By Jeff Buum | Fairway Home Mortgage, Heartland Branch | Sioux Falls, SD | NMLS #400290
Buying a first home is a big, exciting milestone. It can also feel confusing when you are not sure what to do first, what comes after that, or when it makes sense to call a mortgage lender.
Do you pick a real estate agent first? Start touring homes? Figure out how much to save? Apply for a mortgage right away?
Here is the reassuring part: the home buying process follows a clear order. Once you know that order, it is easier to make good decisions, keep stress low, and be ready when you find the right house.
Below is the step-by-step plan Jeff Buum, a Sioux Falls loan officer with Fairway Home Mortgage's Heartland Branch, recommends to first-time buyers.
Step 1: Look at Your Finances and Set a Budget You Can Live With
Start with an honest review of your money before you look at a single listing.
Go over your income, monthly bills, current debts, credit history, and savings. Then decide how much you can comfortably put toward housing each month.
What Can Be Included in Your Monthly Housing Payment
Mortgage principal and interest
Property taxes
Homeowners insurance
Mortgage insurance, when required
HOA dues, if the home has them
Budget for More Than the Monthly Payment
You will also need funds for the down payment, closing costs, moving, and surprise repairs.
Say you qualify for a $2,000 monthly mortgage payment. If that payment leaves you short on groceries, retirement savings, trips, or an emergency fund, a lower-priced home may be the better choice.
The aim isn’t to buy the most expensive home you can qualify for. The aim is to buy a home that fits comfortably in your budget.
Step 2: Meet With a Mortgage Lender
After reviewing your finances, contact a mortgage lender before you start shopping for homes in earnest.
A lender can review your full financial picture, walk you through your loan options, and help you determine what price range you may qualify for.
Loan Choices for First-Time Buyers
Based on your situation, you may qualify for a conventional, FHA, VA, or USDA loan. Some first-time buyers may also be eligible for down payment assistance.
You don't always need 20% down. Some loan programs let qualified buyers put down far less.
This is also a good time to review your credit score, work history, monthly debts, savings, and expected closing costs.
Starting with a lender helps you spot possible roadblocks early, while you still have time to address them.
Step 3: Get a Mortgage Preapproval
Once your lender has reviewed your finances, work with them to get preapproved.
For a pre-approval, the lender reviews your income, assets, debts, and credit history to see whether you appear to qualify for a mortgage and how much you may be able to borrow.
A pre-approval letter gives you a realistic price range and shows sellers you have already taken real steps toward financing.
A Preapproval Is Not the Final Approval
Being preapproved does not mean your loan is fully approved. Your finances, the home, and the loan all still need to meet the program requirements before closing.
Keep this in mind: your preapproval amount is the most you can borrow, not the amount you should spend. Pick a monthly payment that works for your household.
Step 4: Choose a Real Estate Agent
As your budget and financing plan come together, find a real estate agent who knows the local market and understands what you want.
A good agent can help you find homes that fit, set up showings, compare recent sales, write an offer, and work through the purchase agreement.
Talk about your priorities before you tour homes. Consider location, commute, bedrooms, the home's condition, schools if they matter to you, and how long you plan to live there.
It is also smart to go over the agent's representation agreement and how they will be paid before you agree to work together.
How Your Lender and Agent Work as a Team
Your lender and your agent have different jobs. The lender handles your financing, and the agent guides your home search and negotiations.
When they stay in touch and work well together, the whole process tends to go more smoothly.
Step 5: Shop for Homes That Fit Your Budget
This is when the serious house hunting begins.
Let your preapproval and your own budget guide your search. Keep in mind that two homes at the same price can have different monthly costs because of property taxes, insurance, HOA fees, and other expenses.
For instance, a lower-priced home with much higher property taxes could cost more each month than a slightly pricier home in another area.
Look Past the Surface
Don't get distracted by the kitchen, floors, and paint colors. Check the roof, windows, furnace and air conditioning, foundation, and any signs of water damage. These can affect your upkeep costs down the road.
You don't need a perfect house. You need one that fits your budget, meets your needs, and makes sense for your plans.
Step 6: Write an Offer and Negotiate
When you find the right home, your agent can help you put together an offer.
An offer covers more than price. It can also include the earnest money deposit, your desired closing date, financing terms, inspection terms, and other conditions.
What Does Earnest Money Mean?
Earnest money is a deposit, made according to your purchase agreement, that shows you are serious about buying the home. In most cases, you apply it toward your purchase funds at closing, based on the contract terms.
Look Out for Yourself
Winning the house should not be your only goal. Aim to buy it on terms that protect you and fit your finances.
Before you sign, make sure you understand the agreement's deadlines and conditions, including financing and inspection contingencies.
After the seller accepts your offer, you move into the financing and closing stage.
Step 7: Finish Your Mortgage Application and Loan Processing
With an accepted offer, you and your lender move from preapproval to a full mortgage application and underwriting.
Your lender may ask for updated pay stubs, bank statements, tax documents, employment details, explanations for deposits, or other paperwork to verify your application.
The lender will also order or coordinate the appraisal and check whether the home meets the loan program's requirements.
During underwriting, the lender reviews your finances and the property to decide whether to approve the loan.
Keep Your Money Steady During Underwriting
Now is the time to keep your finances as steady as possible.
Talk with your lender before you open a credit card, finance a car, take out a personal loan, or make large deposits or withdrawals you can't explain. New debt or other financial changes can affect whether you qualify.
Send requested documents quickly. Slow responses can hold up your approval.
Step 8: Schedule the Home Inspection and Set Up Homeowners Insurance
The inspection and the mortgage process usually run at the same time.
A home inspection checks the property's condition and can find problems you might miss during a showing, such as roof issues, plumbing leaks, electrical concerns, or foundation problems.
Inspection and Appraisal Are Not the Same
An inspection looks at the home's condition. An appraisal helps set the home's value for the mortgage.
After reviewing the inspection report, you can decide whether to ask for repairs, request a credit, move forward as is, or use a contract right to cancel. What you can do depends on your purchase agreement and its terms.
Set Up Homeowners Insurance
You will also need to buy homeowners insurance and give your lender proof of coverage before closing.
Step 9: Get Final Loan Approval and Get Ready to Close
After the lender reviews your documents and completes the required checks, your loan can move to final approval and closing.
Your lender and closing agent will handle the remaining details, including final loan terms, closing costs, title work, and the funds needed to complete the purchase.
Read Your Closing Disclosure
For most covered mortgages, you must receive a Closing Disclosure at least three business days before closing. It lists your final loan terms, expected payments, and closing costs.
Compare it to the Loan Estimate you received earlier. Check that the numbers add up, and ask about any changes you don't understand.
Also confirm how much you need to bring to closing and how you can send those funds.
Watch Out for Wire Fraud
Be very careful with wire transfers. Closing scams can include fake emails or texts that look like they came from your agent or title company. Before sending any money, call a phone number you know is real to confirm the wiring instructions.
Step 10: Do the Final Walkthrough and Close
Shortly before closing, do a final walkthrough of the home.
Make sure the home is in the condition you agreed on, the seller has moved out as required, and any agreed-upon repairs are done.
What Happens on Closing Day
At closing, you sign your mortgage and purchase documents, bring the required funds, and complete the last steps to transfer ownership.
Once everything is signed and the funds are sent, you get the keys based on the closing arrangements.
Congratulations, you are officially a homeowner!
Quick Recap: The Order of Steps to Buy Your First Home
Here is the full process at a glance:
Look at your finances and set a budget.
Meet with a mortgage lender.
Get preapproved.
Choose a real estate agent.
Shop for homes.
Write an offer and negotiate.
Finish your mortgage application and underwriting.
Complete the inspection and set up homeowners insurance.
Get final loan approval and get ready to close.
Do the walkthrough, sign the paperwork, and get your keys.
Some of these steps happen at the same time. Your inspection, appraisal, insurance, and underwriting may all be in progress at the same time.
What matters most is getting your finances ready before you commit to buying a home.
Final Thoughts
Buying your first home doesn't have to feel overwhelming. It gets much easier when you know what needs to happen and when.
Jeff Buum's top advice is to start with your finances and a mortgage pre-approval before you start shopping seriously. That gives you a clearer budget, helps you understand your choices, and puts you in a stronger spot when you find a home you love.
You don't have to be a mortgage expert to get started. You need a good plan, clear communication, and a team that explains each step.
If you are thinking about buying your first home in Sioux Falls or southeastern South Dakota, Jeff Buum is happy to help you explore your mortgage options, set a realistic budget, and prepare for what comes next.
Call Jeff Buum at (605) 321-7303 to talk about your homebuying plans.
Frequently Asked Questions
Should I talk to a mortgage lender or a real estate agent first?
Begin by reviewing your finances and talking with a mortgage lender. A preapproval gives you a realistic price range before you start shopping seriously. You can look for a real estate agent around the same time.
How long does it take to buy your first home?
It depends on how fast you get your finances ready, find a home, agree on an offer, and finish the mortgage process. The home search can take weeks or months. After an offer is accepted, financing and closing usually take several more weeks. Every transaction is a little different.
Do I need 20% down to buy my first home?
No. Qualified buyers may be able to put less down with a conventional, FHA, VA, USDA, or other eligible loan program. How much you need depends on the program and your situation.
Does a mortgage preapproval guarantee I will get a loan?
No. A preapproval is an early look at whether you are likely to qualify. Final approval depends on verifying your finances, the property, and the lender’s requirements.
What happens once my offer is accepted?
You complete the mortgage application, submit supporting documents, schedule the inspection, set up homeowners insurance, and work through the appraisal and underwriting process. When the loan and the sale are ready, you prepare to close.
What is the biggest mistake first-time buyers make?
A common mistake is shopping based on the most you can borrow instead of a monthly payment you are comfortable with. Your home affects your finances long after closing, so leave room for repairs, savings, and everyday costs.
Jeff Buum | Fairway Home Mortgage, Heartland Branch | NMLS #400290. Copyright©2026 Fairway Independent Mortgage Corporation doing business as Fairway Home Mortgage. NMLS#2289. 4750 S. Biltmore Lane, Madison, WI 53718, 1-866-912-4800. All rights reserved. This is not an offer to enter into an agreement. Not all customers will qualify. Information, rates and programs are subject to change without notice. All products are subject to credit and property approval. Other restrictions and limitations may apply. Equal Housing Opportunity.
