Buying your first home is one of the biggest financial decisions you'll ever make. I've put together this guide to cut through the noise and give you a clear, honest picture of what to expect — from your first conversation with a lender all the way to getting the keys in your hand.
Whether you're just starting to think about homeownership or you're ready to move this weekend, this walkthrough covers every major step — from assessing your finances all the way to getting the keys in your hand.
Before you look at a single listing, you need to understand where you stand financially. This isn't about being pessimistic — it's about setting yourself up to move quickly and confidently when you find the right home.
Your Credit Score
Your credit score is one of the biggest factors in determining what loans you qualify for and what interest rate you'll receive. Here's a quick breakdown of what different score ranges mean for homebuyers:
| Credit Score | Loan Options | What to Expect |
|---|---|---|
| 740+ | All loan types | Best available rates |
| 700–739 | Conventional, FHA, VA, USDA | Competitive rates |
| 660–699 | FHA, VA, USDA, some conventional | Good options available |
| 620–659 | FHA, VA, USDA | Higher rate, still viable |
| 580–619 | FHA (3.5% down), VA | Limited but possible |
| Below 580 | FHA (10% down), some programs | Challenging — let's talk |
Your Debt-to-Income Ratio (DTI)
Lenders look at how much of your gross monthly income goes toward existing debt payments — plus your future mortgage payment. This is called your debt-to-income ratio. Most conventional loans want to see a DTI below 43–45%, while FHA loans can sometimes allow up to 57%. The lower your DTI, the more loan options open up to you.
Your Savings
Beyond the down payment, you'll need reserves for closing costs (typically 2–5% of the purchase price) and ideally 2–3 months of mortgage payments in savings after closing. Knowing your savings picture helps us plan which loan and assistance programs make the most sense for you.
Homebuyers have access to several loan types, each with different down payment requirements, credit score thresholds, and qualifying rules. Here's what's available:
Conventional Loans
Conventional loans are backed by Fannie Mae or Freddie Mac — not a government agency. They typically require a minimum 620 credit score and can go as low as 3% down for first-time buyers. If you put less than 20% down, you'll pay PMI (Private Mortgage Insurance) until you reach 20% equity. Conventional loans offer the most flexibility in property types and loan amounts.
FHA Loans
FHA loans are insured by the Federal Housing Administration and are popular with first-time buyers because of their lower credit and down payment requirements. With a score of 580+, you can put as little as 3.5% down. FHA loans carry a mortgage insurance premium (MIP) for the life of the loan in most cases, but the lower barrier to entry makes them an excellent choice for many buyers.
VA Loans
If you're an eligible veteran, active-duty service member, or surviving spouse, a VA loan is almost always your best option. $0 down payment, no PMI, and typically the most competitive interest rates available. I'm proud to help veterans in Illinois and Wisconsin use every benefit they've earned.
USDA Loans
USDA loans are backed by the U.S. Department of Agriculture and are available in eligible rural and suburban areas — which includes more of Illinois and Wisconsin than most people realize. They offer 100% financing with no down payment for qualifying buyers and properties. Income limits apply.
Jumbo Loans
If you're purchasing a home that exceeds the conforming loan limit (currently $806,500 for most counties in 2026), you'll need a jumbo loan. These require stronger credit and larger down payments but are widely available for well-qualified buyers.
"One of the biggest mistakes I see first-time buyers make is assuming they know which loan type is right for them before talking to a lender. I've had clients convinced they needed an FHA loan who turned out to be perfect for a conventional product with a better rate — and vice versa. A ten-minute conversation can save you thousands."
One of the most common misconceptions I hear from first-time buyers is that they need to save up thousands of dollars before they can even think about buying a home. The truth is, there are programs available right now that can cover your entire down payment — and you don't have to pay them back. Here are two that I offer directly to my clients:
The Empowered Down Payment Assistance Program provides a forgivable grant of up to 3.5% of the home's purchase price — enough to cover the full FHA down payment. As long as you stay in the home and keep the loan for at least six months, the grant is yours to keep with no repayment required.
Who qualifies? You must meet at least one of these criteria:
- First-time buyer (or haven't owned a home in the past 3 years)
- Work in an eligible profession: military, first responders, healthcare, education, or government
- Household income at or below 140% of the area median income
- Purchasing in an underserved census tract
Key details: FHA loans only · 620 minimum credit score · Max DTI 48.99% · Primary residence only · No second lien · No recapture tax · Eligible property types include single-family, duplex, manufactured homes, FHA-approved condos, and PUDs.
The American Gift DPA Program, offered through Equity Prime Mortgage, provides a completely forgivable grant of 2% or 3.5% of the purchase price toward your down payment. Like the Empowered DPA, this is a true grant — not a loan — and it can be combined with up to 6% seller concessions to cover closing costs as well.
Who qualifies? You must meet at least one of these criteria:
- First-time buyer (no ownership interest in a home in the past 3 years)
- Current, retired, or volunteer member of the military, fire service, law enforcement, EMS, education, or medical field
- Household income at or below 140% of the county or state median income
- Purchasing a home in an underserved census tract
Key details: FHA loans only · 30-year fixed rate · 620 minimum credit score · Max DTI 49.99% · Primary residence only · No resale restrictions · Available in Illinois and Wisconsin (and most states except Washington) · A HUD-approved homebuyer counseling course is required prior to closing.
In today's competitive housing market, a pre-approval letter isn't optional. It's essential. Sellers take pre-approved buyers far more seriously than those with only a pre-qualification, and in some markets, you won't even get a showing without one.
Pre-Qualification vs. Pre-Approval: What's the Difference?
Pre-qualification is a quick estimate based on self-reported financial information. It takes minutes and gives you a rough idea of your buying power — but it carries little weight with sellers.
Pre-approval involves a full review of your credit report, income documentation, employment history, and assets. The lender issues a conditional commitment for a specific loan amount. This is what you need before seriously shopping.
What You'll Need to Provide
- Recent pay stubs (30 days)
- W-2s or 1099s from the past 2 years
- Federal tax returns from the past 2 years
- Bank and investment account statements (2–3 months)
- Government-issued photo ID
- Social Security number (for credit pull)
- If self-employed: year-to-date profit & loss statement
- If applicable: divorce decree, child support documentation, gift letters
"Pre-approval letters are typically valid for 60–90 days. I recommend getting pre-approved before you seriously start attending open houses — not after you've fallen in love with a home. The last thing you want is to lose your dream home while paperwork catches up."
Ready for Pre-Approval?
Matt can typically turn around pre-approval in 1–2 business days. Get started now — no pressure, no obligation.
With pre-approval in hand, you're ready to work with a real estate agent and start touring homes. Your lender and your agent are your two most important partners in this process — make sure you trust both of them.
What to Look for Beyond the Listing
- Property taxes: Always verify the actual property tax history of any home you're considering — don't rely on listing estimates. Taxes vary enormously between counties, townships, and even streets. In Illinois, ask for the Property Index Number (PIN); in Wisconsin, your agent can pull the actual tax bill directly.
- HOA fees: Condos and many subdivisions carry monthly HOA dues. These factor into your debt-to-income ratio and can meaningfully affect what you qualify for.
- School district boundaries: These don't always follow city or neighborhood lines. If schools matter to your family, confirm the actual district before making an offer.
- Flood zones: Some areas in Illinois and Wisconsin require flood insurance, which adds to your monthly cost. Your lender will flag this if it applies.
When you find the right home, your real estate agent will help you structure an offer. As a buyer, there are a few key things to understand about this stage:
Earnest Money
Earnest money is a deposit — typically 1–2% of the purchase price — that you submit with your offer to show you're serious. This is held in escrow and applied toward your closing costs at the end. If you back out without a valid contingency, you may forfeit it.
Contingencies
Most offers include contingencies that protect you: a financing contingency (deal is void if you can't get a loan), an inspection contingency (you can negotiate or walk away after inspection), and sometimes an appraisal contingency. Don't waive contingencies lightly, especially in a first purchase.
The Home Inspection
Once your offer is accepted, you'll hire a licensed home inspector to evaluate the property. A thorough inspection covers the roof, foundation, electrical, plumbing, HVAC, and more. This is not optional — even in competitive markets where buyers are tempted to waive it. The inspection typically costs $300–$600 and gives you either peace of mind or negotiating leverage.
The Appraisal
Your lender will order an independent appraisal to confirm the home's value matches what you've agreed to pay. If the appraisal comes in lower than the purchase price, you'll need to negotiate with the seller, pay the difference in cash, or potentially walk away. An appraisal gap is one of the most common surprises in the homebuying process — and one worth planning for.
After the inspection and appraisal, your loan file moves to underwriting. This is where a lender's underwriter reviews your full file to issue a final loan decision. It's normal to receive requests for additional documentation — called "conditions" — during this period. Respond quickly and completely to keep things moving.
Closing day is when you sign the final documents, pay your closing costs and remaining down payment, and receive the keys to your new home. Closings typically take 1–2 hours and are attended by you, your real estate agent, a title company or attorney representative, and sometimes the seller.
What to Bring to Closing
- Government-issued photo ID
- Cashier's check or wire transfer confirmation for closing funds
- Any final documents requested by your lender
- Your checkbook (for any small adjustments)
What You'll Sign
You'll sign the Promissory Note (your promise to repay the loan), the Deed of Trust or Mortgage (which secures the lender's interest in the property), the Closing Disclosure, and a variety of other title and settlement documents. Your closing agent will walk you through each one.
After Closing
Once all documents are signed and funds are disbursed, the deed is recorded with the county and the home is legally yours. Change the locks, set up your utilities, and take a breath — you're a homeowner.
"Closing day is one of the best moments in this job. After all the paperwork and waiting, handing someone their keys and knowing they're stepping into something that will build their family's future — that's why I do this work. I look forward to getting you there."
If you're a firefighter, EMT, law enforcement officer, active military or veteran, teacher, or healthcare professional, you qualify for the Homes for Heroes program — and as a firefighter myself, this one is deeply personal to me.
Through this program, I offer qualifying heroes a free appraisal and lender fee savings on their home purchase. These aren't token discounts — they're meaningful savings on top of the down payment assistance programs and loan products already available to you.
To use your Homes for Heroes benefits, simply mention it when you reach out. I'll make sure it's applied from the start. Learn more about the program here →
Ready to Take the First Step?
Whether you're a hero or a first-time buyer — Matt is here to help. Choose how you'd like to connect.