA loans (3.5% down, 580+ credit score), VA loans (0% down for eligible veterans), USDA loans (0% down in eligible rural/suburban areas), and Fannie Mae/Freddie Mac conventional loans at 3% down for qualifying first-time buyers. State-level programmes typically offer $5,000-$25,000 in grant or forgivable loan assistance. Income limits, purchase price caps, and homebuyer education requirements apply in most programmes. HUD's website maintains a directory of state agencies. (Source: HUD; CFPB)
Frequently asked questions
The minimum credit score depends on the loan type. FHA loans require 580 for 3.5% down (some lenders accept 500 with 10% down). Conventional loans typically require 620-640. VA loans have no official minimum but most lenders require 620. USDA loans generally require 640. The best rates go to borrowers with 760+, which can make a substantial difference in monthly payment over a 30-year term. A 100-point difference in credit score can change the rate by 0.5-1.0%, affecting monthly payment by $100-$200 on a $350,000 loan. If your score is under 620, spending 6-12 months improving it before applying can meaningfully change your purchasing power.
Beyond the down payment, plan for closing costs (2-5% of loan amount), a home inspection ($300-$600), moving costs, and an emergency fund for repairs (1% of home value per year is a common rule of thumb). If you put less than 20% down on a conventional loan, you will also pay PMI until you reach 20% equity. On a $350,000 home with 5% down: down payment $17,500, closing costs $7,000-$14,000, inspection $500, emergency fund reserve $3,500 minimum. Total cash needed: $28,500-$35,500 before moving costs. Many buyers are caught off guard by the gap between the down payment and the total cash required at closing.
This question cannot be answered generically. The two most important variables are your personal financial readiness and your local market. Nationally, affordability is at multi-decade lows by price-to-income ratio, and mortgage rates in 2024-2025 are approximately double their 2020-2021 lows. That said, "waiting for the market" has historically disadvantaged buyers: in most major markets, prices have trended upward over any 10-year period. The better frame is: can you afford the monthly payment comfortably at today's rate and price? If yes and you plan to stay at least 5-7 years, buying often makes sense regardless of market timing. If you would be over-stretched at today's rates, waiting and saving may be the better choice.
Several federal and state programs reduce the upfront cost of buying. FHA loans require only 3.5% down and accept credit scores as low as 580. Fannie Mae HomeReady and Freddie Mac Home Possible both allow 3% down for income-qualified buyers. VA loans offer 0% down for eligible veterans and active military. USDA loans offer 0% down in eligible rural and suburban areas. Most states also run their own down payment assistance programs through Housing Finance Agencies, offering grants or low-interest second mortgages of $5,000-$25,000. The IRS allows first-time buyers to withdraw up to $10,000 from an IRA penalty-free for a home purchase. Research your state HFA and HUD's website for programs specific to your area. (Source: FHA; Fannie Mae; HUD)
Closing costs typically run 2-5% of the purchase price and include lender origination fees, title insurance, appraisal, attorney fees, and prepaid property taxes. On a $300,000 home that is $6,000-$15,000 in addition to the down payment. After purchase, first-time buyers often underestimate ongoing costs: property taxes average 1.1% of home value nationally, homeowners insurance averages $1,400-$2,000 per year, and maintenance is typically budgeted at 1-2% of home value annually. HOA fees where applicable can add $200-$800 per month. The true monthly cost of ownership therefore significantly exceeds the principal and interest mortgage payment alone. (Source: Bankrate; NAR; US Census)
In the US, lenders use a debt-to-income (DTI) ratio to assess affordability. The front-end ratio (housing costs only) should be below 28% of gross monthly income, and the back-end ratio (all debts including housing) should be below 36-43% depending on the lender and loan type. Fannie Mae accepts back-end DTI up to 45% for conventional loans if other compensating factors are strong. Some FHA loans allow back-end DTI up to 57% in specific cases. In the UK, the Mortgage Market Review requires lenders to stress test affordability at a rate typically 3 percentage points above the initial rate to ensure borrowers can withstand rate rises. This stress test is one reason UK loan-to-income multiples are lower than the US. (Source: CFPB; FCA PRA Mortgage Guidelines)
In the US, the average time from accepted offer to closing is 43 days according to Ellie Mae's Origination Insight Report. Cash buyers can close in as little as 10-14 days. Financed purchases depend heavily on lender processing time, inspection resolution, and title searches. FHA and VA loans typically take 5-10 days longer than conventional loans due to additional appraisal requirements. In the UK, the conveyancing process averages 12-16 weeks from offer acceptance to exchange of contracts, and a further 1-4 weeks to completion. Chain transactions (where your seller is buying another property simultaneously) are the largest source of delays in the UK market. (Source: Ellie Mae; RICS UK Residential Market Survey)
Private mortgage insurance (PMI) is required on conventional US loans where the down payment is less than 20%. It typically costs 0.5-1.5% of the loan amount per year, added to monthly payments. On a $300,000 loan PMI of 1% adds $250 per month. PMI is not permanent: it can be cancelled once equity reaches 20% of the original value (Homeowners Protection Act) or 22% by automatic cancellation. Strategies to avoid PMI include saving a full 20% down, taking a piggyback loan (80/10/10 structure), or choosing a lender-paid PMI mortgage where the cost is absorbed into a slightly higher interest rate. FHA loans have their own mortgage insurance premium which is harder to remove and may be permanent on loans originated after June 2013 with less than 10% down. (Source: CFPB; Fannie Mae)
- National Association of Realtors. Profile of Home Buyers and Sellers. 2024.
- Federal Housing Finance Agency (FHFA). House Price Index. 2024.
- Consumer Financial Protection Bureau (CFPB). homebuying resources. consumerfinance.gov
- US Department of Housing and Urban Development (HUD). hud.gov/buying
- Freddie Mac. Primary Mortgage Market Survey. 2024.