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Okay, so here's what happened last Tuesday. I was helping a team member with a couple who'd been renting in Louisville for six years, saving every dollar they could, convinced they needed a 20% down payment before they could even think about buying. When we showed them they could get into a home with just 3% down through a conventional loan, and potentially qualify for down payment assistance on top of that, they literally teared up right there in the conference room. That's when it hit me—again—how much misinformation floats around about homeownership.
Buying your first home should feel exciting, not terrifying. Yes, it's probably the biggest purchase you'll make, and yes, there are a lot of moving pieces. But when you understand the process and have the right information, the whole thing becomes manageable. Think of it like this: Nobody expects you to know how to perform surgery just because you need an operation. Same thing here—you don't need to be a mortgage expert to buy a house. You just need to know what questions to ask and what steps to take.
The median home price in the United States hit $410,800 in Q2 2025 according to the Federal Reserve Bank of St. Louis, which sounds overwhelming until you realize there are programs and strategies specifically designed to help first-time buyers like you make this work. Actually, scratch that—prices vary wildly by location. Zillow reported the average U.S. home value at $369,147 as of October 2025, while existing homes reached $435,300 per the National Association of Realtors. What matters most is understanding what you can afford in your specific market and what resources are available to help you get there.
I'm currently finishing my Master’s of Social Work (MSW) program while working full-time, so I understand juggling multiple priorities and feeling like you're never quite ready for the next big step. Here's the thing though—you don't have to have everything perfect to start this process. You just need to be prepared.
This isn't just about reading articles online. I mean actually educating yourself on how mortgages work, what different loan types mean for your finances, and what the entire buying process looks like from start to finish.
A mortgage is a loan specifically for buying a house that you pay back over time with interest. Most buyers finance anywhere from 80-97% of the purchase price, depending on their down payment and loan type. The two most common options you'll hear about are 15-year and 30-year loans, and this choice will significantly impact your monthly budget and long-term costs.
Let me break this down with actual numbers. Say you're buying a $350,000 home with a 20% down payment of $70,000, financing $280,000. With a 30-year mortgage at 6.75% interest, your principal and interest payment would be approximately $1,816 per month. Over 30 years, you'd pay about $373,760 in interest alone. Switch to a 15-year loan at 6.25%, and your monthly payment jumps to roughly $2,401—but you'd pay only $152,180 in interest total. That's a $221,580 difference in interest costs.
The textbook answer is that 30-year mortgages work better for buyers who need lower monthly payments and want more financial flexibility. The 15-year option makes sense if you can afford higher payments and want to build equity faster while paying substantially less interest. What this means for you is there's no universally "right" answer—it depends on your income stability, other financial goals, and comfort level with your monthly housing payment.
Consider taking a home buyer education class. These courses provide in-depth insight into budgeting, working with lenders, understanding contracts, and navigating the inspection process. Some are offered free through HUD-approved agencies, and here's the kicker—many down payment assistance programs actually require these classes, so you might as well get ahead of it. At AmeriSave, we've seen buyers who complete these courses make significantly better decisions throughout the process because they understand what they're signing and why it matters.
Before you get too far into this journey, ask yourself these critical questions:
Can you commit to this home for at least 5 years? Buying involves substantial upfront costs—closing costs typically run 3%-6% of your loan amount according to the Consumer Financial Protection Bureau, plus moving expenses, potential repairs, new furniture, and all those surprise costs that pop up in the first year. If there's a real possibility you'll need to relocate within 5 years for work or family reasons, renting might actually be more cost-effective. Selling a home quickly can be expensive, and you might not have built enough equity to cover all your costs.
Do you have an emergency fund covering at least 3 months of expenses? Water heaters die. Roofs leak. HVAC systems fail at the worst possible moment. Three months of expenses gives you breathing room when—not if—something breaks or you face unexpected income loss. In my MSW program, we talk a lot about financial stability being foundational to overall wellbeing, and this emergency fund is a huge piece of that foundation.
Is your income stable? If your paycheck fluctuates significantly or your job feels uncertain, missing mortgage payments could put your home at risk. Lenders will evaluate your income stability too, but you need to be honest with yourself about whether you can reliably make payments during lean periods.
Do you have money for a down payment? While you can sometimes put down as little as 3% on a conventional loan or even zero with certain government programs, having a larger down payment reduces your monthly payments and helps you avoid private mortgage insurance. Remember you'll need additional cash beyond the down payment for closing costs, moving, and those first-month expenses. Don't drain your entire savings account just to hit a down payment target.
If you answered "yes" to all those questions, gather your financial documents and prepare to take your first real steps. But if you answered "no" to even one, that doesn't mean you're failing—it means you're being smart about timing. Sometimes the right decision is to wait, build your savings, and position yourself for success rather than stretching yourself too thin right out of the gate.
This is where things get interesting, and honestly, where a lot of buyers leave money on the table because they simply don't know these programs exist. As a first-time buyer, you may qualify for programs that can make purchasing a home significantly more achievable.
The big one everyone's been talking about is the Downpayment Toward Equity Act, which proposes up to $25,000 in cash assistance for first-generation, first-time buyers. As of October 2025, this federal program hasn't been passed into law yet, so you can't actually apply for it. But the fact that it's being seriously discussed tells you something about the momentum behind helping first-time buyers.
Here's what's actually available right now:
State and local down payment assistance programs vary widely by location, but many provide grants or forgivable loans ranging from $10,000 to $25,000 or more. For example, Michigan's First-Generation Down Payment Assistance program launched in February 2025 with $25,000 deferred loans for first-generation buyers. New York's HomeFirst program offers up to $100,000 toward down payment or closing costs in New York City . Georgia Dream provides various assistance options for homes up to $550,000 depending on your income and veteran status.
The amounts and requirements differ significantly by location, so research what's available in your specific area. Many state housing finance agencies maintain searchable databases of local programs.
The National Homebuyers Fund provides grants or three-year forgivable loans to first-time buyers nationwide, typically up to 5% of your mortgage loan amount. You can pair this with conventional, FHA, VA, or USDA mortgages. Call (866) 643-4968 or visit their website to find participating lenders.
HomePath Ready Buyer program from Fannie Mae offers first-time buyers up to 3% of the purchase price toward closing costs after completing a home buyer education course. That education requirement actually works in your favor because you'll be better prepared for the entire process.
Good Neighbor Next Door program through HUD offers significant discounts—up to 50% off list price—on homes in revitalization areas specifically for law enforcement officers, teachers, firefighters, and emergency medical technicians. You must commit to living in the property as your sole residence for at least 36 months.
Mortgage Credit Certificate programs allow first-time buyers to claim a federal tax credit on a portion of the mortgage interest paid each year. This isn't cash at closing, but it can save you hundreds or thousands annually on your tax bill, effectively reducing your mortgage cost.
A client asked me yesterday whether these programs are "too good to be true." The answer is no—they're real, they're designed specifically to help people like you, and they exist because policymakers recognize that homeownership builds wealth and stabilizes communities. The catch is just that you'll need extensive paperwork to complete applications. Research what documents you'll need and have them ready when you begin. The more prepared you are, the less overwhelming the process feels.
At AmeriSave, we work with various assistance programs and can help you navigate which ones might fit your situation. The key is to start researching early so you understand your options before you fall in love with a specific house.
One of the first exercises I do with buyers is creating what I call the "reality check list." It helps enormously when you're actually out there touring properties because you'll have a framework for evaluating what you see instead of getting swept up in granite countertops or a beautifully staged living room.
Break your wishlist into three categories:
Needs are utterly essential—deal-breakers if they're not present. If you're planning on having children or already have them, adequate bedrooms might be a need. If you work from home full-time, dedicated office space could be a need. If you have mobility limitations, a single-story home or one with a first-floor bedroom and bathroom might be a need. These are the items where there's no compromise.
Non-negotiables are critically important to you but not absolutely necessary. If you have dogs, a big yard or location near green spaces might be a nonnegotiable. If you cook seriously, a functional kitchen with decent counter space might fall here. If you rely on public transportation, proximity to bus or train lines could be a nonnegotiable. These matter tremendously to your quality of life, but you might be willing to trade one for another.
Nice-to-haves are features you'd love but wouldn't walk away from a great house without. A walk-in closet, hardwood floors throughout, proximity to your favorite coffee shop, a finished basement—these add value and enjoyment but aren't crucial for the purchase decision.
Here's an example from my own experience. When my husband and I were buying in Louisville, our needs were: three bedrooms minimum, two bathrooms, functional kitchen, safe neighborhood with good schools. Non-negotiables: fenced yard for our dogs, garage or covered parking, within 30 minutes of both our workplaces. Nice-to-haves: updated bathrooms, home office space, walkable neighborhood. We ended up buying a house that met all our needs and most non-negotiables but didn't have the updated bathrooms. We tackled that renovation two years later when we had saved up for it.
Make this list before you start seriously shopping, and revisit it with your partner or co-buyer to make sure you're aligned. It'll save you from those arguments in the car after touring a house where one person loved it and the other person was mentally calculating how to diplomatically say "absolutely not."
Once you've got your list of home features sorted out, it's time to find a buyer's agent who will represent your interests throughout this process. This matters more than you might think because only a buyer's agent works on your behalf—don't rely on the seller's agent to look out for you.
Start by asking friends, family, and coworkers for referrals. Personal recommendations from people who recently bought homes are gold. Do research online, read reviews, check their sales history. Then interview at least three agents before deciding.
During interviews, ask:
A good buyer's agent will show you properties fitting your needs and price range, attend showings with you and learn your priorities as a homeowner, help you decide how much to offer for a property based on comparable sales and market conditions, submit your offer letter on your behalf, negotiate with the seller's agent after you submit an offer, coordinate with your lender, inspector, and other professionals, and go to closing with you to ensure everything's in order.
They'll ask pragmatic questions about what you want, like how many bedrooms and bathrooms, what type of home, how many cars you need to park, and what amenities matter most—nearby parks, grocery stores, public transit, schools.
Remember that while you want good representation, the cheapest option isn't always best when we're talking about one of the biggest purchases of your life. That said, commission structures vary, so understand what you're getting for the cost. Some agents charge buyer's premiums, others work entirely on commission from the seller. Get this spelled out clearly upfront.
Before you get too far down the road with house hunting, let's talk about preapproval versus prequalification because this confuses almost everyone at first.
Prequalification is basically an estimate. You provide a lender with information about your income, assets, and debts—usually informally, sometimes just over the phone or through an online form. The lender does some quick math and tells you roughly how much loan you might qualify for. It's helpful as a starting point, but it's not official and doesn't carry much weight with sellers.
Preapproval is the real deal. This is an official evaluation where you submit actual documentation—W-2s, pay stubs, bank statements, tax returns. The lender pulls your credit report, verifies your employment, and assesses your entire financial situation. At the end, you receive a preapproval letter stating exactly how much loan money you can get based on your verified financial information.
In a competitive market, preapproval makes a massive difference. When you submit an offer, that preapproval letter shows the seller you're a qualified buyer who can actually close on the purchase. Multiple offers on a property? The seller will almost always choose the preapproved buyer over someone with just a prequalification or no letter at all. Why? Because a preapproved buyer is significantly less likely to have their financing fall through at the last minute.
Benefits of getting preapproved include knowing exactly how much home you can afford, which focuses your search within a realistic budget, making stronger offers because sellers see you have verified financing, experiencing fewer surprises during the actual mortgage process because the major financial review already happened, and often closing faster because significant underwriting work is already complete.
At AmeriSave, we make the preapproval process straightforward and can often complete it within days. We'll pull your credit, review your documentation, and issue a preapproval letter that strengthens your position as a serious buyer. Some lenders offer conditional preapprovals that are good for 60-90 days, giving you a solid window to find the right property.
If you're just getting started and not fully ready to commit—maybe you're still building your down payment or aren't sure about timing—a prequalification might be all you need right now. But once you're serious about buying, get that preapproval before you start making offers.
If you're trying to take out a mortgage, right now is absolutely not the time to open new credit cards, take out personal loans, finance a car, or make any other big changes to your credit profile. I cannot emphasize this enough because it's one of the most common mistakes I see buyers make.
Here's what happens: You get preapproved based on your credit report from that specific date. But lenders continue monitoring your credit all the way through closing. If they discover you've taken out another loan, opened new lines of credit, or your credit balance has increased significantly, it could jeopardize your final approval. Sometimes it just delays closing, which is stressful enough. But sometimes it actually kills the deal.
A couple I worked with got preapproved, found their dream home, went under contract—and then decided they needed furniture for their new place. So they opened a store credit card to finance $4,000 worth of furniture three weeks before closing. When their lender pulled credit again before final approval, that new debt changed their debt-to-income ratio enough that they no longer qualified for the loan amount they needed. We had to renegotiate with the seller, the buyers had to come up with additional cash to make up the difference, and it was a complete mess. All because they couldn't wait a month to buy furniture.
Here's your rule for the entire mortgage process: Do not change anything about your financial situation without talking to your lender first. Don't open new credit cards, take out personal or auto or student loans, make large purchases on existing credit, cosign loans for anyone, change jobs if you can help it, make large deposits or withdrawals without documentation, close old credit accounts, or have new hard inquiries on your credit.
Keep making all your regular payments on time, maintain low balances on existing credit, and just sit tight financially until after you close. Once you have keys in hand and you've moved in, then go buy all the furniture and décor you want.
When you're ready to actually apply for a mortgage, you need to understand the different loan types because they affect your down payment amount, the type of home you can buy, interest rates, and ongoing costs.
Conventional loans are the most common type. These are mortgages between you and a private lender like a bank or mortgage company—no government backing. Conventional loans typically offer the most flexibility and can be used for primary residences, second homes, or investment properties. You can purchase a home with as little as 3% down, though putting down less than 20% means you'll pay private mortgage insurance until you build 20% equity. The PMI protects the lender if you default, and it adds to your monthly payment—typically $30-$70 per month per $100,000 borrowed, depending on your credit score and down payment amount.
Conventional loans generally require credit scores of at least 620, though higher scores get better interest rates. Your debt-to-income ratio typically needs to stay below 43-50%. These loans follow guidelines set by Fannie Mae or Freddie Mac, which means there are maximum loan limits that vary by county, ranging from $806,500 in most areas to over $1 million in high-cost markets as of 2025.
FHA loans are backed by the Federal Housing Administration, an agency under the U.S. Department of Housing and Urban Development. The government insurance means lenders face less risk, which translates to more relaxed requirements for borrowers. You can qualify for an FHA loan first time home buyer program with a credit score as low as 580 and a down payment of just 3.5%. If your credit score is between 500-579, you might still qualify but you'll need 10% down.
The tradeoff is that FHA loans require mortgage insurance premiums both upfront—1.75% of the loan amount, typically rolled into the loan—and ongoing monthly premiums for the life of the loan if you put down less than 10%. Even if you later build significant equity, you can't cancel FHA mortgage insurance without refinancing into a different loan type. FHA loans also have lower loan limits than conventional loans in many markets.
FHA loans make sense for buyers with lower credit scores, smaller down payments, or higher debt-to-income ratios who might not qualify for conventional financing. At AmeriSave, we help lots of first-time buyers who start with FHA loans and refinance to conventional loans once they've built equity and improved their credit.
VA loans are exclusively for veterans, active-duty service members, National Guard members, and qualified surviving spouses. These are backed by the Department of Veterans Affairs and offer incredible benefits: zero down payment required, no PMI regardless of down payment amount, competitive interest rates, and relaxed credit requirements. The VA charges a one-time funding fee, typically 2.15%-3.3% of the loan amount for first-time use and less for subsequent use, but this can be rolled into the loan amount. Some disabled veterans are exempt from the funding fee entirely.
VA loans don't have maximum loan amounts, though lenders may impose their own limits. There's also something called the VA entitlement or guarantee, which determines how much the VA will cover if you default. For 2025, the basic entitlement is $36,000, but there are additional tier limits based on county conforming loan limits.
If you're eligible for VA benefits, this is almost always your best option for financing a home purchase. At AmeriSave, we work extensively with VA loans and can help you understand exactly what your entitlement covers.
USDA loans are for buyers purchasing in qualified rural or suburban areas, which actually includes way more locations than most people think. These loans, backed by the U.S. Department of Agriculture, offer zero down payment options for low- to moderate-income buyers. There are household income limits based on the area median income, typically up to 115% of median in your location, and the property must be in a USDA-eligible area, which you can check through the USDA eligibility map.
USDA loans charge an upfront guarantee fee of 1% of the loan amount and annual fees of 0.35% of the loan balance, but they offer some of the lowest interest rates available and that zero-down option is compelling for buyers who qualify. Note that AmeriSave doesn't currently offer USDA loans, but we can refer you to lenders who do if that's the best fit for your situation.
The key is matching the loan type to your specific circumstances. If you're a veteran, VA is usually your best bet. If you have great credit and at least 5% to put down, conventional might save you money long-term. If your credit is lower or you have limited down payment funds, FHA opens doors. If you're buying in a rural area and meet income limits, USDA could give you the best terms.
This is something buyers skip surprisingly often, and it costs them thousands of dollars. Choosing the right mortgage lender can save you significant money over the life of your loan, so invest time in shopping around rather than going with the first lender you find or just using whoever your real estate agent recommends without doing your own research.
Get loan estimates from at least three lenders. Federal law requires lenders to provide a standardized Loan Estimate form within three business days of receiving your application. This form breaks down the interest rate, monthly payment, and all the fees associated with your loan, making it easy to compare offers side-by-side.
When comparing lenders, look at both the interest rate and the annual percentage rate. The interest rate determines your monthly principal and interest payment. The APR includes the interest rate plus additional fees like origination charges, discount points, and some closing costs, giving you a more complete picture of the loan's true cost. A loan might have a slightly lower interest rate but higher APR because of expensive fees, making it actually more costly than a loan with a slightly higher rate but lower fees.
Consider different lender types. Banks and credit unions offer familiarity and established relationships, though their rates and processes may not be as competitive or streamlined. Online lenders like AmeriSave often provide lower rates and faster processing because of lower overhead and automated systems. Mortgage brokers shop multiple lenders for you but may charge broker fees, so make sure you understand their compensation structure.
At AmeriSave, we offer a streamlined digital experience that allows you to manage your application online, upload documents securely, track your progress in real-time, and get faster approvals than traditional mortgage processes. We compete on rates and we're transparent about all costs upfront, so you know exactly what you're getting into.
Pay attention to lender reviews and ratings too. A slightly lower rate isn't worth much if the lender is disorganized, misses deadlines, or creates stress during what should be an exciting time. Look for lenders with solid customer service, clear communication, and proven track records of closing loans on time.
Don't be afraid to negotiate. If one lender offers you a great rate but you prefer another lender for other reasons, show them the better rate and ask if they'll match it. Sometimes they will, especially if you're a strong borrower.
Your down payment is the money you pay upfront toward the home's purchase price, with the mortgage covering the rest. The more you save for a down payment, the less you need to borrow, which means lower monthly payments and less interest paid over the life of the loan.
Here's the reality: You don't need 20% down, despite what conventional wisdom says. Conventional loans allow down payments as low as 3%. FHA loans require 3.5% down with decent credit. VA and USDA loans offer zero-down options for qualified buyers. So if you're delaying homeownership because you're trying to save 20%, stop. Run the numbers and see what actually makes sense for your situation.
That said, there are advantages to larger down payments. The big one is avoiding PMI if you put down 20% or more on a conventional loan. PMI typically costs $30-$70 per month per $100,000 borrowed, so on a $300,000 loan you might pay $90-$210 monthly just for insurance that protects the lender, not you. Over time that adds up. But here's something people don't always realize—once you've built 20% equity through payments and home appreciation, you can request to cancel PMI on conventional loans. So a lower down payment now doesn't mean permanent PMI.
Strategies for saving your down payment include setting up automatic transfers from checking to a dedicated savings account the day after each paycheck hits. You won't miss money you never see in your spending account. Even $200-$300 per paycheck adds up fast—that's $5,200-$7,800 annually.
Cut discretionary spending temporarily. I'm not saying never eat out or enjoy yourself, but if you're serious about buying within 12-18 months, reducing restaurants, subscriptions, and impulse purchases can accelerate your savings dramatically. Track your spending for a month, identify your biggest flexible expenses, and target cuts there.
Direct windfalls to savings. Tax refunds, bonuses, gifts, side gig income—put this money straight into your down payment fund rather than treating it as spending money.
Investigate high-yield savings accounts or money market accounts for your down payment fund. As of October 2025, some online banks offer 4-5% APY, which is significantly better than traditional bank savings accounts at 0.01% APY. On $20,000 saved over 18 months, that's a difference of hundreds of dollars.
Consider gift funds from family. Many loan programs allow all or part of your down payment to come from gifts from family members, though you'll need a gift letter stating the money doesn't need to be repaid. Check with your lender about gift fund requirements.
Look into down payment assistance programs as discussed earlier. Grants and forgivable loans can provide thousands of dollars toward your down payment, significantly reducing what you need to save on your own.
At AmeriSave, we work with various down payment assistance programs and can help you understand which ones might be available based on your location and circumstances. Sometimes combining a lower down payment with assistance programs is smarter than waiting years to save 20%, especially in markets where home prices are appreciating 4-6% annually—you might be saving $10,000 but the home's price increased by $15,000.
Okay, so this is where a lot of first-time buyers get surprised, and it's frustrating because closing costs can feel like they come out of nowhere. If you assume your down payment is all you need to close on your mortgage loan, you're in for a shock when you see something called a Closing Disclosure.
Closing costs are upfront expenses that go to various parties—your lender, title company, county offices, insurance companies—in exchange for processing and finalizing your home purchase. Generally, expect to pay 3%-6% of your total loan amount in closing costs according to the Consumer Financial Protection Bureau. On a $300,000 loan, that's $9,000-$18,000 on top of your down payment.
Let me work through a realistic example. You're buying a $350,000 home with a 5% down payment of $17,500, financing $332,500. At 4% closing costs, you'd pay $13,300 in fees. So you need $30,800 total to close—the $17,500 plus the $13,300—not just the $17,500 down payment.
Common closing costs include loan origination fees, typically 0.5%-1% of the loan amount, appraisal fees usually $400-$600 for a single-family home, credit report fees about $25-$50, title search and title insurance typically $1,000-$4,000, survey fees of $300-$500 in areas where required, attorney fees ranging from $500-$1,500 in some states, home inspection fees usually $300-$500, homeowners insurance with the first year's premium prepaid at closing, property tax prepaids, escrow prepaids of 2-3 months, recording fees typically $100-$250, HOA fees if applicable, and optional discount points to buy down your interest rate.
You'll receive a Loan Estimate form within three days of applying, showing estimated closing costs. Then, at least three business days before closing, you'll receive the Closing Disclosure with final numbers. Compare these carefully—costs should be very similar, though some fees might change slightly based on final loan amount or timing.
Strategies to reduce closing costs include requesting seller concessions. In buyer-friendly markets, you can ask the seller to contribute toward closing costs, typically 3-6% of the purchase price depending on loan type. This is negotiated as part of your offer. Instead of asking for $10,000 off the purchase price, you might offer full price with $10,000 in seller concessions toward closing costs.
Shop around for services. For services where you can choose your own provider—like homeowners insurance, home inspections, and sometimes attorneys—get multiple quotes. Your lender must allow you to shop for certain services.
Negotiate lender fees. Some fees are non-negotiable, like appraisal fees going to a third-party appraiser, but origination fees, processing fees, and underwriting fees sometimes have wiggle room. Don't be afraid to ask if they can reduce or waive certain fees, especially if you're a strong borrower or have competing offers from other lenders.
Consider a no-closing-cost mortgage. Some lenders offer loans where they cover closing costs in exchange for a slightly higher interest rate. This can be smart if you're short on cash now and plan to refinance within a few years. At AmeriSave, we can help you run the math to see if this trade-off makes sense for your situation.
Look into first-time buyer programs that help with closing costs, not just down payments. Many of the assistance programs discussed earlier can be used for closing costs, expanding your options significantly.
While your home is where you'll live your life, build memories, maybe raise kids—it's also a major financial investment. Even if you're not thinking about selling anytime soon, understanding resale value helps you make a smarter purchase decision.
Factors affecting future resale value include neighborhood trajectory—is the area improving or declining? Look at whether new businesses are opening, infrastructure improvements are planned, crime trends, and whether younger families are moving in. Gentrifying neighborhoods can see dramatic appreciation, while declining areas might stagnate or lose value.
School quality matters. Even if you don't have kids, homes in highly-rated school districts typically appreciate faster and sell easier. Check GreatSchools.org for ratings and trends.
Location and amenities affect long-term value. Proximity to employment centers, public transit, parks, shopping, restaurants, and entertainment all matter. "Location, location, location" isn't just a cliché—it's the single biggest factor in home values.
Home condition and age play a role. A well-maintained 30-year-old home often holds value better than a neglected 10-year-old home. Budget for ongoing maintenance to protect your investment.
Comparable sales show what similar homes in the area are selling for. Use Zillow, Realtor.com, or ask your agent for comps. If homes in your target neighborhood are selling for $200,000-$220,000 and you're considering a $250,000 property, you might be overpaying—or the home might have upgrades that justify premium pricing.
Market trends matter. Look at whether home prices in the area are appreciating or flat. According to the Federal Reserve Bank of St. Louis, median U.S. home prices have increased approximately 40% from 2020-2025, but local markets vary dramatically. Some areas saw 60%+ appreciation while others remained flat or declined.
Unusual features can be a double-edged sword. Highly personalized renovations, unusual layouts, or extremely niche features like a home recording studio or indoor pool can actually limit your buyer pool when selling. Stick with mainstream appeal unless you're planning to stay long-term.
Let's talk about building equity because this is the whole point of homeownership from a wealth-building perspective. Equity is the difference between what you owe on your mortgage and what your home is worth. Every mortgage payment you make increases your ownership stake, and if property values appreciate, your equity grows even faster.
Example: You buy a $350,000 home with a 5% down payment of $17,500, financing $332,500 at 6.75% over 30 years. After one year of payments—about $21,800 annually in principal and interest—you've paid down roughly $4,800 of principal. If your home appreciates 4% in that year, that's $14,000 in appreciation. Your equity has grown from $17,500 to $36,300—a 107% increase in your equity position in just 12 months.
After five years, you've paid down perhaps $27,000 of principal, and if the home appreciated 4% annually, it's now worth approximately $426,000. Your equity is around $120,500—your original $17,500 down payment, plus $27,000 in principal reduction, plus $76,000 in appreciation. That's nearly 7x your initial investment.
This growing equity becomes your financial foundation when it's time to sell. It's what allows you to move up to a larger home, relocate to a new area, or simply walk away from the sale with cash in hand. Without sufficient equity, you might find yourself unable to sell without bringing money to closing, which severely limits your housing options and financial flexibility.
The flip side is that if you overpay significantly for a home or buy in a declining market, you could end up underwater—owing more than the home is worth. This is why buying at a reasonable price in a stable or appreciating market matters—it protects your downside while setting you up for gains.
So you've found a home that checks your boxes. Now comes the stressful part—deciding what to offer and actually putting it in writing.
First, understand that your offer isn't just a price. It's a package that includes purchase price, earnest money deposit typically equal to 1%-3% of the purchase price, contingencies like financing, inspection, appraisal, and sale contingencies, closing timeline, included items, and seller concessions if you're asking the seller to contribute toward closing costs.
Determining your offer price involves reviewing comparable sales. Your agent should provide recent sales of similar homes in the area. If comparable 3-bedroom, 2-bath homes around 1,800 square feet sold for $340,000-$360,000 in the past 90 days, that's your baseline.
Consider market conditions. In a seller's market with low inventory and high demand, you might need to offer at or above asking price. In a buyer's market with high inventory, you have more negotiation room. Ask your agent about typical offer-to-list price ratios in your area. Are homes selling at 95% of asking? 100%? 105%?
Factor in home condition. If the property needs work, adjust your offer accordingly. Need a new roof for $15,000? Outdated kitchen that'll require $25,000 to update? You might offer less than comps to account for these costs.
Don't get house-poor. This is critical. Being "house poor" means a disproportionate percentage of your income goes to mortgage payments, insurance, property taxes, and maintenance, leaving little for other financial goals or emergency costs. A general guideline is keeping your total housing expenses below 28-30% of your gross income. On a $75,000 annual income or $6,250 monthly, that means keeping housing costs under $1,750-$1,875 per month including principal, interest, taxes, insurance, and HOA fees if applicable.
Don't skip the math. Let's work through a realistic scenario. You're buying a $350,000 home with 5% down or $17,500, financing $332,500 at 6.75% over 30 years. Monthly principal and interest: roughly $2,156. Add property taxes at say $3,000 annually or $250 monthly, homeowners insurance at $100 monthly, and PMI at $110 monthly. Total housing payment: approximately $2,616 monthly. You need gross income of at least $93,000 annually or $7,750 monthly to keep housing at 28% of gross income. If you earn less, either you're stretching your budget or you need a less expensive home.
At AmeriSave, we provide calculators and guidance to help you determine what you can comfortably afford, not just what you might technically qualify for. There's a big difference, and we want you succeeding in homeownership, not struggling to make payments.
Crafting your offer means working closely with your agent on strategy. In competitive markets, your offer might include offering above asking price, limited or no contingencies, flexible closing timeline matching seller preferences, a personal letter to sellers, or an escalation clause where you'll automatically beat other offers up to a certain maximum.
In buyer-friendly markets, you have more leverage. You might offer below asking price, request seller concessions toward closing costs, include all standard contingencies, and take time to fully inspect and evaluate.
Remember that your preapproval letter strengthens any offer significantly. Sellers take preapproved buyers much more seriously than those who haven't secured financing yet.
Two critical protective steps happen after your offer is accepted: the home inspection and the appraisal. These aren't just hoops to jump through—they protect both you and your lender from making a bad investment.
A qualified home inspector thoroughly examines the property from foundation to roof, identifying potential problems like structural issues, electrical problems, plumbing leaks or old pipes, HVAC system condition and life expectancy, water damage or mold or moisture issues, pest problems, and code violations.
A standard home inspection costs $300-$500 for a typical single-family home and takes 2-4 hours. You should absolutely attend the inspection so the inspector can walk you through findings and answer questions. They'll provide a detailed written report afterward, typically 30-50+ pages with photos documenting everything they found.
Most mortgage lenders don't require inspections—this is for your protection, not theirs. But skipping inspection is incredibly risky. I had a client once who waived inspection to make their offer more competitive. Two months after moving in, they discovered the HVAC system was shot—complete replacement cost $12,000—and the roof needed work at $8,000. They wouldn't have bought the house if they'd known, or they would've negotiated a much lower price.
Include an inspection contingency in your purchase offer. This gives you the right to request the seller make repairs before closing, request a credit toward repairs at closing, renegotiate the purchase price based on findings, or walk away from the deal entirely if problems are too severe and get your earnest money back.
After receiving the inspection report, work with your agent to determine what to request from the seller. Typically, you focus on major issues affecting safety, structural integrity, or expensive systems, not cosmetic concerns or minor maintenance items. Sellers might agree to make repairs, provide credits, or split costs.
Your lender will require an appraisal before approving your loan. This determines the home's market value based on property features, recent sales of comparable properties, current market conditions, and local market trends.
The appraisal typically costs $400-$600 for a single-family home and is ordered by your lender but paid by you, often at closing or sometimes upfront. The appraiser is independent—they don't work for you or the seller, they work for the lender.
Why lenders require appraisals: They want to ensure they're not loaning more money than the house is worth. If you default, the lender needs to recoup their investment by selling the property. If they lend $350,000 on a house worth $300,000, they're exposed to significant loss.
What happens if the appraisal comes in low? Say you agreed to buy a home for $360,000, but it appraises for $340,000. You have options: renegotiate the purchase price to match the appraised value of $340,000, bring additional cash to closing to cover the $20,000 gap, split the difference with the seller and agree on $350,000, or walk away if you included an appraisal contingency.
This is why the appraisal contingency is important—it protects you from being forced to complete a purchase at an inflated price or having to come up with unexpected additional cash.
Both inspections and appraisals are investments in making a smart purchase decision. Yes, they cost money upfront, but they can save you tens of thousands in avoided problems or negotiating leverage.
Even the most thorough inspection won't catch every potential issue, and things break over time regardless of condition. Creating a maintenance budget before you even close helps you avoid that panicked scramble when your water heater dies on a Saturday night.
A general rule of thumb is budgeting 1%-2% of your home's value annually for maintenance and repairs. On a $350,000 home, that's $3,500-$7,000 per year, or roughly $300-$600 per month. This might sound high, especially when you're already stretching to afford the mortgage, but here's the reality: It's going to cost you something. The question is whether you're prepared or scrambling.
Create a separate savings account specifically for home maintenance and start funding it before you close. Even if you can only manage $100-$200 per month initially, that builds a cushion for when things break.
Common expenses you'll face include HVAC maintenance and repairs with annual service at $100-$150, minor repairs at $300-$800, and full system replacement every 15-20 years at $5,000-$12,000. Water heater replacement happens every 8-12 years at $800-$2,500 depending on type and size. Roof repairs or replacement includes minor repairs at $300-$1,500 and full replacement every 20-30 years at $8,000-$20,000. Appliance replacements for refrigerators, washers, dryers, and dishwashers last 10-15 years at $400-$2,000 each. Plumbing issues range from minor repairs at $150-$500 to pipe replacements at $1,500-$4,000 to sewer line issues at $3,000-$15,000.
If your inspection reveals problems, negotiate before closing. Option 1: Request the seller fix issues before closing. This works well for significant problems, but make sure repairs are done properly. Request receipts and proof of licensed contractor work.
Option 2: Request a credit toward repairs at closing. You receive money at closing that you can use for repairs after moving in. This gives you control over which contractors do the work and quality standards.
Option 3: Negotiate a lower purchase price to account for needed repairs. If the house needs $15,000 in work, offer $15,000 less.
In competitive markets, sellers may be less willing to negotiate, so prioritize the most critical items—those affecting safety, major systems, or structural integrity. Minor cosmetic issues or deferred maintenance you can handle yourself over time.
A word on what "critical" actually means: Water damage, foundation issues, electrical problems, and major HVAC or roof problems are critical. Outdated countertops, old carpet, and cosmetic wear aren't critical—they're things you can address on your own timeline and budget.
At AmeriSave, we've seen buyers focus too much on getting the house "perfect" before closing instead of addressing actual problems. Remember, you can paint and renovate after moving in. You can't easily fix a cracked foundation or failing septic system without major expense.
Once you close on your house, you'll have a mountain of paperwork—some that you need indefinitely, some you should keep for years, and some that's essentially just documentation of the process. The key is organizing and protecting the critical documents you'll need for as long as you own the home and sometimes beyond.
Documents to keep permanently or long-term include your Closing Disclosure showing exactly what you paid for the house, all your closing costs, and loan terms. Your deed proves you own the property. Your title insurance policy protects you if ownership disputes arise. Your mortgage note shows the legal terms of your loan. Keep your home inspection report, appraisal report, and property survey indefinitely. Keep warranties and receipts for major repairs or improvements over $500, mortgage statements for the current year plus the prior 7 years, property tax receipts for at least 7 years, and homeowners insurance policies with current policy accessible plus prior year policies for 3-5 years.
How to protect important documents: Purchase a fireproof and waterproof safe for your most critical documents—deed, closing documents, insurance policies, warranties. These range from $50-$300 depending on size and quality.
Make digital backups of everything. Scan all important documents and store them in secure cloud storage with two-factor authentication and on an external hard drive kept in a separate location.
Tell co-owners or family members where documents are stored and how to access them. If something happens to you, others need to be able to find this information. If you use a safe, make sure someone trustworthy knows the combination or where you keep the key.
Create a home information binder with copies of key documents, plus information about contractors you've used, paint colors for each room, locations of shutoffs, security system codes, WiFi network information, HOA contacts and documents, and warranty information for appliances and systems.
For mortgage statements and monthly bills, keep the current year digitally or physically, plus prior 7 years for tax purposes. After that, you can shred them if physical or delete them if digital.
A trick I learned from my MSW program: Organization reduces stress dramatically during transitions or emergencies. Taking an afternoon to set up your document system saves enormous headache later.
Homeownership comes with tax advantages that renters don't get, but you need to understand what's deductible and what documentation you need to keep.
Mortgage interest deduction allows you to deduct mortgage interest paid on loans up to $750,000 or $375,000 if married filing separately if you itemize deductions. For most first-time buyers, mortgage interest is substantial in the early years, potentially saving thousands on your tax bill. Your lender will send you Form 1098 showing how much interest you paid annually.
Property tax deduction lets you deduct up to $10,000 in combined state and local taxes, which includes property taxes. In high-tax areas, you'll likely hit this cap, but it still provides significant tax savings.
Points deduction applies if you paid discount points to lower your interest rate. These are generally deductible in the year paid on a purchase loan or spread over the loan life on refinances.
PMI deduction for private mortgage insurance was deductible in recent years, but this deduction periodically expires and gets renewed by Congress. Check current tax law or ask your accountant whether PMI is deductible in the current tax year.
To benefit from these deductions, you need to itemize rather than taking the standard deduction. For 2025, the standard deduction is $15,000 for single filers and $30,000 for married couples filing jointly. If your itemized deductions exceed these amounts, itemizing saves you money. In the first years of homeownership when mortgage interest is highest, many people benefit from itemizing.
Let me work through an example. You have a $350,000 mortgage at 6.75%, paying roughly $23,625 in interest the first year. Property taxes are $4,000. State income taxes are $3,000. Charitable giving is $2,000. Total itemized deductions: $32,625. For a married couple, this exceeds the $30,000 standard deduction by $2,625, potentially saving $525-$1,050 in taxes depending on your tax bracket.
Beyond taxes, understand your ongoing housing costs. Principal and Interest is your mortgage payment, fixed for the life of the loan if you have a fixed-rate mortgage. Property Taxes vary wildly by location with some areas charging 0.5% of home value annually and others exceeding 2%. On a $350,000 home, that's $1,750-$7,000 per year. Homeowners Insurance protects your home and belongings from damage or loss with costs varying based on location, coverage amount, deductible, and risk factors. Budget $800-$2,000+ annually. PMI applies if you put down less than 20%. HOA Fees for condos, townhouses, or planned communities might be $100-$500+ monthly. Utilities including heat, electric, water, sewer, trash, and internet are usually higher in a house than in an apartment. Budget $250-$500+ monthly. Maintenance should be budgeted at 1%-2% of home value annually as discussed earlier.
Add all these up to understand your true monthly housing cost, not just the principal and interest payment. Many first-time buyers focus only on the mortgage payment and underestimate total housing costs by $400-$800 monthly.
At AmeriSave, we help you understand total housing costs upfront, so there are no surprises after you close. We can connect you with insurance providers and help you estimate all these expenses realistically.
One thing nobody tells you about homeownership: You'll need a roster of trusted contractors and service providers, and finding them in an emergency is stressful and expensive. Start building these relationships before you need them urgently.
Before closing or shortly after, identify and save contact information for an HVAC technician for annual maintenance at $100-$150, a plumber for everything from leaky faucets to water heater issues, an electrician for anything beyond basic outlet or light switch issues, a handyman for general repairs and minor projects, a landscaper or tree service for tree trimming and major landscape work, a roofer before you need one, an appliance repair specialist, pest control for quarterly or annual treatments, and a chimney sweep if you have a fireplace.
How to find good contractors: Ask neighbors and local homeowners for recommendations. Check online reviews but look at the overall pattern rather than isolated negative reviews. Verify licenses and insurance because contractors should carry liability insurance and workers compensation. Get multiple quotes for major work over $500-$1,000. Start small by trying a contractor for a minor job before hiring them for a major project. Build relationships over time by using good contractors repeatedly and referring others to them. Pay promptly and fairly because contractors talk to each other.
At my house, I have saved contacts for about 15 different service providers that I've used over the years. Some I call every year for maintenance, others are there for emergencies. But having that list saved means I'm never scrambling to find someone reliable when something breaks at 7pm on a Friday.
Buying your first home is a significant milestone and a dramatic step toward building your future. While the process has complexity, you can navigate it successfully with proper preparation, the right information, and professional guidance.
The key is maintaining your financial health throughout the process, ensuring that homeownership enhances rather than strains your quality of life. When you buy within your means, understand what you're getting into, and plan for both expected and unexpected costs, your home becomes both a place to live and a long-term investment that builds wealth over time.
Start by educating yourself thoroughly about mortgages, loan types, and the entire process. Get preapproved before shopping to strengthen your position and understand your realistic budget. Explore the numerous first-time buyer programs that could provide thousands in assistance—don't leave this money on the table. Work with a buyer's agent who represents your interests, not the seller's. Include proper contingencies in your offer to protect yourself. Hire qualified inspectors and appraisers. Budget realistically for both closing costs and ongoing expenses. Protect your important documents and maintain your home consistently.
Remember, this isn't a race. The timeline that works for someone else might not work for you, and that's completely fine. If you need another year to save more down payment, improve your credit, or ensure job stability, that's smart planning, not failure. The housing market isn't going anywhere, and homeownership will still be there when you're truly ready.
If you're a first-time buyer, explore your options with AmeriSave. We offer competitive rates, a streamlined digital experience, and a team committed to helping you through every step of the process. You don't have to navigate this alone—we're here to help you make homeownership a reality.
The amount varies based on your home price, down payment percentage, and closing costs, but let's work through realistic numbers. For a $350,000 home with a conventional loan at 5% down, you need $17,500 for the down payment plus approximately $10,500-$21,000 in closing costs or 3%-6% of loan amount. That's roughly $28,000-$38,500 total to close. However, you can reduce this through down payment assistance programs and seller concessions. FHA loans require just 3.5% down, so $12,250 down payment on that same home, plus closing costs. VA and USDA loans for qualified buyers require $0 down payment—you'd only need closing costs, though sellers can contribute toward those. The absolute minimum to get into a home might be as little as $5,000-$10,000 if you maximize assistance programs and negotiate seller concessions, but $20,000-$30,000 provides more options and flexibility. Beyond what you need to close, keep an emergency fund of at least 3 months expenses separate from your down payment savings.
Minimum credit score requirements vary by loan type, and higher scores get better interest rates and terms. Conventional loans typically require 620+ credit scores, though 680+ gets you more favorable rates. FHA loans accept credit scores as low as 580 with 3.5% down, or 500-579 with 10% down—these are your best options with lower credit. VA loans don't have official minimums set by the VA, but most lenders want to see 580-620+. USDA loans typically require 640+. Here's what this means in practical terms: A borrower with a 740+ credit score might get a 6.5% rate on a $300,000 loan, paying approximately $1,896 monthly for principal and interest. A borrower with a 620 score might get 7.5%, paying $2,098 monthly—that's $202 more per month or $72,720 more over 30 years. If your score is below 620, focus on improving it before applying by paying down credit card balances, making all payments on time, and not opening new credit accounts. Even 20-40 points improvement can save you substantial money. At AmeriSave, we can provide guidance on the most impactful steps to improve your credit score before applying for a mortgage.
This depends on your personal situation, not just market conditions. Buying makes sense when you can answer yes to these questions: Can you commit to staying in the area at least 5 years? Do you have stable income? Do you have emergency savings beyond your down payment? Do you understand and can afford total housing costs including mortgage, taxes, insurance, and maintenance? Are you emotionally and logistically ready for homeownership responsibilities? Financially, buying builds equity and fixes your housing costs with fixed-rate mortgages, while renting provides flexibility and no maintenance responsibilities. With median home prices at $410,800 according to the Federal Reserve Bank of St. Louis Q2 2025 data and mortgage rates above 6.5%, monthly costs are higher than recent years. However, you're building equity rather than paying rent with no return. Run the numbers for your specific situation—compare total monthly housing costs for buying versus renting in your area, factor in how long you'll stay, and consider opportunity costs of tying up cash in a down payment. Many financial advisors suggest buying makes sense if you're staying 5+ years, have stable income, and can afford total housing costs under 30% of gross income. Renting makes more sense for shorter timelines, uncertain income, or if you're not ready for maintenance responsibilities.
Conventional loans are mortgages from private lenders with no government backing, requiring typically 620+ credit scores and 3-20% down payments. If you put down less than 20%, you pay PMI which you can cancel once you reach 20% equity. These loans offer the most flexibility for primary homes, second homes, or investment properties. FHA loans are government-insured loans from the Federal Housing Administration allowing lower credit scores as low as 580 and smaller down payments at 3.5%, making them accessible for buyers with limited savings or credit challenges. The tradeoff is mandatory mortgage insurance premiums both upfront and monthly for the life of the loan if you put down less than 10%. VA loans are exclusively for veterans, active military, National Guard members, and qualified spouses, offering zero down payment, no PMI, competitive rates, and relaxed credit requirements. The VA charges a funding fee typically 2.15%-3.3% that can be rolled into the loan, though disabled veterans may be exempt. Choose based on your situation: VA if you're eligible since it offers the best terms, FHA if your credit is below 620 or you have limited down payment, conventional if you have decent credit and at least 5% down. Each loan type has different qualification requirements, costs, and benefits, so compare total costs over time rather than just focusing on down payment requirements.
The timeline from starting your search to getting keys typically ranges from 2-6 months depending on several factors. Here's a realistic breakdown: Finding and viewing homes can take 2 weeks to 3+ months depending on your market, how picky you are, and inventory levels. Once you find the right property and make an offer, negotiations typically take 3-7 days. After an accepted offer, you enter the closing period which usually takes 30-45 days for conventional loans, sometimes 45-60 days for FHA or VA loans due to additional requirements. During closing, you'll complete home inspection within 1-2 weeks after offer acceptance, appraisal within 1-2 weeks, finalize mortgage approval over 2-3 weeks, and complete final walkthrough and signing in the last few days. You can speed this up by getting preapproved before shopping, having all financial documents organized, responding quickly to lender requests, and being flexible on closing dates. Some buyers close in as little as 21 days with cash or aggressive timelines, while others take 6+ months if they're being selective about location and features. The key variables are your market's inventory levels, your financing type, how quickly you can find the right property, and whether any issues emerge during inspection or appraisal. At AmeriSave, our streamlined digital process often allows faster closings than traditional lenders, sometimes shaving 1-2 weeks off typical timelines.
Yes, you can absolutely buy a house with student loan debt, but it affects your debt-to-income ratio which lenders use to determine how much you can borrow. Lenders calculate DTI by dividing your total monthly debt payments by your gross monthly income. Most lenders want to see DTI below 43-50%, though some programs allow higher ratios. Student loans count toward this calculation. Here's how it works: If you earn $6,000 monthly and have $400 in student loan payments, $200 car payment, and $100 minimum credit card payment, your existing debt is $700 monthly. On a 43% DTI limit, your total debt can't exceed $2,580 monthly, leaving $1,880 for housing costs including principal, interest, taxes, and insurance. That might support roughly a $300,000 mortgage depending on rates and taxes. For income-driven repayment plans showing $0 monthly payment, lenders typically use either the actual $0 payment, 0.5% of the loan balance, or the fully amortized payment depending on loan type and lender guidelines. Strategies to improve your buying power with student loans include paying down high-interest debts to lower DTI, increasing your income through raises or side work, considering refinancing student loans to lower monthly payments, and looking into first-time buyer programs with more flexible DTI requirements. Don't let student loans discourage you from homeownership—millions of Americans successfully buy homes while carrying education debt.
You can absolutely sell before 5 years, but you might lose money or barely break even due to transaction costs and limited equity building. Here's the math: When you buy, you pay 3-6% in closing costs. When you sell, you typically pay 5-6% in realtor commissions plus 1-2% in additional closing costs. On a $350,000 home, that's potentially $14,000-$28,000 in buying costs and $21,000-$28,000 in selling costs—roughly $35,000-$56,000 total in transaction expenses. In the early years of your mortgage, most of your payment goes toward interest rather than principal, so you're building equity slowly. After 3 years on a $332,500 loan at 6.75%, you might have paid down only $15,000 in principal. If your home appreciated 3% annually, you'd gain about $31,500 in appreciation. Combined equity: roughly $46,500. Subtract selling costs of $24,500, and you're left with about $22,000—barely more than you'd need for a down payment on your next home. If the market declined or stayed flat, you could actually lose money on the sale. Situations where selling early might make sense include job relocation you can't avoid, major life changes like divorce or health issues, or significant unexpected home problems. If you think you might need to move within 5 years, seriously consider renting instead or buy a home you could afford to keep as a rental property if you relocate.
You absolutely do not need 20% down, despite what many people believe. Conventional loans allow as little as 3% down, FHA loans require 3.5% down, and VA or USDA loans offer zero-down options for qualified buyers. The 20% threshold matters primarily for avoiding private mortgage insurance on conventional loans. With less than 20% down on a conventional loan, you'll pay PMI typically $30-$70 monthly per $100,000 borrowed until you reach 20% equity through payments and appreciation. Once you hit that threshold, you can request PMI cancellation. FHA loans have mortgage insurance for the life of the loan regardless of equity if you put down less than 10%, which is why many borrowers start with FHA then refinance to conventional once they have 20% equity. The real question isn't whether you need 20% down but whether a larger down payment makes financial sense for your situation. Benefits of larger down payments include lower monthly payments, less interest paid over time, avoiding orreducing PMI, stronger offers in competitive markets, and lower risk of being underwater if values decline. Benefits of smaller down payments include preserving cash for emergencies and home repairs, getting into homeownership sooner while building equity and locking in housing costs, and potentially earning better returns by investing the difference rather than tying it up in home equity. Many financial advisors suggest putting down 10-20% if you can comfortably afford it while maintaining emergency savings, but don't delay buying for years trying to save 20% if 5-10% gets you into a home that makes sense for your situation.
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