Common Loan Mistakes First-Time Homebuyers Make

1. NOT GETTING PREQUALIFIED EARLY

Many buyers fall in love with a home before knowing how much they can actually afford. A lender pre-qualification (or better yet, pre-approval) gives you a clear idea of your budget. It also shows sellers you’re serious.

TIP: Talk to a lender before you start house-hunting. Getting pre-qualified helps you narrow your search and gives you time to correct any credit issues in advance.

2. UNDERESTIMATING THE TOTAL COSTS

First-time buyers often focus only on the monthly mortgage payment and forget about other expenses. Property taxes, homeowner’s insurance, HOA fees, utilities, and maintenance costs can add hundreds to your monthly budget.

TIP: Ask your lender for a full breakdown of your estimated costs. Budget for move-in expenses and an emergency fund, too.

3. MAKING BIG FINANCIAL CHANGES BEFORE CLOSING

Opening new credit cards, buying a car, or switching jobs during the loan process can jeopardize your loan approval—even if you were already pre-approved.

TIP: Keep your financial profile stable from the time you apply until after you close on your home. Don’t make any large purchases or open new credit accounts without checking with your lender first.

4. NOT UNDERSTANDING THE TYPE OF LOAN YOU’RE GETTING

From FHA and VA loans to conventional and USDA loans, there are several loan types available, each with pros and cons. Some first-time buyers don’t realize the difference—or choose based only on the lowest interest rate.

TIP: Ask your lender to explain your loan’s terms, including the interest rate, loan length, down payment, and whether the rate is fixed or adjustable. Make sure it fits your long-term financial goals.

5. OVERSTRETCHING YOUR BUDGET

It’s tempting to buy at the top of your price range, especially when interest rates are low. But doing so can leave little room for savings, emergencies, or future expenses.

TIP: Just because you’re approved for a certain amount doesn’t mean you should spend it. Choose a loan payment you can comfortably afford—even if your income changes or costs go up.

6. IGNORING DOWN PAYMENT ASSISTANCE PROGRAMS

Many first-time buyers assume they need 20% down, but that’s not true. In fact, many loan programs require as little as 3% down—and there are numerous local and state programs that offer down payment or closing cost assistance.

TIP: Ask your lender or real estate agent about programs for first-time buyers in your area. In South Texas, some builders also offer incentives when working with preferred lenders.

7. CHOOSING THE WRONG LENDER

Not all lenders offer the same programs, rates, or level of service. Some first-time buyers don’t shop around or settle for a lender that doesn’t explain the process clearly.

TIP: Interview multiple lenders. Ask questions, compare rates and fees, and choose someone who communicates clearly and helps you understand your options.

BOTTOM LINE

Buying your first home doesn’t have to be stressful—especially when you’re informed. Avoiding these common loan mistakes can help you close with confidence and enjoy your new home without regrets. Remember, a home is one of the biggest purchases you’ll ever make. Take your time, do your homework, and surround yourself with professionals who are there to help.