22 Common Homebuying Missteps - And How to Avoid Them

Buying your first home is exciting, but like anything you do for the first time, it comes with a learning curve. Many first-time homebuyers hesitate to ask questions, which can lead to avoidable mistakes—and even buyer’s remorse.

Arming yourself with knowledge about the home buying process—both the financial and property aspects—can make the experience smoother and less stressful. 

Buying a home is one of life’s biggest decisions, and for first-time buyers, the process can feel overwhelming. To help navigate the journey, we’ve compiled insights from experienced real estate professionals and industry experts. From understanding hidden costs to negotiating effectively, these tips highlight common pitfalls first-time buyers face—and how to avoid them.

1. Hesitating to Ask Questions

It’s natural to feel unsure about asking questions, but staying silent can lead to misunderstandings and mistakes. Michael Douthwaite, a mortgage loan officer with Zillow Home Loans, estimates that 90% of his clients don’t fully understand the loan process at the start, yet many hesitate to seek clarification.

“We see it all the time—buyers don’t want to seem uninformed, so they avoid asking questions,” he says. Unfortunately, incorrect assumptions can create unnecessary challenges as the process unfolds.

PRO TIP: Don’t be shy—ask plenty of questions! A good loan officer will guide you through the process and help you feel confident about your next steps, whether you’re ready to purchase or need time to prepare.

2. Planning to Use a Bank Loan for the Down Payment

A common misconception is that buyers can use a bank loan for their down payment. Typically, you’ll need to pay at least 3% of the purchase price upfront, and the source of that payment matters. Savings, stock sales, or gifts from family are common sources, but taking out an unsecured loan or using a credit card for the down payment is not allowed.

“One exception is borrowing from a 401(k), but that comes with strict rules and potential consequences,” says Douthwaite.

PRO TIP: Learn more about how down payments work and explore creative ways to save. Proper planning can help you avoid financial setbacks.

3. Neglecting Your Credit Score

Your credit score plays a crucial role in determining your mortgage eligibility and interest rate. Major purchases or running up credit card balances in the months leading up to your mortgage application can hurt your credit and limit your options.

PRO TIP: Educate yourself on why your credit score matters and take steps to protect it while preparing to buy a home.

4. Overlooking Down Payment Assistance Programs

Many buyers aren’t aware of the assistance programs available to first-time homebuyers. From low-interest loans to forgivable grants, these programs can significantly ease the financial burden of a down payment.

“Even if one buyer has previously owned a home, some programs consider the other buyer as a first-time buyer, allowing access to these benefits,” explains Shelly Salas, a broker with Your Home Sold Guaranteed Realty in Texas.

PRO TIP: Use tools like Zillow® to explore down payment assistance programs in your area. Many listings include details about available resources to help make homeownership more accessible.

5. Shopping for Homes Without Pre-Approval

Home shopping is exciting, but starting your search before getting pre-approved for a mortgage can lead to frustration and wasted time. Pre-approval helps you understand your budget, focus your search, and make confident offers. In competitive markets, it’s especially crucial as it demonstrates to sellers that you’re a serious buyer.

“I had a client shopping in the $400,000 price range for two weeks,” shares Douthwaite. “It turns out she only qualified for $200,000, so she wasted time and energy.”

PRO TIP: Begin your homebuying journey by discussing financing options early. Pre-qualification or pre-approval sets clear expectations and helps you focus on homes you can afford.

6. Overlooking Closing Costs

Closing costs are often overlooked but are an essential part of buying a home. These costs, which range from 2% to 5% of the purchase price, include property taxes, loan fees, and title insurance. Knowing about these expenses upfront can prevent surprises at the closing table.

PRO TIP: Once you’ve applied for a mortgage, your lender is required to provide a detailed estimate of all fees and closing costs. Use this estimate to prepare for the final amount needed at closing.

7. Failing to Negotiate Closing Costs

Closing costs aren’t set in stone and can often be negotiated. Sellers might cover a portion of the costs or offer to buy down your mortgage interest rate to make your monthly payments more manageable, especially in buyer-friendly markets.

“If unexpected costs arise, we can help structure the offer to include seller credits, reducing your upfront expenses,” Douthwaite explains.

PRO TIP: Lean on your agent’s expertise to craft a strategic offer that minimizes your closing costs and maximizes your budget.

8. Ignoring Monthly Payment Affordability

Before making an offer, it’s essential to consider the monthly payment and ensure it fits your budget. Experts recommend that your mortgage payment doesn’t exceed one-third of your income, leaving room for savings, emergencies, and life’s pleasures.

Zillow offers tools to help you calculate:

• Rent vs. Buy Calculator: Helps you determine how long it would take for buying to become more cost-effective than renting.
• Monthly Mortgage Calculator: Provides estimates for total monthly payments, including taxes and insurance.
• Affordability Calculator: Gives a personalized estimate of what you can afford based on your income, debts, and down payment.

PRO TIP: Use these tools or consult a lender to create a realistic home-buying budget that works for you.

9. Underestimating Interest Rates’ Impact

Even small changes in interest rates can significantly affect your buying power. For example, a 1% drop in rates could allow you to spend tens of thousands more on a home without increasing your monthly payment.

PRO TIP: Stay informed about interest rate trends to better understand their effect on your affordability and financing options.

10. Taking Rejection Personally

Rejection can sting, especially if you’ve started picturing yourself in the home. It’s important to remember that homebuying is often a numbers game. You may need to make multiple offers before landing the perfect home, particularly in competitive markets.

“Some buyers imagine their future in a home and take rejection hard,” says Douthwaite. “But staying resilient is key.”

PRO TIP: Work with an experienced agent who can guide you through the ups and downs of the process. Being financially prepared and ready to act quickly can give you an edge in securing your dream home.

11. Not Realizing Pre-Approvals Last for Months

Missing out on a dream home can be disheartening, and some buyers pause their search to avoid repeating the pre-approval process. But many lenders’ pre-approvals are valid for 90 days, giving you plenty of time to find another home.

“You don’t have to reapply during that period,” says Douthwaite. “If one home doesn’t work out, you’re still ready to jump on the next one.”

PRO TIP: If you lose out on a home, take a moment to regroup. With your pre-approval still valid, work with your agent to explore new opportunities.

12. Overbuying Beyond Your Budget

Just because you qualify for a $500,000 loan doesn’t mean you should max out your budget. Purchasing a home that stretches your finances too thin can lead to a “house poor” lifestyle, leaving little room for everyday expenses or emergencies.

“You want the home of your dreams within your budget, without sacrificing the ability to live comfortably,” says Salas.

PRO TIP: Get pre-qualified to understand your financial limits and focus your search on homes that fit comfortably within your budget.

13. Overlooking Assumable Low-Interest Mortgages

Many buyers don’t realize that certain low-interest mortgages can be assumed from the current homeowner, offering significant savings. While most conventional loans aren’t assumable, qualified buyers can assume FHA, VA, or USDA loans under specific conditions.

“VA loans, for instance, can sometimes carry interest rates as low as 2% or 3%, saving buyers hundreds each month,” says Salas. “And you don’t need to be a veteran to assume a VA loan if you qualify.”

PRO TIP: Ask your agent or lender about assumable loan opportunities. These can be a game changer in markets with higher interest rates.

14. Missing Out on Seller Concessions

Negotiation is a crucial part of buying a home, and seller concessions can make a significant difference. From covering closing costs to paying off solar panels, sellers in buyer-friendly markets may be open to helping you save money.

“In one case, we negotiated $60,000 for the buyer to cover solar panels,” shares Salas. “Market data can back up your request and make it harder for sellers to say no.”

PRO TIP: Don’t shy away from asking for concessions. Lean on your agent’s expertise to craft a compelling case using local market insights.

15. Not Vetting Your Agent

The right agent can make or break your home-buying experience, yet many buyers don’t take the time to vet their agents for experience and local market knowledge.

“A lot of agents only sell one or two homes a year,” Salas warns. “Look for agents with proven success and positive client reviews. Your agent should have multiple strategies to save you money and guide you through the nuances of your market.”

PRO TIP: Partner with an experienced agent who understands your market dynamics, whether it’s a seller’s or buyer’s market. Their expertise can save you money on everything from the sales price to closing costs and repairs.

16. Limiting Your Search to Turnkey Homes

Turnkey homes are appealing but often come at a premium. Focusing solely on move-in-ready properties might narrow your options, especially when inventory is low. “Purchasing a fixer-upper can help you secure the location, size, or layout you want at a more affordable price,” says Winston Murray.

PRO TIP: Fixer-uppers aren’t for everyone. Choose a home that matches your skill level and timeline for updates. Light cosmetic fixes like painting or replacing fixtures can be manageable for first-timers.

17. Ignoring New Construction Homes

Some buyers skip over newly built homes, but they can offer financial incentives like reduced closing costs or custom finishes. “New construction often provides flexibility and perks that existing homes may not,” says Murray.

PRO TIP: Research the builder’s reputation, customer reviews, and warranties. Make sure all necessary permits are closed before finalizing the purchase.

18. Refusing to Compromise on Features

A rigid “must-have” list can limit your options. “It’s rare to find a home that checks every box,” Murray advises. Prioritize the features that matter most and be open to adjusting your expectations.

PRO TIP: Expand your search geographically or adjust your wish list. Up-and-coming areas might offer great deals that won’t last as prices rise.

19. Avoiding Homes That Have Been on the Market Too Long

Homes that linger on the market often get overlooked, but they could be hidden gems. Issues like a high initial price, poor photos, or staging can lead to a property being undervalued.

PRO TIP: Keep an eye on both new and older listings. Properties with long market times may offer negotiation opportunities or hidden potential.

20. Overlooking Hidden Costs

Hidden costs like insurance in flood zones, special assessments, or condo reserves can surprise buyers. “Different areas have unique expenses that may not be immediately apparent,” says Marcus Larrea.

PRO TIP: Work with an experienced agent who understands local ordinances and hidden fees. They can help you budget more accurately and avoid surprises.

21. Skipping Home Inspections

Waiving a home inspection might speed up your purchase, but it’s a risky move. Major issues like foundation problems or mold can turn a dream home into a costly nightmare.

PRO TIP: Always get a professional inspection. For fixer-uppers, bring a contractor along to estimate repair costs so you can budget accordingly.

22. Focusing on Easily Changeable Features

Some buyers fixate on minor details, like outdated sinks or paint colors, instead of considering the home’s overall potential. “Don’t let small issues prevent you from buying a home you love,” says Jason Farris.

PRO TIP: Focus on features that are expensive or impossible to change, like lot size or location. Minor updates can be tackled later, often for a fraction of the cost.

Conclusion

Buying your first home is an exciting journey, but it comes with challenges that can be avoided with the right knowledge and preparation. By understanding common pitfalls and taking proactive steps—like getting pre-approved, asking questions, and staying flexible in your search—you can make the process smoother and more rewarding. Remember, having an experienced agent by your side and staying informed about the market are key to finding the home that fits your needs and budget. With the right approach, you’ll be well on your way to achieving your homeownership dreams.