The biggest first-time buyer mistakes are not getting pre-approval before house hunting, only getting one mortgage quote (costs $1,500+ per year), skipping the home inspection, draining savings for the down payment and making major purchases before closing. These errors cost thousands of dollars or lead to buying the wrong house. Here’s how to avoid each one.
Financial Mistakes
1. Not Getting Pre-Approved First
The mistake: House hunting before knowing what you can afford.
Why it hurts:
- Fall in love with homes outside your budget
- Waste time looking at wrong properties
- Sellers don’t take your offer seriously
- Discover credit problems too late
The fix: Get pre-approved before looking at houses. Pre-approval tells you exactly what you qualify for and makes your offer competitive.
2. Only Getting One Mortgage Quote
The mistake: Accepting the first rate offered without shopping.
Why it hurts:
- Rates vary 0.5% or more between lenders
- On $350,000, 0.5% = $100+/month = $36,000 over 30 years
The fix: Get quotes from at least 3-5 lenders. Shop within 14-45 days so all inquiries count as one credit pull.
Marcus got quotes from five lenders. The lowest was 6.375%, the highest was 6.875%. He saved $1,200/year by shopping.
3. Draining Savings for the Down Payment
The mistake: Putting every dollar into the down payment, leaving no reserves.
Why it hurts:
- No emergency fund when something breaks
- Can’t cover unexpected repairs
- Financial stress immediately after buying
- May need to use credit cards for expenses
The fix: Keep 3-6 months of expenses in savings after closing. A smaller down payment with reserves beats a larger down payment with empty savings.
4. Making Major Purchases Before Closing
The mistake: Buying a car, furniture or appliances before closing.
Why it hurts:
- Increases debt-to-income ratio
- May disqualify you from the loan
- Lender re-checks credit before closing
- New debt raises red flags
The fix: Wait until after closing for major purchases. Don’t finance anything—not even “zero interest” furniture deals.
5. Ignoring the True Cost of Ownership
The mistake: Only budgeting for the mortgage payment.
Why it hurts:
- Forget about taxes, insurance, maintenance
- Actual costs 30-50% higher than P&I
- Financial strain within months of buying
The fix: Budget for the full PITI (principal, interest, taxes, insurance) plus 1-2% of home value annually for maintenance.
Example: $2,000 P&I payment becomes $2,800 with taxes, insurance and maintenance.
House Hunting Mistakes
6. Skipping the Home Inspection
The mistake: Waiving inspection to win a bidding war or save $400.
Why it hurts:
- Miss major problems (foundation, roof, plumbing)
- Inherit expensive repairs
- No use to negotiate
The fix: Always get an inspection. If market pressure requires waiving the contingency, still get an informational inspection—you just won’t negotiate based on it.
Angela skipped inspection to win a bidding war. Six months later, she discovered $35,000 in foundation repairs.
7. Buying the Most Expensive House You Qualify For
The mistake: Maxing out your pre-approval amount.
Why it hurts:
- Becomes “house poor”—all income goes to mortgage
- No room for emergencies, vacations, savings
- Stress and financial strain
The fix: Buy below your maximum. Just because you qualify for $450,000 doesn’t mean you should spend $450,000.
8. Falling in Love Before Research
The mistake: Getting emotionally attached before due diligence.
Why it hurts:
- Overlook obvious problems
- Overpay because you “have to have it”
- Make irrational decisions
The fix: Research first, fall in love second. Check school ratings, crime stats, flood zones and future development plans before getting attached.
9. Only Considering the House, Not the Location
The mistake: Focusing on the house while ignoring neighborhood factors.
Why it hurts:
- Commute is longer than expected
- Neighborhood doesn’t match lifestyle
- Schools are poor (affects resale value)
- Area is declining
The fix: Visit at different times—morning, evening, weekends. Talk to neighbors. Research future development. Check walkability and commute times.
10. Buying a House That Needs Too Much Work
The mistake: Underestimating renovation costs and time.
Why it hurts:
- Projects cost 2-3x more than expected
- Take 2-3x longer than planned
- Living in construction is stressful
- May not add equivalent value
The fix: Get contractor estimates before buying. Add 20-30% buffer to all estimates. Be realistic about your DIY skills and time.
Offer and Negotiation Mistakes
11. Offering Too Low in a Seller’s Market
The mistake: Lowballing when there are multiple offers.
Why it hurts:
- Seller doesn’t counter—just rejects
- Lose the house
- Start process over with another property
The fix: Understand market conditions. In competitive markets, offer strong from the start. Your agent can advise on appropriate pricing.
12. Waiving All Contingencies
The mistake: Removing all protections to be more competitive.
Why it hurts:
- No way out if inspection reveals problems
- Stuck if financing falls through
- May cover appraisal gap from savings
The fix: Shorten contingency periods instead of eliminating them. Keep financing contingency if you’re not paying cash.
13. Not Understanding What You’re Signing
The mistake: Signing contracts without reading or asking questions.
Why it hurts:
- Commit to terms you don’t understand
- Miss important deadlines
- Give up rights unknowingly
The fix: Read everything. Ask your agent or attorney to explain anything unclear. Take your time at closing.
Process Mistakes
14. Changing Jobs During the Process
The mistake: Starting a new job while your loan is in process.
Why it hurts:
- Lender must re-verify employment
- New job may not qualify (probation period, different income type)
- Can delay or kill your loan
The fix: Wait until after closing to change jobs. If you must change, tell your lender immediately—don’t hide it.
15. Not Building a Professional Team
The mistake: Going it alone or using whoever’s available.
Why it hurts:
- Bad agent gives bad advice
- Inexperienced lender causes delays
- Poor inspector misses problems
The fix: Build a team of experienced professionals:
- Buyer’s agent (experienced in your target area)
- Mortgage lender (responsive, competitive rates)
- Home inspector (licensed, thorough)
- Real estate attorney (if required in your state)
Red Flags to Watch For
In the House
- Strong air fresheners (hiding odors)
- Fresh paint in odd spots (covering damage)
- Sloping floors (foundation issues)
- Water stains (past or current leaks)
- Musty smells (mold or water problems)
In the Neighborhood
- Many homes for sale at once
- Deferred maintenance throughout
- Businesses closing
- Traffic or noise issues
- Poor school ratings
In the Transaction
- Seller won’t allow inspection
- Pressure to close quickly
- Reluctance to provide disclosures
- Price seems too good
- Agent pushing you toward decision
First-Time Buyer Checklist
Before You Start
- Check your credit reports
- Save for down payment AND reserves
- Get pre-approved for a mortgage
- Research neighborhoods
- Build your team (agent, lender)
During House Hunting
- Stay within budget
- Consider total cost, not just price
- Visit at different times
- Research before getting attached
- Be patient
Making an Offer
- Price based on comps
- Include appropriate contingencies
- Protect your earnest money
- Understand all terms
After Acceptance
- Get thorough inspection
- Review all documents
- Don’t make major purchases
- Don’t change jobs
- Complete final walkthrough
Frequently Asked Questions
What’s the biggest mistake first-time buyers make?
Not shopping for mortgage rates. Most buyers only get one quote, costing them thousands over the life of the loan. Getting 3-5 quotes takes a few hours and can save $50,000+.
Should I waive inspection to win a bidding war?
Generally no. At minimum, get an informational inspection (you can’t negotiate based on findings, but you know what you’re buying). Waiving completely is risky.
How much should I spend on a house?
Keep total housing costs (PITI) under 28% of gross income. Just because you qualify for more doesn’t mean you should spend it. Leave room for other financial goals.
Is it okay to buy a fixer-upper as a first home?
It can be, but be realistic. Get contractor estimates before buying. Budget 30% more than estimates. Have reserves for unexpected problems. Don’t underestimate the stress of renovating while living in the home.
Should I use the listing agent as my buyer’s agent?
Generally no. Using the same agent for both sides (dual agency) creates conflicts of interest. Get your own buyer’s agent who represents only your interests.
How long should I wait before buying furniture?
Wait until after you close and get your keys. Many buyers have lost their loan approval by financing furniture or making large purchases before closing.
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David Thompson
Former Bank Underwriter, 20+ Years in Lending
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