12 Home Buying Mistakes To Avoid By First-Time Homebuyers

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12 Common Home Buying Mistakes and How to Avoid Them (2026 Guide)

Buying a home is one of the biggest financial steps you’ll ever take. It’s exciting, emotional, and expensive when things go wrong if you’re not careful. At Gustan Cho Associates, we’ve helped thousands of homebuyers avoid costly errors that can delay closings, drain savings, or even lead to foreclosure.

Avoiding the common pitfalls when buying a home can help you prevent regret later. Whether you’re a first-time buyer or moving up to your next home, knowing what not to do is just as important as knowing what to do.

Key Takeaways

• Plan before you shop. Get pre-approved and set a comfortable budget before falling in love with a house.
• Don’t skip inspections. A few hundred dollars up front can save thousands in hidden repairs.
• Think long term. Choose the right neighborhood, loan program, and payment that fits your lifestyle—not just what you qualify for.
• Work with experts. A good loan officer and real estate agent can help you avoid 90% of buyer mistakes.
• Stay consistent. Avoid new credit, job changes, or large purchases until after closing.

What Are the Biggest Home Buying Mistakes First-Time Buyers Make?

First-time buyers often rush into the process. They focus on finding the “perfect home” but overlook the financial steps that make ownership sustainable. Buying a house isn’t just about qualifying for a mortgage—it’s about building a stable foundation for your future.

The most common pattern we see? Buyers fall in love with a property before understanding their numbers, loan options, or long-term responsibilities. That’s why the best first step isn’t looking at houses—talking to a trusted lender who can explain your full range of options.

Mistake #1 – Buying More House Than You Can Comfortably Afford

Just because you qualify for a certain loan amount doesn’t mean it’s wise to use every penny. Lenders use debt-to-income ratios (DTI) to determine eligibility—FHA allows up to 56.9% in some cases—but that doesn’t account for lifestyle, savings, or unexpected repairs. Some approvals can allow higher DTIs, but your comfort budget matters more than the max guideline.

Example:

You might qualify for a $2,500 mortgage payment, but if that leaves no room for car maintenance, kids’ activities, or medical bills, you’re setting yourself up for stress.

How to Avoid It:

• Create a detailed monthly budget before you shop.
• Aim for a payment that feels comfortable, not stretched.
• Save an emergency fund that covers 3 to 6 months of your expenses.

Mistake #2 – Skipping the Mortgage Pre-Approval Process

One common home buying mistake is looking at houses without getting pre-approved. Pre-approval is important. It shows sellers that you’re really interested in andand it also helps you get a grip on your budget.

At Gustan Cho Associates, we offer a 21-Day Fast Track TBD Loan Program that allows you to get fully underwritten before finding a property. That means faster closings and stronger offers.

Avoid this mistake by:

• Get a verified pre-approval before your first home tour.
• Asking your loan officer for a TBD (to-be-determined) approval for confidence in competitive markets.

Mistake #3 – Ignoring Credit Preparation Before Buying a Home

Your credit score affects everything—your rate, loan program, and how much you pay each month. Too many buyers wait until they’re ready to apply before checking their credit.

How to Avoid It:

• Review your credit report 3–6 months before applying.
• Pay down credit cards below 30% of their limits.
• Avoid opening or closing accounts.
• Ask your loan officer how to boost your score efficiently.

Even a 20-point increase can save you thousands over the life of your mortgage.

Mistake #4 – Skipping a Home Inspection to Save a Few Hundred Dollars

When the market is hot, some buyers skip inspections to make offers more attractive. This can turn your dream home into a financial nightmare.

A professional inspection can uncover hidden problems—foundation cracks, plumbing leaks, faulty wiring, or roof issues. Investing a few hundred dollars now can prevent you from incurring greater expenses in the future.

Pro Tip:

Always attend your inspection and ask questions. The report can also be a negotiation tool for repairs or seller credits before closing.

Mistake #5 – Falling in Love with the Wrong Location

We’ve all heard “location, location, location.” Many buyers focus on the house but forget to evaluate the neighborhood.

A home that seems perfect on the inside might be next to loud railroad tracks or far from good schools. If you plan to sell later, poor location choices can hurt your resale value.

How to Avoid it:

• Visiting the area at different times of day.
• Talking to neighbors about traffic and safety.
• Researching schools, parks, and local amenities.
• Checking commute routes and noise levels.

Mistake #6 – Not Comparing Loan Options and Lenders

Every lender has different rules. Some have lender overlays, meaning stricter requirements than what the FHA, VA, or Fannie Mae guidelines actually allow.

At Gustan Cho Associates, we have no lender overlays on government and conventional loans. That means you’re approved if you meet the agency guidelines—no unnecessary roadblocks.

How to Avoid It:

• Compare lenders beyond just interest rates.
• Ask about overlays, fees, and turnaround times.
• Choose a lender that clearly explains your options, not just quotes numbers.

Mistake #7 – Forgetting About Closing Costs and Hidden Expenses

A typical first-time home buying mistake is not estimating how much money they’ll need at closing. Costs like appraisal, title insurance, escrow fees, and taxes can add up to 2–5% of your home’s purchase price.

Avoid this mistake by:

• Asking your loan officer for a detailed cost estimate early.
• Negotiating seller credits or lender-paid closing costs.
• Keeping some funds for moving, utilities, and minor upgrades after closing.

Owning a home also means paying for maintenance, HOA dues, and annual property taxes—budget for those from day one.

Mistake #8 – Making Major Financial Changes Before Closing

Even after approval, your lender will re-check your finances before closing. Opening new credit cards, financing furniture, or changing jobs can delay or derail your mortgage.

Avoid this mistake by:

• Keeping your financial situation stable until after closing.
• Avoiding new debt or large purchases.
• Consult with your loan officer before making any major financial decisions.

A simple “Can I do this?” phone call can save your loan.

Mistake #9 – Waiving Contingencies in a Competitive Market

In fast markets, buyers sometimes waive appraisal or financing contingencies to strengthen offers. While this can win a bidding war, it can also expose you to big risks—like overpaying or losing your earnest deposit.

Better approach:

• Get a full underwriting approval before shopping.
• Offer a larger earnest deposit instead of waiving protections.
• Work closely with your lender and agent to craft a competitive but safe offer.

Mistake #10 – Not Working with an Experienced Loan Officer

Your loan officer is your guide through the mortgage maze. An inexperienced one might miss details, cause underwriting delays, or give poor advice about loan programs.

At Gustan Cho Associates, our loan officers work seven days a week and specialize in helping borrowers whom other lenders can’t approve. Over 80% of our clients come to us after being denied elsewhere.

How to Avoid This Mistake:

• Choose a loan officer with experience in your loan type.
• Ask about communication style and availability.
• Check reviews and success stories from past clients.

Mistake #11 – Failing to Plan for Maintenance and Repairs

When you rent, your landlord handles repairs. When you own, that’s on you. Many homeowners forget to budget for upkeep and put repairs on credit cards.

Rule of thumb:

Set aside 1% of your home’s value per year for maintenance. If your home is worth $350,000, plan to save about $3,500 annually.

Pro Tip:

Create a “home emergency fund” for items that insurance doesn’t cover, such as HVAC issues or plumbing leaks.

Mistake #12 – Thinking You Have to Do It Alone

Buying a home can feel overwhelming—but you don’t have to navigate it solo. Between your agent, loan officer, and inspector, you have a team of experts ready to help.

What to Do Instead:

• Ask questions, even if they seem basic.
• Let your loan officer know if anything changes.
• Remember: the best buyers are informed buyers.

Case Study: How One Buyer Avoided Costly Home Buying Mistakes

Meet Jennifer, a first-time buyer from Illinois. She was pre-approved with another lender for a $400,000 home and found a property she loved. The problem? Her loan officer never explained debt-to-income ratios or future expenses.

When she called Gustan Cho Associates, we reviewed her full financial picture. We discovered that with taxes, insurance, and HOA dues, her actual payment would stretch her budget dangerously thin.

We helped her:

• Find a home for $340,000 that fits comfortably within her means.
• Lock in a lower rate through a lender with no overlays.
• Close in just 21 days with our Fast Track TBD Program.

Now Jennifer has an affordable home and a cushion for emergencies—a perfect example of how expert guidance can prevent long-term regret.

How Gustan Cho Associates Helps You Avoid Home Buying Mistakes

At Gustan Cho Associates, we believe homeownership should be rewarding, not stressful. We aim to help you buy a home the right way—without unnecessary denials or last-minute surprises.

Here’s why thousands of homebuyers choose us every year:

• No Lender Overlays: We follow actual agency guidelines, not extra rules.
• More Loan Options: FHA, VA, USDA, Conventional, Non-QM, and specialty loans.
• Fast Closings: Many loans close in 21 days or less.
• Personal Service: Loan officers are available 7 days a week.
• Expert Guidance: We walk you through every step—from pre-approval to closing.

Buying a home shouldn’t feel like guesswork. Let our team guide you through the process and help you avoid the home buying mistakes that catch many first-time buyers.

Conclusion: Avoid Home Buying Mistakes with Expert Guidance

Buying a home is exciting, but even small missteps can have lasting effects. The good news is that you can avoid nearly all home buying mistakes with the right preparation and a trusted team on your side.

At Gustan Cho Associates, we guide borrowers through the entire process, making sure every step supports their financial goals, not just their dream home.

Don’t guess. Don’t rush. Buy smart. Buy prepared. Buy with Gustan Cho Associates.

Call 800-900-8569 | Email alex@gustancho.com | Text for a fast response—our team is here seven days a week.

Frequently Asked Questions About Home Buying Mistakes:

Q: What are the Most Common Home Buying Mistakes People Make?

A: The most common home buying mistakes include buying more than you can afford, skipping a home inspection, and not getting pre-approved before house hunting. These small mistakes can turn into big financial problems later.

Q: How Can I Avoid Home Buying Mistakes as a First-Time Buyer?

A: You can avoid home buying mistakes by getting pre-approved early, setting a realistic budget, checking your credit, and working with an experienced loan officer. Having the right team makes the process smoother and less stressful.

Q: Is Buying a Home I Can Barely Afford a Big Mistake?

A: Yes. One of the biggest home buying mistakes is buying a home that stretches your budget too far. Even if you qualify for a higher loan amount, choose a monthly payment that fits your lifestyle and expenses comfortably.

Q: Why is Skipping a Home Inspection a Bad Idea?

A: Skipping a home inspection is one of the most expensive home buying mistakes. A good inspection helps you find hidden problems—like roof leaks or plumbing issues—before you buy the house.

Q: Can Choosing the Wrong Neighborhood be Considered a Home Buying Mistake?

A: Absolutely. Buying in the wrong area is one of the most overlooked home buying mistakes. Before making an offer, you should research the neighborhood, schools, safety, and traffic.

Q: Do Home Buying Mistakes Only Happen to First-Time Buyers?

A: No. Even experienced homeowners make home buying mistakes. Market changes, emotions, or bad advice can lead anyone to make poor decisions without proper guidance.

Q: How do I Know if I’m Working with the Right Lender?

A: The right lender will explain all your options, answer questions clearly, and help you find a loan that fits your goals. At Gustan Cho Associates, we help borrowers avoid home buying mistakes with honest, no-overlay lending and fast closings.

Q: Are Home Buying Mistakes Permanent, or Can They be Fixed?

A: Some home buying mistakes can be fixed—like refinancing to lower your payment—but others, like buying in a bad location, can be harder to change. It’s always better to prevent mistakes than to fix them later.

Q: What’s the Biggest Financial Mistake Buyers Make Before Closing?

A: A major home buying mistake before closing is changing jobs, opening new credit cards, or financing big purchases. These can hurt your loan approval or delay your closing date.

Q: How Can Gustan Cho Associates Help Me Avoid Home Buying Mistakes?

A: Gustan Cho Associates helps you avoid home buying mistakes by guiding you through every step—from pre-approval to closing. We offer many loan programs, no lender overlays, and expert loan officers available seven days a week.

This article “Home Buying Mistakes To Avoid By First-Time Homebuyers” about was updated on December 29th, 2025.