# Step 1: Am I ready to buy?. Am I ready to buy a house? A first-time buyer's checklist

> You're ready when you can pay three things without emptying your savings: the down payment, the closing costs, and a cushion for repairs after you move in. Lenders will also look at your credit and how much of your income already goes to debt. Start a few months early: small fixes to your credit and savings can change the rate you're offered.

By David Knorr, founder of BuyWise Home. Last reviewed October 28, 2026. Web page: https://www.buywisehome.com/guide/ready-to-buy

## What you need saved

- **The [down payment](https://www.buywisehome.com/guide/glossary/down-payment).** Some loans accept as little as 3% for first-time buyers, and an [FHA loan](https://www.buywisehome.com/guide/glossary/fha-loan) as little as 3.5%. On a conventional loan, putting down less than 20% usually means paying [PMI](https://www.buywisehome.com/guide/glossary/pmi) every month.
- **[Closing costs](https://www.buywisehome.com/guide/glossary/closing-costs).** Often 2% to 5% of the price, paid at closing on top of the down payment.
- **Due diligence costs.** The [inspection](https://www.buywisehome.com/guide/glossary/home-inspection) and any extra tests, paid up front even if you walk away.
- **A repair cushion.** Every home needs something in the first year. A cushion means a surprise doesn't land on a credit card.

## Help with your down payment

The federal government and every state offer help for first-time buyers: [down payment help](https://www.buywisehome.com/guide/glossary/down-payment-assistance) as a grant or a 0% loan you repay when you sell, and loans that need only 3% to 3.5% down. Most have income and price limits, and most must be set up through a participating lender before you close, so look early. [Find the programs that may fit your home and household](https://www.buywisehome.com/guide/tools/down-payment-help).

## What lenders look at

- **Your credit score.** A higher score usually means a lower rate, and a lower rate saves money every month for years.
- **Your [debt-to-income ratio](https://www.buywisehome.com/guide/glossary/debt-to-income).** The share of your monthly income that goes to debt payments, counting the new mortgage.
- **Steady income.** Lenders usually want about two years of history. If you're self-employed, expect to show tax returns.
- **Where your savings came from.** Large deposits need a paper trail. Money from family usually needs a signed gift letter.

## Budget from the monthly cost, not the price

The price you can be approved for and the payment you can live with are different numbers. Your monthly cost is the loan payment plus [property tax](https://www.buywisehome.com/guide/glossary/property-tax), [homeowners insurance](https://www.buywisehome.com/guide/glossary/homeowners-insurance), any [HOA](https://www.buywisehome.com/guide/glossary/hoa) dues, PMI if you have it, and upkeep. Work out what you can pay each month and still save, then work back to a price.

## Dos and don'ts

**Do**

- Check your credit reports for free and dispute any errors.
- Keep records of where your savings came from.
- Set your budget from the monthly cost you can carry.
- Keep money aside for repairs after closing.

**Don't**

- Open new credit cards or finance a car while you're buying.
- Move large sums between accounts without a record.
- Let the most you're approved for decide your budget.
- Count the down payment as the only cash you need.

## Questions to ask

**Yourself**

1. How long do I expect to live here? Buying usually pays off over years, not months.
2. What monthly payment can I carry, with taxes, insurance and HOA dues included?
3. After closing, how much will be left in savings?

## Terms on this page

- [Down payment](https://www.buywisehome.com/guide/glossary/down-payment): The part of the price you pay in cash. The loan covers the rest.
- [FHA loan](https://www.buywisehome.com/guide/glossary/fha-loan): A government-backed mortgage with down payments from 3.5%.
- [PMI](https://www.buywisehome.com/guide/glossary/pmi): Insurance you pay when you put down less than 20%. It protects the lender.
- [Closing costs](https://www.buywisehome.com/guide/glossary/closing-costs): Fees paid at closing on top of the down payment, often 2%–5% of the price.
- [Home inspection](https://www.buywisehome.com/guide/glossary/home-inspection): A visual check of the home's condition by a professional inspector.
- [Down payment assistance](https://www.buywisehome.com/guide/glossary/down-payment-assistance): Help with the down payment and closing costs, as a grant or a low- or no-interest loan.
- [Debt-to-income ratio](https://www.buywisehome.com/guide/glossary/debt-to-income): Your monthly debts divided by your monthly income. Lenders use it to size your loan.
- [Property tax](https://www.buywisehome.com/guide/glossary/property-tax): A yearly tax on the home's value, usually paid monthly through your mortgage.
- [Homeowners insurance](https://www.buywisehome.com/guide/glossary/homeowners-insurance): Pays to repair your home after damage like fire or storms. Your lender requires it.
- [HOA](https://www.buywisehome.com/guide/glossary/hoa): A homeowners association: shared spaces and rules, paid for by owners' dues.

## Sources

- [CFPB: Buying a House](https://www.consumerfinance.gov/owning-a-home/)
- [AnnualCreditReport.com (free credit reports)](https://www.annualcreditreport.com/)

_General information based on the standard Georgia REALTORS® purchase contract and public guidance. Your own contract decides: read it, and ask your agent or closing attorney about anything that matters. Not legal or financial advice._