7 Essential Tips for First-Time Home Buyers in 2025

Congratulations on beginning your journey to homeownership! As the market evolves this year, being prepared can make all the difference in your buying experience. Whether it’s understanding mortgage rates, exploring available homes, or negotiating the best deal, a little knowledge goes a long way. 

In this guide, I’ll share practical tips to help you navigate your first home purchase with confidence and ease—so you can focus on finding a place you’ll love to call home.

7 Tips for Buying Your First Home in 2025

For many aspiring homeowners, the dream of buying a house has felt just out of reach. After plummeting to historic lows during the pandemic, mortgage rates have climbed back up to the 6% to 7% range, keeping many buyers unable to move forward.

There’s hope that relief could come, but forecasts suggest mortgage rates will settle slightly above 6% this year, due to the 10-year Treasury bond yield. This yield reflects investor confidence in the economy and inflation trends—and since most mortgages are government-backed, their rates tend to follow suit. For now, rates remain tied to economic shifts, making patience and strategic planning essential for those looking to enter the market.

1.Turn on Alerts for Mortgage Rate Trends 

Mortgage rates remain unpredictable, shifting daily, but experts don’t expect any major drops in borrowing costs this year. With inflation likely to stay elevated, the central bank has signaled fewer interest rate cuts ahead, keeping high pressure on mortgage rates.

While mortgage rate projections set the market tone, individual borrowers still have opportunities to secure lower rates. Exploring different loan terms, negotiating with lenders, or purchasing mortgage points to buy down the rate can all help reduce costs.

Even a slight reduction in your mortgage rate at the start of a loan may lead to significant long-term savings, cutting tens of thousands of dollars in interest over time. For buyers, small strategic moves can make homeownership more affordable, even in a higher-rate environment.

2. Create a High-End and Low-End Budget 

If you haven’t started yet, now is the time to budget for your down payment and other home-buying expenses, such as closing costs, home insurance, and property taxes.

While many lenders accept a minimum down payment of 3% for conventional loans, a larger down payment can work in your favor. Putting down 20% reduces the loan amount—meaning less debt—and eliminates the need for private mortgage insurance, lowering your overall costs.

When planning your budget, ensure you can comfortably manage your monthly mortgage payment along with other financial obligations, including student loans, credit card balances, and recurring bills.

To get a clearer picture of what your budget is, use a mortgage calculator to estimate payments based on credit score, down payment, and projected interest rate.

3. Be Adaptable With Expectations 

In a competitive market, finding a home that checks every box while staying within budget can be challenging. You may find a property in the perfect location, but it might lack a spacious backyard or have outdated features. Weighing these trade-offs can help you make a smarter decision.

Prioritize your must-haves, such as location or commute time, but stay open to compromising on factors like square footage or cosmetic details. If you’re willing to take on renovations, consider a fixer-upper—older homes or those needing updates often come with lower price tags, making them a more affordable entry point into the market.

Another way to strengthen your offer is by being flexible on the closing date. Sellers may be more inclined to choose a buyer who can accommodate their timeline, giving you an edge in a competitive bidding environment.

4. Consider Buying Sooner Rather Than Later 

For years, many homeowners have been reluctant to trade in the historically low rates they locked in during the pandemic. In fact, 85% of mortgage borrowers currently have rates below today’s market levels, keeping housing inventory tight and prices high. But change is inevitable—major life events like job relocations, growing families, and downsizing needs will push more sellers to list their homes.

This shift could finally bring some balance to the housing market. With an estimated 11.7% increase in the number of existing homes for sale this year, buyers may find more choices and a more stable market than they’ve seen in nearly a decade.

Many prospective buyers are waiting on purchasing a home, hoping for mortgage rates to decline. While waiting for lower rates might seem like a smart move, home prices are projected to continue rising. Once rates do drop, the surge in demand could drive up competition and push prices even higher.

If buying a home fits within your budget, acting sooner rather than later could give you more leverage in negotiations. Instead of waiting for the perfect rate, consider the option of buying now and refinancing later if rates decrease—but be sure to stay within your financial comfort zone.

5. Consider Buying New 

The current shortage of resale homes is closely tied to high mortgage rates. Many homeowners who secured rates below 6%—some even under 4%—are hesitant to sell and take on a higher rate, leading to fewer existing homes hitting the market.

However, new construction is helping to fill the gap. In 2024, newly built homes made up over 30% of single-family home sales, a significant jump from the 10% to 12% seen in previous years.

If inventory is tight in your area, exploring new construction could be a smart alternative. These homes often come with fewer bidding wars and may be more competitively priced. Plus, many builders are offering incentives like price reductions and rate buy-downs to attract buyers, making new builds an option worth considering

 A key market indicator, the month’s supply—which measures how long it would take to sell all available homes—is expected to rise from 3.7 months in 2024 to 4.1 months in the new year. Anything above four months signals a shift toward a more balanced market, offering buyers more leverage.

If these projections hold, competition among buyers will ease, and home prices could stabilize. In fact, 2025 is on track to see the highest number of homes for sale since December 2019, with an estimated 20% of listings expected to see price reductions. After years of intense bidding wars and limited options, more inventory means buyers may finally have room to make more strategic, less rushed decisions.

6. Find a Realtor You Trust 

Buying a home is a major milestone, but without the right support, it can feel overwhelming. The key to a smooth experience is working with a realtor who understands the local market, anticipates challenges, and helps you make informed decisions with confidence. 

With in-depth local expertise and a commitment to personalized service, I make the homebuying process clear and straightforward. I take the time to understand what you’re looking for—your must-haves, budget, and long-term goals—so you can move forward without second-guessing. 

Instead of feeling lost in listings and negotiations, work with a realtor who prioritizes your needs and handles the details seamlessly. 

7. Be Patient 

If 2025 isn’t the right time for you to buy a home, that’s perfectly fine. Use this time to strengthen your financial position so you’ll be ready when the right opportunity comes along.

Boost Your Credit Score

Your credit score is a leading factor in securing a mortgage and determining your interest rate. While most conventional loans require a minimum score of 620, aiming for 740 or higher will help you qualify for the best rates. To improve your score, focus on making credit card payments on time—ideally in full—and keeping your balances low relative to your credit limit.

Reduce Debt

Lenders evaluate your debt-to-income ratio when evaluating how much you can borrow. Lowering your debt can improve your DTI, increasing your chances of securing a better loan with more favorable terms. Plus, reducing debt gives you more financial flexibility, making it easier to save for your long-term goals.

Build Your Down Payment Fund

Saving for a down payment takes time, but starting with small, consistent contributions can make a big difference. Set weekly or monthly savings goals and consider placing your funds in a high-yield savings account or a certificate of deposit if you don’t plan to buy in the immediate future. This way, your savings can grow with compound interest, bringing you closer to homeownership on your terms.

Is 2025 a Good Year to Buy a Home? 

Deciding whether to buy a home in 2025 depends on your financial circumstances, goals, and local market conditions. However, several key factors could make this a promising year for buyers:

• Mortgage rates may gradually decline: While rates are expected to stay above 6% for much of the year, they could decrease over time, making home loans slightly more affordable.
• Waiting could mean more competition: As rates drop, more buyers will enter the market, potentially driving up home prices and increasing competition.
• Inventory is improving: More homeowners are expected to list their properties, and new construction will continue adding supply, giving buyers more options.
• Sellers and builders are offering incentives: Some homebuilders and sellers are providing rate buy-downs, closing cost assistance, or price reductions to attract buyers.
• Buyers may have more negotiating power: With increased inventory, buyers in some markets could have an advantage in negotiations, something that’s been rare in recent years.

If you’re financially ready, 2025 could be a smart time to buy—especially before competition intensifies. The best approach is to assess your budget, explore available loan options, and partner with a trusted realtor to find the right home at the right time.

Speak With an Expert Local Realtor at Matthias John Realty 

The housing market is shifting, and while mortgage rates remain above 6%, waiting for the perfect moment could mean facing even higher prices and more competition down the road. The good news? With the right strategy and expert guidance, homeownership is still within reach.

At Matthias John Realty, I help buyers navigate the market with confidence—whether you’re looking for the best loan options, negotiating power, or new construction opportunities. If you’re ready to take the next step, let’s find a plan that works for you. Call today at 434.906.4630 or fill out my contact form to get started. Your dream home is waiting!