7 Common First-Time Homebuyer Mistakes (And How to Avoid Them)

Buying your first home is exciting—but it's also one of the biggest financial decisions you'll ever make. After helping thousands of first-time buyers over 24+ years, we've seen certain mistakes repeated again and again. The good news? They're all avoidable.

1. Not Getting Pre-Approved Before House Hunting

The Mistake: Many first-time buyers start browsing homes online or attending open houses without knowing how much they can afford or whether they'll qualify for a mortgage.

Why It's Costly: You might fall in love with homes outside your budget, or worse, make an offer only to discover you don't qualify for the needed loan amount. In competitive markets, sellers often won't even consider offers from buyers without pre-approval.

The Solution: Get pre-approved BEFORE you start seriously house hunting. Pre-approval tells you exactly how much you can borrow, what your estimated payment will be, and shows sellers you're a serious, qualified buyer. This puts you in a stronger negotiating position.

At CNA Equity Group, we can typically pre-approve qualified borrowers within 24-48 hours with a comprehensive analysis of your finances.

2. Maxing Out Your Budget

The Mistake: Getting approved for $500,000 and immediately looking at homes priced at $500,000—or even slightly above, hoping to negotiate down.

Why It's Costly: Just because a lender approves you for a certain amount doesn't mean you should borrow that much. Lenders qualify you based on maximum debt ratios, but they don't know about your other expenses: student loans, car payments, daycare, lifestyle spending, or saving goals.

The Solution: Create a realistic budget that includes:

• Future property taxes and insurance (often higher than you expect)
• HOA fees if applicable
• Maintenance and repairs (budget 1-2% of home value annually)
• Utilities and upkeep
• Your other financial goals (retirement, emergency fund, etc.)

Many financial advisors suggest spending no more than 28% of your gross income on housing. We recommend staying well below your maximum approval amount to maintain financial flexibility.

3. Skipping the Home Inspection

The Mistake: To save $400-600 or make your offer more competitive, some buyers waive the home inspection or do a cursory walk-through.

Why It's Costly: A home inspection can reveal major issues like foundation problems, roof damage, electrical issues, or plumbing nightmares that could cost tens of thousands to repair. Without an inspection, you're buying blind.

The Solution: ALWAYS get a professional home inspection, even in competitive markets. If you're worried about your offer being competitive, consider:

• Shortening the inspection period (7 days instead of 14)
• Including an inspection but limiting your ability to renegotiate for minor issues
• Offering slightly above asking price to offset keeping the inspection contingency

A good inspector will also educate you about your new home's systems and maintenance needs. It's one of the best $500 you'll spend.

4. Draining All Your Savings for the Down Payment

The Mistake: Using every dollar you've saved for the down payment and closing costs, leaving yourself with little to no emergency fund.

Why It's Costly: Homeownership comes with unexpected expenses. The water heater fails, the AC breaks in summer, or you discover termite damage. Without savings, you'll be forced to use high-interest credit cards or worse—risk missing mortgage payments.

The Solution: Maintain an emergency fund of 3-6 months of expenses AFTER your down payment and closing costs. Consider:

• Making a smaller down payment (3.5% FHA instead of 20% conventional)
• Using down payment assistance programs
• Asking for seller concessions to help with closing costs
• Waiting a bit longer to save more

Yes, a smaller down payment means mortgage insurance, but the financial cushion is worth it—especially for first-time buyers.

5. Not Shopping Around for Mortgage Rates

The Mistake: Getting a mortgage from your regular bank without comparing rates from other lenders, or accepting the first rate quote you receive.

Why It's Costly: Different lenders offer different rates, fees, and terms. A 0.25% rate difference on a $400,000 loan costs you approximately $60 per month and $21,000 over 30 years.

The Solution: Get rate quotes from at least 3-5 lenders:

• Your current bank or credit union
• Major national lenders
• Local mortgage brokers (like us!)
• Online lenders

Don't just compare interest rates—look at total closing costs, lender fees, and loan terms. Multiple mortgage inquiries within a 45-day window count as a single inquiry on your credit report, so shop freely.

At CNA Equity Group, we work with multiple lenders and can often find you better rates than you'd get going directly to a single bank.

6. Making Major Financial Changes During Underwriting

The Mistake: After your offer is accepted, you buy new furniture on credit, finance a new car, change jobs, or make large cash deposits to your account.

Why It's Costly: Lenders re-verify your employment, income, and credit right before closing. Major changes can:

• Increase your debt-to-income ratio beyond acceptable limits
• Raise red flags about undisclosed debts
• Create sourcing issues for large deposits
• Even cause your loan to be denied days before closing

The Solution: From the time you apply for a mortgage until after closing:

• Don't open new credit accounts or take on new debt
• Don't make large purchases or finance anything
• Don't change jobs if possible (or consult your lender first)
• Don't make large cash deposits without documenting the source
• Don't close credit card accounts
• Keep your finances stable and boring

Think of it as a financial freeze—maintain the status quo until you have the keys in hand.

7. Forgetting About Closing Costs

The Mistake: Saving exactly 3.5% or 5% for a down payment and being shocked to learn you need several thousand more for closing costs.

Why It's Costly: Closing costs typically range from 2-5% of the purchase price and include:

• Loan origination fees
• Appraisal and inspection fees
• Title insurance and escrow fees
• Property taxes and insurance prepayments
• Recording fees and transfer taxes
• Attorney fees in some states

On a $400,000 home, that's $8,000 to $20,000 in addition to your down payment.

The Solution: When budgeting for a home purchase, plan for:

• Down payment (3.5% to 20%)
• Closing costs (2-5%)
• Moving expenses
• Immediate repairs or improvements
• Emergency fund

Ask your lender for a Loan Estimate early in the process, which breaks down all expected costs. You can also:

• Negotiate for seller concessions to cover some closing costs
• Choose a slightly higher interest rate in exchange for lender credits
• Look into down payment assistance programs that may help with closing costs

The Path to Successful Homeownership

Avoiding these common mistakes puts you on solid footing for successful homeownership. At CNA Equity Group, we've guided thousands of first-time buyers through this process over 24+ years. We'll help you:

• Get pre-approved with a realistic budget
• Understand all costs involved
• Shop for the best rates and terms
• Navigate the entire process from application to closing
• Avoid the pitfalls that trip up many first-time buyers

Ready to Do It Right the First Time?

Let's start your homebuying journey on the right foot. We'll take the time to educate you, answer all your questions, and ensure you're making informed decisions every step of the way.

Call us at (925) 244-1505 or click below to start your pre-approval today.