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A First-Time Buyer's Guide to Choosing a Home
August 13, 2026
August 13, 2026
Knowing what to look for when buying a house means matching the right property type, size, and budget to your actual life — not following a one-size-fits-all checklist.
Buying a house isn't only the biggest financial decision most people make — it's also the most personal. There is no one-size-fits-all house, especially when you factor in budget, mortgage offers, location, and all the red lines and deal-breakers that buyers tend to have.
First things first, take a deep breath and then lay out what's most important to you. What to look for when buying a house comes down to a few key factors: the type of home that fits your lifestyle, how much space you need, what you can realistically afford, and which loan program makes sense for your situation. You can start by comparing mortgage lenders to see what rates and terms are available to you.
Are you looking to purchase that bachelor pad or downtown loft, or do you plan to get married and start a family in the burbs? The square footage you're looking for can be the most significant factor affecting the cost of your home, and is one that takes careful consideration.
In a sense, it can be a tradeoff between location and size. A condo in a highly-desirable area can cost as much as a large family house in many suburbs, so it's up to you to decide if size or location is your top priority.
With a larger house, you stand to face more maintenance and energy costs, and cleaning will be more of a pain. In addition, if your locale charges property tax based on square footage, it can add up each month. That said, if you plan on having kids and want the extra space, and suburban schools, it could make a lot of sense for you to look for a house with storage space and room to play in.
Sure, nobody likes paying money into their landlord's wallet on rent every month, but in a rental property you know that if something breaks, it's probably not your responsibility to fix it.
Maintenance is a major cost of home-owning, and it should be a central consideration when deciding what type of house to buy. You may have fallen in love at first sight with that brownstone or mid-century modern, but with age often comes wear and tear. Pipes wear down and need replacing, roofs spring leaks, and foundations start to show their age. Older houses tend to have more character, but with a new house, you can spare yourself some maintenance headaches.
If you've got a knack for fixer-uppers and can handle small renovations on your own, this may be less of a concern. For many of us though, small repairs can really add up.
New houses (and condos and townhomes) are also built to be more energy efficient, with an eye toward conservation and green living that wasn't nearly as popular in decades past. This can affect your monthly costs as a homeowner as well.
Having a nice yard or a well-kept garden can be a real source of happiness and tranquility as a homeowner — and can give you some headaches as well.
Depending on the climate where you live, keeping a yard green — and alive — can be a serious cost on your monthly water bill, and if you need a professional landscaper to come by regularly, you may start seeing the wisdom of condo living after all.
The costs of maintenance can also affect whether or not you spring for a house with a pool, space for a swingset, or a wooden deck that will need to withstand the elements year after year.
When weighing what type of outdoor space you want, consider the costs of upkeep and whether or not you can afford the expense or time to maintain it yourself. Think about the climate where you live, and how much it'll cost to keep things looking green and well-kept. In addition, you can also join the growing trend of xeriscaping — landscaping that doesn't require heavy watering and is centered on succulents, rocks, and other plants and materials that won't drive up your water bill. In general, it's a good idea to look for a property that has been landscaped with an eye towards sustainability.
There are four main types of homes you're likely to consider when purchasing a place to live: a single-family home, condo, townhome, and co-op. They differ in terms of size, ownership structure, and your responsibilities as an owner. Here's a closer look at each.
Home Type | Ownership | Privacy/Space | Maintenance Responsibility | Monthly Fees | Financing Note |
Single-Family Home | You own land + structure | High (detached, private lot) | All on you (interior + exterior + landscaping) | None (unless voluntary HOA) | Standard mortgage options |
Condo | You own your unit; shared common areas | Moderate (shared walls/building) | Interior only; HOA covers exterior/common areas | HOA fees (varies widely) | Standard mortgage; HOA financials reviewed |
Townhome | You own unit + sometimes small lot | Moderate (shared walls) | Interior + sometimes yard; HOA covers some exterior | HOA fees (often lower than condo) | Standard mortgage options |
Co-op | You own shares in a corporation, not real property | Moderate (shared building) | Interior only; corporation covers building | Monthly maintenance fees + assessments | Stricter approval; fewer lenders offer co-op loans |
A single-family home is a detached property, which gives you more privacy and land than condos or townhomes. With a single family house you also get to call all the shots when it comes to renovations and upkeep. That said, you're also responsible for fixing anything that goes wrong, and maintaining the landscaping, so if you want a more worry- and hassle-free sort of home ownership, this might not be your best option.
Typically a condominium is a residence that you own within a building, though some are detached and stand on their own. Like many apartment complexes, condominiums include common areas like a lobby, pool, gym, game room, or a barbecue area, which residences share. You'll also be required to pay maintenance and/or membership fees, though at the same time, you won't be on the hook for taking care of the yard or making repairs in the property. That said, you won't have as much freedom to renovate like you would with a single family home.
A townhome is a multi-floor private residence that is connected to another private residence through a common wall. Typically these provide less space and privacy than a private family house, but you also won't have to worry as much about upkeep and maintenance and you can make use of common areas. Think of it as somewhere between a condo and a single-family house.
People often get co-ops and condominiums mixed-up, but there are some differences. When you buy into a co-op, you don't actually own the housing unit, rather, you buy shares of the corporation that owns the building. With these shares comes a lease for a unit in the building. You will also have to pay monthly maintenance fees for the building, as well as real estate taxes. In addition, in order to live in a co-op you have to win the approval of the co-op board, which is made up of residents of the building. Because you're buying shares rather than real property, co-op financing works differently: lenders use a specialized co-op share loan secured by your shares and proprietary lease rather than a standard mortgage, and approval also hinges on the co-op board.
When it comes to home ownership, focus on what you can afford, and make sure your eyes aren't bigger than your bank account.
A larger house will be more expensive, not only in closing price but also in terms of utilities, maintenance, and property tax. Take a look at your needs and how much you expect your family to grow in the coming years. Are you single? Married? Do you plan on having kids? All of these questions can help you decide whether or not more room is a necessity, then you can decide what you can afford and what you can't.
When looking at your monthly income and what you can afford, lenders typically look at two guidelines: a housing expense ratio (your monthly mortgage payment — principal, interest, taxes, and insurance — ideally under about 30% of gross monthly income) and a debt-to-income ratio (all monthly debts, including housing, ideally under about 45%). Understanding how debt-to-income ratio affects your mortgage approval can help you set realistic expectations before you start shopping.
It's also wise to make sure to keep a significant amount of money liquid in your savings, so that if something unexpected happens — such as sudden repairs or a loss of employment — you can still keep up with your payments for a few months.
Another thing to look at is the property tax in your area. Depending on how high it is, the cost of getting a bigger property may be even higher than you think. If you're looking at a condominium or townhome, you should also weigh the burden of the homeowner's association fee. Set aside money each year for ongoing maintenance and repairs, too, along with insurance and property taxes.
According to the NAR 2025 Profile of Home Buyers and Sellers, the median down payment for first-time buyers was 10% — the highest since 1989. But you don't necessarily need 10% or 20% down to buy a home. Low-down-payment options exist: conventional loans can go as low as 3%, FHA loans typically require about 3.5%, and VA and USDA loans offer 0% down for eligible buyers.
First-time buyers have access to several programs designed to lower the barrier to homeownership. FHA loans, backed by the Federal Housing Administration, allow lower credit scores and smaller down payments. VA loans, available to veterans and active-duty service members, offer 0% down and no private mortgage insurance. USDA loans serve eligible rural and suburban buyers with 0% down as well. Many states and local governments also offer down-payment assistance grants or low-interest second mortgages for qualifying first-time buyers.
This guide is designed to help you if you're:
Buying solo — figuring out how much space you actually need vs. what you can afford.
A couple or growing family — weighing room to grow against monthly costs and maintenance.
Looking for low-maintenance living — considering a condo or townhome to skip yard work and major repairs.
A budget-first buyer — prioritizing affordability and exploring low-down-payment loan options.
A veteran or service member — exploring VA loan benefits for 0% down and favorable terms.
The good news is that owning a home can strengthen your financial standing and give you an asset that may grow in value over time — one you can pass on someday to your loved ones.
On the other hand, there is a lot to consider and some paperwork to go through before you can move in. One thing to keep in mind is that this is not only one of the biggest investments you'll ever make, it's also one of the most personal. Only you can truly decide what size home you want and need, and what you can afford. Once you've weighed all of your options, you'll be even closer to that place of your own.
Here are your next steps:
Get pre-approved. Knowing what you qualify for helps you shop with confidence and strengthens your offer.
Compare mortgage options. See what rates and terms different lenders offer by comparing mortgage lenders.
Check your ratios. Keep housing costs under ~30% of gross income and total debt under ~45%.
Review the full checklist. Walk through our first-time home buyer checklist to make sure you don't miss a step.
It depends on your budget, how much maintenance you're willing to handle, and your life stage. Single-family homes offer privacy but more upkeep; condos and townhomes trade space for convenience; co-ops require board approval and stricter financing.
With a condo, you own your unit and share common areas. A townhome is a multi-story unit you own, often with a small yard. A co-op means you own shares in a corporation rather than real property, with stricter approval and financing requirements.
Lenders generally want your housing costs under about 30% of gross income and total debt under about 45%. Factor in property taxes, insurance, HOA fees, and maintenance — not just the mortgage payment.
The median down payment for first-time buyers was 10% in 2025, but you may qualify for less. Conventional loans can go as low as 3%, FHA loans typically require about 3.5%, and VA or USDA loans offer 0% down for eligible buyers.
Yes. Because you're buying shares in a corporation rather than real property, fewer lenders offer co-op loans, and the approval process — including co-op board review — tends to be more complex than for condos or single-family homes.
This guide draws on publicly available data from the National Association of Realtors (NAR), the U.S. Department of Housing and Urban Development (HUD), and Freddie Mac. We reviewed the NAR 2025 Profile of Home Buyers and Sellers for current first-time buyer statistics, HUD's Housing Market Indicators for rate context, and Freddie Mac's affordability guidance for housing expense and debt-to-income ratios. BestMoney's editorial team cross-referenced these sources with our own review of mortgage lender offerings and programs.
National Association of Realtors, "First-Time Home Buyer Share Falls to Historic Low of 21%; Median Age Rises to 40" (November 2025)
National Association of Realtors, "Could More First-Time Buyers Make the Math Work in 2026?" (January 2026)
U.S. Department of Housing and Urban Development, Housing Market Indicators Report (April 2026)
Freddie Mac, My Home — "How Much Home Can I Afford?" (2026)
The BestMoney editorial team is composed of writers and experts covering a full range of financial services. Our mission is to simplify the process of selecting the right provider for every need, leveraging our extensive industry knowledge to deliver clear, reliable advice.
