Don’t apply for a home loan without watching this first.

Feb 21

First-Time Home Buyer Checklist: What You Need to Know

By Will Flanagan | Pacific Northwest Home Loans

Buying your first home is an exciting milestone, but it can also be overwhelming. As a first-time homebuyer, you may have a lot of questions and concerns. That’s why I’ve put together this guide to help you understand the key steps in the home loan process and what lenders typically look for.

1. Start with an Accurate Loan Application

When applying for a mortgage, it's important to provide accurate and complete information. Lenders will ask for details such as:
✅ Your last two years of job history
✅ Income verification (pay stubs, tax returns, W-2s)
✅ Your debt-to-income (DTI) ratio

Many people don’t actually know their exact monthly income, which is why we verify your financial details. This ensures a smooth process and minimizes any surprises down the road.

2. Understanding Debt-to-Income Ratio

Your debt-to-income ratio (DTI) is a key factor in determining how much you can afford. There are two main components:
✔ Front-end ratio: Your monthly housing costs (mortgage, insurance, taxes) compared to your income.
✔ Back-end ratio: Your total monthly debt obligations (credit cards, car loans, student loans) plus housing costs, compared to your income.

For example, if your total DTI is around 45%, that helps lenders determine the loan amount you qualify for.

3. Choosing the Right Loan Type

There are different types of home loans, and choosing the right one depends on your financial situation and credit score:
🔹 Conventional Loans – Best for borrowers with strong credit (typically 680+).
🔹 FHA Loans – More lenient with credit and DTI, making it a great option for first-time buyers.
🔹 VA Loans – Available for eligible veterans with great benefits, including no down payment.

I use tools to compare different loan options side by side, helping you decide which loan best fits your needs.

4. Work with a Real Estate Agent

Having a knowledgeable real estate agent is key. They will:
🏡 Help you find the right home within your budget
📑 Guide you through making an offer
📝 Handle negotiations and paperwork

5. Ignore “Armchair Advice”

Friends and family may offer well-meaning advice, but real estate markets change frequently. A lender like myself stays up-to-date on the latest guidelines, so trust expert advice over outdated information.

6. Save for Closing Costs & Home Expenses

While some sellers may cover closing costs, it’s always a good idea to have 2-5% of the home price saved. Additionally, budgeting for home expenses is crucial.

7. Get a Home Inspection & Attend It

A home inspection ensures there are no hidden surprises with the property. Attending the inspection allows you to:
✔ Learn about the home’s systems (water shutoff, electrical panel, etc.)
✔ Identify potential repairs or maintenance issues
✔ Gain peace of mind before finalizing your purchase