Preparing to Buy Your First Home in 2025: Trends, Tips, and Tools

All set to buy your first home in 2025? Congratulations! It’s a big step - a milestone that is worth celebrating, just like your first child! 

Buying a home is a huge financial decision. As the housing market in the US evolves & grows, first-time home buyers face both exciting opportunities and potential challenges. If you are unsure in any way, we’re here to help; you can walk into our offices for an in-person consultation. Alternatively, you can access our online resources on the Total Mortgage website to help guide you if you are choosing to make the decisions on your own.

Keep reading through this home-buying guide as we take you through this challenging landscape.  

 

The 2025 Housing Market Landscape

The housing market in the US is impacted by different factors, including demand and supply, government policies, and shifts in the economy. As first-time buyers, you need to have a proper understanding of these vibrant dynamics as they are ever-evolving. The right knowledge helps you make the right decision in securing the appropriate property for your family at the right price.

Market Trends to Watch Out For

Moderate price increases are expected in the housing market in most regions of the US. That is because the demand is steady compared to the limited supply of inventory. The price might stabilize in some parts of the country. Although in urban areas, high demand for houses, especially amongst first-time homebuyers, can put pressure on home prices. 

In the United States, a 30-year fixed-rate mortgage is one of the most preferred mortgage loan types chosen by most homebuyers. Therefore, let’s go through some projections for a 30-year fixed-rate mortgage in 2025: 

• Mortgage Interest Rate Forecast: As per Fannie Mae, the average rate of interest for a 30-year fixed mortgage will be around 6.4% throughout the year. 

• Sales of Existing Homes: Sales are expected to grow moderately as buyers adjust to higher prices and mortgage rates. However, if mortgage rates decline, transactions could experience a surge.

• Changes in Real Estate Commissions and MLS Listings: New policies regarding real estate commissions and the sharing of home listings on public MLS systems are expected to vary regionally before national rules are fully enforced.

• Newly Built Homes: Newly constructed homes will continue to help fill the supply gaps caused by the limited inventory of existing homes. Homebuilders may also offer incentives like buying down mortgage rates to attract buyers.

As first-time homebuyers, you need to keep track of the mortgage interest rate forecasts for 2025. While the interest rates were on a rising trend in 2024, the rates are expected to stabilize this year. This can be an opportunity for buyers. Homebuyers are recommended to stay informed about the changing rate trends. 

Stay updated on the current mortgage rates by checking the Total Mortgage website. The rates are updated twice every day. 

Government-Backed Loan Programs

Homeownership will remain accessible through programs with FHA loan requirements, down payment assistance, VA home loan benefits, and first-time homebuyer USDA loan eligibility criteria. These programs will continue to help first-time buyers with affordable financing options and support their homeownership journey with competitive terms. 

Affordability and Budget Planning

Budget planning is crucial. But this can be a complex task. You can use a tool like our home affordability calculator to make the most accurate estimates and set realistic expectations in your home-buying journey.

 

Essential Steps for First-Time Buyers

The home-buying process steps can seem overwhelming initially. But as you proceed, things will start to make more sense. If you need help making the journey stress-free, you can speak with our team at Total Mortgage. We will assist you to make things easier for you.

Step 1 - Evaluate Your Finances

The most important thing is assessing your financial situation. Take a look at your income, savings, and credit score. Make use of an online affordability calculator to get an estimate of the price that you can afford to pay. 

Step 2 - Save for a Down Payment

In most cases, the down payment is one of the biggest obstacles for first-time buyers. In the case of conventional loans, you may need to pay up to 20% of the mortgage amount for a down payment, which is definitely a huge amount that can be financially burdening for you.  Therefore, consider a down payment assistance mortgage to make the homebuying journey a bit easier. 

Step 3 - Prequalification for a Loan

The next step in the process of home buying is the home loan pre-qualification. This step is important as it gives you an estimate of the amount that you can borrow. It helps you shortlist properties based on your pre-qualified loan amount. Here is a quick guide to getting mortgage pre-approval. 

Step 4 – Hire the Right Professionals

Now is the time to approach professionals who can make this process of home buying cost-effective and worthwhile for you. For example, you need to have inspectors who will inspect the shortlisted home as per a home inspection checklist to ensure that there are no issues with the property. Similarly, real estate agents will help cover the target market,  shortlist properties, and also negotiate on your behalf for the best deal.

Step 5 - A Home Buying Checklist

Take the help of a home-buying checklist so that you are sure that all the major steps and milestones are covered to secure the best deal. 

 

Explore Home Loan Options & Understand Their Benefits

As a first-time home buyer, you must gather information about relevant home loan options offered by the government as well as private lenders. 

Here's a quick overview of some popular loan categories and options to consider:

Conventional Loans

These loans usually offer affordable conventional mortgage rates with predictable terms. However, your credit score and history must be sound. Additionally, you should be able to make a larger down payment to access this loan. 

Government-Backed Loans

First-time homebuyers can take advantage of government-backed loans like:

• FHA Loans - These loans are best for homebuyers with a low credit score or those who cannot afford a large down payment.  FHA loan requirements are usually homebuyer-friendly. FHA loans include 15-year fixed, FHA 203K, and FHA Streamline loans. 

• USDA Loans -  These loans are for homebuyers who are keen to buy homes in rural areas. You can expect 100% financing for eligible properties. These loans are available as USDA 30-year fixed loans and USDA streamline loans. 

• VA Loans - These loans can be accessed exclusively by people in military services, veterans, and spouses. VA home loan benefits are no down payment and competitive interest rates. Loans include VA 15-year fixed loans and VA Streamline loans. 

Adjustable vs. Fixed-Rate Mortgages

A fixed-rate mortgage is one where the rate of interest is locked for the entire loan term. Thus, your monthly payments are fixed. 

On the other hand, an adjustable-rate mortgage usually has a fixed rate in the initial years, and then the rate is adjusted after the end of the fixed-rate period. In this case, the rates are initially lower, but there is the risk of increasing rates in the future, subject to market conditions. 

Under the ARM category, lenders usually offer 10/1 ARM, 7/1 ARM, FHA 5/1 ARM, Jumbo 10/1 ARM, Jumbo 5/1 ARM, and Jumbo 7/1 ARM.

 

Take Advantage of Interactive Tools and Resources to Buy a Home in 2025

Make the most of our interactive tools to simplify your homebuying process. Use our mortgage calculator to determine monthly payments and compare loan options, while the refinance calculator helps you evaluate potential savings from refinancing your current mortgage. These tools give valuable insights to guide your financial planning and decision-making.

You can also use our other digital resources, like loan comparison tools and informative articles on housing market trends, homebuying tips, and loan updates, to help you make informed decisions. 

 

Seek In-person and Online Support from the Total Mortgage Team to Buy a Home in 2025

Get started with your homebuying journey in 2025 with Total Mortgage’s in-person or online consultation and support. If you need help in person, please visit our nearby branches; otherwise, we’re also available for online assistance regarding your home loan approval process.

Alternatively, you can check our website, which offers a range of resources, including tools to check your pre-approval status to help you streamline and fast-track your path to homeownership. Whether in person or online, we’re committed to making your homebuying experience as smooth and convenient as possible.