5 Mistakes to Avoid as a First-Time Home Buyer

September 22, 2026
Ken Graczak
Mortgage News

5 Mistakes to Avoid as a First-Time Home Buyer

The biggest mistakes first-time home buyers make happen before they ever step foot in a house. They happen with money. Working with the wrong lender for your situation. Opening a new credit card at the wrong time. Forgetting that closing costs are a real number, not an afterthought. Here’s the deal: the financing side of buying a home trips up more people than the house hunting ever does.

We’ve walked hundreds of Minnesota families through this process, and the same five mistakes show up again and again. Let’s look at them together so you don’t have to learn the hard way.

What You Need to Know

Getting pre-approved should happen before you fall in love with a house, not after
New credit accounts during the loan process can delay or derail your approval
Budget for closing costs separately from your down payment. In Minnesota, that’s typically 2% to 5% of your loan amount
Who you work with matters more than the rate you see online. Every situation is different
A good loan officer stays in touch with you every one to two weeks during pre-approval, not just at the start

Want to run your numbers first? We’re happy to look at your situation before you do anything else.

Mistake #1: Shopping for Homes Before Getting Pre-Approved

Should I get pre-approved before I start looking at homes?

Yes. Pre-approval tells you what you can actually afford before you fall for a house that’s out of reach. Skip this step and you’re just guessing. Real estate agents won’t take you seriously without it either, and in a competitive market, sellers won’t either.

I’ve had clients walk into my office already attached to a listing that’s $60,000 over what they qualify for. That conversation is never fun. It’s a lot easier to fall in love with a home you can actually get.

Pre-approval isn’t instant, either. It typically takes 90 to 120 days from first conversation to close, depending on your financial picture. We stay in touch with you every one to two weeks during that window, watching for changes in your rate, your employment, your credit. A good lender stays proactive so nothing catches you off guard later.

Mistake #2: Opening New Credit or Making Big Purchases Mid-Process

Can opening a new credit card hurt my mortgage approval?

It can, and it happens more than you’d think. Here’s the deal: lenders pull your credit again right before closing. A new credit card, a car loan, even a big furniture purchase on store financing can shift your debt-to-income ratio enough to delay or kill your approval.

Most lenders qualify you using 45% of your gross monthly income minus your existing debt. That number is already worked out carefully during pre-approval. Add a new payment and you can blow right past it.

But there’s a catch: this isn’t just about not applying for new credit. It’s about not moving money around either. Don’t close old accounts, don’t co-sign for anyone, don’t make a big withdrawal from savings without talking to us first. If something financial is about to change in your life, tell your loan officer before you do it, not after.

Mistake #3: Forgetting About Closing Costs

How much should I budget beyond just the down payment?

Plan on 2% to 5% of your loan amount in Minnesota for closing costs, on top of your down payment. On a $350,000 loan, that’s somewhere between $7,000 and $17,500. This is an estimate for illustration only. Actual rates, payments, and eligibility vary based on your credit score, loan type, down payment, and current market conditions.

A lot of first-time buyers save hard for the down payment and stop there. Then closing costs show up like a surprise guest. Why does this matter? Because if you’re short at the closing table, that’s not a small problem. That’s a delayed closing or a deal that falls apart.

The good news is there’s more flexibility than people think. FHA loans only require 3.5% down. Conventional loans can go as low as 3%. Programs like HomeReady and Home Possible are income-limited but can save you money on mortgage insurance. We’ll walk through what applies to you before you’re deep into house hunting, not after.

Mistake #4: Not Taking the Mortgage Experience Seriously

Does it actually matter who you work with for a mortgage?

It matters more than the rate you see online. Here’s the deal: every situation is different. Everybody’s got their own little puzzle. Your income, your credit, your down payment, your timeline, none of it looks exactly like the next person’s.

A lot of buyers go straight to the lowest rate they see advertised. But if you don’t fit neatly into that lender’s box, you’re stuck working within their guidelines. No flexibility. No alternative. Just one scenario, and you either fit it or you don’t.

That’s not what you want when you’re making the biggest purchase of your life.

As a broker, I’m not tied to one lender’s guidelines. I’ve got levers I can pull because I work with multiple lenders, not one bank. If your situation doesn’t fit the first option, we find one that does.

Here’s what to actually look for when you’re choosing who to work with:

Someone with real experience, not someone learning on your file
Someone with systems in place to keep your loan on track and moving
Someone with access to multiple lenders, in case the first one isn’t the right fit for your situation
Someone who genuinely likes working through puzzles, because that’s what finding the right fit for you actually is

This is the broker advantage, and it’s worth going to bat for.

Mistake #5: Treating Credit Score Thresholds Like a Guessing Game

What’s the biggest financing mistake first-time home buyers make?

Assuming their credit score locks them into one loan type, when really it opens up options they didn’t know they had. If your score is under 680, FHA and conventional should both be on the table for comparison. Some lenders can go under 620 on conventional, though the mortgage insurance cost might make FHA the smarter move depending on your numbers.

VA loans, for buyers who qualify, never carry monthly mortgage insurance at all. That’s a real advantage worth exploring if you or your spouse served.

Coach yourself up on this before you assume anything. The mortgage world has more paths through it than people expect. What you’re getting yourself into is rarely as narrow as it looks from the outside.

A Real Scenario

Say you’re looking at a $320,000 home with 5% down. That’s $16,000 down, plus an estimated $6,400 to $16,000 in closing costs depending on your loan type and lender fees. This is an estimate for illustration only. Actual rates, payments, and eligibility vary based on your credit score, loan type, down payment, and current market conditions.

That’s the kind of number that catches people off guard if nobody walks them through it early. It’s also exactly why we start with a conversation, not a commitment.

Questions We Hear a Lot

What’s the biggest financing mistake first-time home buyers make?
Assuming they only have one loan option based on their credit score. Most buyers have more paths available than they realize, and comparing FHA against conventional, or checking VA eligibility, can change the whole picture.

Should I get pre-approved before I start looking at homes?
Yes, always. Pre-approval tells you what you can actually afford, gives you credibility with sellers, and gives us time to watch for any changes to your credit, income, or the market before you close.

Can opening a new credit card hurt my mortgage approval?
It can. New credit accounts, big purchases, and even closing old accounts can shift your debt-to-income ratio enough to delay or derail your loan. Talk to your loan officer before making any financial moves during the process.

How much should I budget beyond just the down payment?
Plan on 2% to 5% of your loan amount for closing costs in Minnesota, separate from your down payment. This is an estimate for illustration only. Actual costs vary based on your loan type, lender, and situation.

Does it actually matter who you work with for a mortgage?
Yes, more than the rate you see advertised. Every buyer’s situation is different, and a lender who only works within one set of guidelines can box you in if you don’t fit their exact scenario. A broker with experience, real systems, and access to multiple lenders can find the fit that actually works for you.

No Pressure, Just Clarity

Buying your first home comes with enough unknowns already. The financing side doesn’t have to be one of them. Let’s look at it together before you make any of these five mistakes, not after.

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Written by Ken Graczak, NMLS #184394 | CFR Mortgage | Minnesota