Laying the Groundwork for Your First Home
Preparation and knowledge can help first-time homebuyers feel confident when entering the housing market. According to the National Association of Realtors (NAR), homeownership continues to be one of the primary ways Americans build long-term financial stability.
Homeownership in Iowa also remains a meaningful financial milestone. The NAR states that delaying homeownership can impact long-term wealth building. For example, waiting to purchase a home until age 40 instead of age 30 could mean missing out on approximately $150,000 in potential home equity growth on a typical starter home.
Homeownership is one of the most powerful financial tools available to Iowans and many Americans. Customers should be encouraged to take time to understand their financial position and explore their options before beginning the homebuying process.
If you are considering buying a home, here are several important factors to review before starting your home search.
How much have you saved?
Start with a clear picture of your savings. Down payments typically range from 5% to 20% of the purchase price, depending on the loan program. In addition to your down payment, you will need funds for closing costs and moving expenses.
It is also important to maintain an emergency fund. Financial experts recommend keeping three to six months of living expenses in reserve to cover unexpected costs.
How much debt are you carrying?
Review your current financial obligations, including car loans, credit cards and student loans. Lenders evaluate your debt-to-income ratio when determining loan eligibility. In general, total debt payments should remain manageable relative to your income. Resist making last-minute purchases that could impact loan eligibility.
As a general guideline, housing costs – including mortgage, property taxes and insurance – are often recommended to stay within 25% to 30% of gross monthly income.
What is your credit profile?
Your credit score plays a significant role in qualifying for a mortgage and securing a competitive interest rate. A stronger credit history can lead to better loan terms and lower monthly payments.
If your credit score needs improvement, take time before applying to reduce outstanding balances and make consistent, on-time payments that can help strengthen your position.
Have you planned for the full cost of homeownership?
Beyond the mortgage payment, homeownership includes additional expenses such as utilities, maintenance, property taxes and homeowners insurance. Buyers should also consider potential repairs and routine upkeep. According to a study by Bankrate, the average homeowner in Iowa spent about $15,737 annually on costs beyond their mortgage payment in 2025, including property taxes, insurance, utilities and routine maintenance, painting a picture of the importance of planning for the full cost of homeownership.
Creating a realistic monthly budget can help ensure long-term affordability and prevent financial strain.
How long do you plan to stay?
Homeownership often makes the most financial sense for those planning to stay in one place for several years. Over time, homeowners can build equity and benefit from property appreciation. Those anticipating a short-term move may want to carefully consider whether buying aligns with their goals.
Learn More
To speak to a Residential Loan Officer to discuss your situation and see today's rates, visit https://www.luanasavingsbank.com/borrow/mortgage-loans/.