Alright, so you’re ready to buy a home, or maybe you’re just thinking about it. Either way, there’s a lot of noise out there—tons of numbers, conflicting advice, and an overwhelming list of “essentials” for getting that house. But today, we're breaking it down to the real essentials.

I brought in my good friend Lori, who’s been in the trenches talking to thousands of buyers, to walk through some of the foundational truths and tips every first-time buyer should know. Let’s take the guesswork out and get you moving in the right direction.

Step One: Get Real About What Your Mortgage Payment Actually Includes

Most buyers start here: How much can I afford? And fair question, because no one wants to be "house poor." But here's the thing—the monthly number you have in your head? It probably needs some fine-tuning.

So let’s break down PITI—the four primary pieces of a mortgage payment:

1. Principal – The base amount you borrowed.

2. Interest – The cost of borrowing that base.

3. Taxes – Property taxes (usually escrowed, meaning they’re tucked into your monthly payment).

4. Insurance – This covers your home, also escrowed most of the time.

That’s the basic recipe, but there are a few extra ingredients that might sneak in:

• Mortgage Insurance – Required if you’re doing an FHA loan or putting less than 20% down.

• HOA Fees – If you’re in a community with an association, this will hit your monthly budget.

• Flood Insurance – If you’re in a designated flood zone, you’ll need this extra coverage.

Pro Tip: Don’t skip the budget conversation with your lender. This is where so many buyers overshoot—by forgetting to count the taxes and insurance. Set that number with everything factored in so there’s zero surprise when you start house-hunting.

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The Must-Do Move: Get Pre-Approved Before You Even Start Browsing Homes

Here’s the hard truth: the pre-approval is the first step, not the home search. And it’s non-negotiable.

Why? Because pre-approval gives you a concrete number to work with and prevents you from falling in love with a house that’s $100k out of your budget. More importantly, it’s proof that you’re a serious buyer, which gives you an edge in competitive markets.

A lender will analyze your finances, income, debts, and credit to determine your borrowing capacity. This step:

• Gives you a clear, realistic budget: no guessing, no disappointment.

• Strengthens your negotiating position: sellers know you’re legit.

• Saves you time: you’re only looking at homes you can actually buy.

Reality Check: Going straight to Zillow without knowing your budget is like grocery shopping without a wallet. It’s only going to lead to frustration.

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The Big Metric: Debt-to-Income Ratio (DTI) and Why It Matters

You’ll hear lenders talk about DTI a lot. It stands for Debt-to-Income Ratio, and it’s one of the main ways lenders determine how much they’re willing to loan you.

Here’s the DTI formula:

1. Add up your monthly debts (like credit cards, car payments, student loans, and your expected mortgage).

2. Divide this total by your monthly gross income (the amount before taxes).

That gives you a percentage—your DTI. Here’s what that means:

• Conventional Loans – Generally aim for a max DTI of around 45%.

• FHA Loans – Often more flexible, sometimes allowing DTIs up to 55%.

Bottom line: Just because you’re approved for a high loan amount doesn’t mean you need to go there. Your DTI gives you a benchmark, but it’s up to you to choose a payment that leaves breathing room. You don’t want to be in a position where you’re stressing every month just to make ends meet.

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Let’s Talk Interest Rates (And Why Timing Matters)

Interest rates can be tricky. They change frequently—sometimes even several times in a day—depending on the market. So if you’re rate-shopping without a contract, understand that the numbers you’re seeing are estimates at best. The real rate gets locked once you’re under contract.

Rates depend on:

• Market conditions – External economic factors.

• Your credit score – Higher credit generally means lower rates.

• The loan type – Different loan programs come with different rate requirements.

First-Time Buyer Insight: Some programs for new buyers offer favorable rates but come with lower DTI caps. This is why working with a knowledgeable lender matters—they’ll help you navigate the options and find the best fit for your financial situation.

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Why You Need a Trusted Team (And What That Team Should Do for You)

Homebuying is not a solo journey—it’s a team effort. Here’s who you need:

• A lender you trust – Someone who explains the process, sets clear expectations, and gives you the tools to make informed decisions.

• A real estate agent who’s got your back – Someone who won’t just unlock doors but will actively work to find properties that check your boxes within your budget.

These are the people who make or break the experience. Good ones will simplify things for you, cut through the noise, and make sure you know what’s coming before you even ask.

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How to Avoid Common Pitfalls (And the Trap of Falling in Love With the Wrong House)

A few quick pointers to keep you grounded:

1. Start with Pre-Approval: This isn’t optional. It’s your first step, not your last.

2. Stick to Your Budget: Set your budget and don’t budge. The numbers on your pre-approval are your ceiling, not necessarily your comfort zone.

3. Look at the Full Picture: That monthly payment? Remember, it’s not just principal and interest. It’s the whole PITI package.

4. Be Flexible with Rates: Rates change daily, sometimes hourly. A solid lender will help you lock in when the timing is right.

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