How much should a first-time buyer put down?

Twenty per cent keeps private mortgage insurance off your payment and is the assumption most quoted rates are built on. Lower down payments work — 3% to 5% is common — but expect PMI and a closer look at your debt-to-income ratio. Whatever you choose, do not spend the whole reserve getting there: on a $400,000 purchase each percentage point is about $27 a month of payment, which is cheap next to a repair you cannot cover.

How much house can I afford on a $95,000 salary?

At the old 28% housing rule the ceiling is a $2,217 monthly payment, which supports roughly a $410,000 home at 6.5% over 25 years with 20% down — before tax and insurance. Loosen the cap to 36% of gross and the same income points at about $527,000, which is nearer the maximum a lender will approve than the number you should spend to.

What is the difference between pre-qualification and pre-approval?

Pre-qualification is an estimate built on figures you state. Pre-approval verifies income, assets and credit and commits the lender to a number, which is why sellers take it seriously and mostly ignore the first. Getting it before you shop stops you offering on a house the arithmetic cannot carry.

What costs do first-time buyers forget?

Closing costs of 2–5% of the loan on top of the down payment, then the ongoing trio: property tax, insurance and maintenance — on a $400,000 home about $367 and $333 a month respectively at 1.1% tax and 1% maintenance. When you eventually sell, 5–6% of the price goes back out as commission and closing costs.

Should a first-time buyer take a 15-year or a 30-year loan?

Most people are better off starting from the payment they can carry in a bad month, which usually means 30 years, and buying the option to accelerate with a regular extra payment. What each term does to interest and to equity in the first five years is worked through in our 15-year versus 30-year mortgage guide.

5 First-Time Homebuyer Mistakes to Avoid

4 min read · updated October 6, 2026

First-time buyers almost never fail on the big question. They fail on five small ones, each of which looked obvious at the time and none of which had a number attached to it when the decision was made.

Here are the five, in the order they tend to happen, with the arithmetic that makes each one concrete — because a mistake you can price is a mistake you can avoid.

1. Shopping by house price instead of monthly payment

Listings are sorted by price, so buyers browse by price and then discover the bill arrives monthly. A $400,000 home is not one number: with 20% down at 6.5% over 25 years it is a $2,161 principal-and-interest payment (Mortgage Payment Calculator) before tax, insurance and any mortgage insurance. Working the other way round is usually wiser: the How Much House Can I Afford Calculator starts at your income, turns it into a payment you can carry, and only then into a price — on $95,000 of income at the 28% housing cap it points at a $2,217 payment and a home around $410,000, and that estimate is before tax and insurance, which is precisely why the realistic figure lands lower.

2. Spending the entire savings on the down payment

The down payment is not the cash requirement — it is the visible half of it. Closing costs run another 2–5% of the loan, which on a $400,000 purchase is roughly $8,000 to $20,000 paid at the table, and the first water heater fails without an appointment. Buyers who put down every dollar they own end up owning a house they cannot afford to run. The Down Payment Calculator prices that tradeoff directly: on a $400,000 purchase, each percentage point you move out of the down payment is about $27 a month for the life of the loan. What the whole table costs, line by line, is worked out here.

3. Assuming the mortgage payment is the cost of owning

On that same $400,000 home, property tax at 1.1% adds roughly $367 a month and maintenance at 1% of the price another $333 (Property Tax Calculator), with homeowners insurance on top. None of it builds equity or comes back when you sell, and that is exactly the distinction the Rent vs Buy Calculator is built around: it counts only what you cannot recover.

4. Taking the first loan offer as the market

Many first-time buyers accept the quote from the bank where they have held a checking account since college. Half a point is not a rounding error: on a $320,000 loan over 30 years, 6.0% instead of 6.5% is $1,919 rather than $2,023 a month and about $37,500 less interest across the term. If you are below 20% down, ask the same questions about mortgage insurance — at 10% down on a $400,000 home it is $150 a month until you reach 80% loan-to-value (PMI Calculator). That is a five-figure decision sitting inside a line item, and the Refinance Break-Even Calculator is what keeps a later fix honest.

5. Buying for the wrong time horizon

Nobody plans to move, and yet first homes change hands sooner than owners expect. Selling costs about 5–6% of the price — $20,000 to $24,000 on a $400,000 house — and in the early years most of each payment is interest rather than equity: five years into a 30-year loan at 6.5%, roughly $20,000 of a $320,000 principal has been retired (Amortization Calculator, and the full story in our 15-year versus 30-year guide). If your honest plan is shorter than five years, renting is a legitimate answer rather than a consolation prize.

Before you sign

Price the payment, not the house. Keep two months of salary in reserve after closing, because the down payment is only half the cash requirement. Budget tax, insurance and maintenance as their own line rather than a surprise. Collect two loan quotes and read the PMI line. And be honest about how long you will stay, because that answer changes which of the above matters most. Once you are in the house, the six levers in how to lower your monthly mortgage payment are what you will want next.