When you are ready to buy your first home, you should aim for a 20% down payment so you can avoid the added cost of private mortgage insurance (PMI). To keep your home affordable, ensure your monthly payment—including taxes and insurance—is no more than 25% of your take-home pay on a 15-year fixed-rate mortgage.
To protect your investment, you must always get title insurance. If you are buying a property that is not a standard subdivision lot, you should also get a survey to confirm exactly what you are buying. Regardless of your age or expertise, you should always hire a professional for a home inspection rather than trying to figure out issues in the crawl space yourself.
When selecting a property, you should avoid houses that are “ugly from the street” or have poor floor plans, such as needing to walk through one bedroom to get to another. You cannot “fix ugly,” and a house that is cheap when you buy it because of its appearance will also be cheap and difficult to sell later. Instead, you should look for a “boring” house—one that is cute from the street and carries less risk. While you can update minor things like carpet or gutters, you should avoid major rehabs or houses with no original structural plan.
Finally, you should be careful with corner lots, as they often have a nice front presentation but a very small, “pinched” backyard. Most importantly, do not let your excitement lead you to rationalize a bad purchase; if a feature of the house concerns you now, it will likely concern a future buyer when you are ready to sell.
