First-Time Home Buyer Advice: First Quarter 2025

Many home buyers (and prospective home buyers) struggled through the low affordability and high mortgage rates of 2024’s housing market.

Plenty bided their time, waiting for improved conditions. The first quarter of 2025 comes with increased for-sale inventory, anticipated declines in interest rates and pace of home price growth, as well as top emerging cities for first-time buyers.

Preparing yourself is also a major key to homeownership. To help, The Mortgage Reports spoke with industry experts to see what first-time home buyer advice they have to kick off 2025.

In this article (Skip to…)

• Top advice for first-time home buyers
• Best help in low affordability market
• Does your local market favor buyers or sellers?

Expert advice for first-time home buyers

The housing market can be a tough and sometimes confusing place to navigate — especially for first-time buyers. Home buying conditions are in a constant state of flux, shifting over time and geography.

To shed some light and (hopefully) make matters easier, The Mortgage Reports got insights from experts in the field to help borrowers in 2025’s first quarter. Answers have been edited for brevity and clarity.

What’s the top piece of advice you’d give first-time home buyers in 2025’s first quarter?

Miki Adams, president at CBC Mortgage Agency:

We’ll see what changes come along with the new administration, but my advice would be not to wait. If you’re a first-time home buyer, definitely connect with a HUD-approved housing counselor and work on developing and understanding the budget that you’ll need to own a home. Look at the ways you can save to build that home purchase fund that you might need and consider down payment assistance.

Ralph DiBugnara, president at Home Qualified:

We are in a tough market to buy a home because of high interest rates and lack of homes for sale. But stay vigilant because it makes more sense long-term to buy a home rather than when rates drop and the market is once again flooded with home seekers. If you already own a home, rates dropping will allow you to refinance and lower the payment on a property that has increased in value.

Danielle Hale, chief economist at Realtor.com:

First-time home buyers in today’s market need to be financially prepared with a good amount of savings for a down payment and closing costs, however, they might not need as much money as they think they do. Advice from older generations is often to aim for 20%, but not many buyers, particularly first-time buyers, hit that level. Mortgage products like FHA loans — which permit down payments of 3.5% — and VA and USDA loans — which permit as little as zero down payment — can open the door to homeownership for those who don’t have a big pile of cash to use.

In today’s market, another consideration for first-time buyers is that they think medium-to-long-term. With the costs of rent so far below the costs of buying in many markets, today’s home shoppers face a much longer break-even horizon. That just means that in order for buying to be the better financial decision, first-time buyers likely want to plan to stay in a home more than 7 years, whereas sometimes as little as 3 to 5 years is expected.

Rick Sharga, CEO at CJ Patrick Company:

Don’t try to time the market — it rarely works with stocks, and almost never works when it comes to buying a house. Only buy what you can reasonably afford given whatever the current market conditions are. And since there’s concern about home values in certain markets across the country, only buy if you’re reasonably sure you’re going to stay there for the next few years. Home prices historically have always gone up over time, but they do fall sometimes, and you don’t want to be in a position where you need to sell if your home value has dipped below what you paid for it.

Affordability may improve over the course of next year, home price appreciation is slowing down, wage growth continues to be healthy, and it’s possible mortgage rates will improve at least a little bit. And the latter part of the year is often better for buyers since there’s less activity, and sellers are sometimes more willing to negotiate. So don’t rush to buy in the first quarter; find what you like and can afford, even if it takes a few more months than you’d like.

Sam Williamson, senior economist at First American:

Shop around for mortgage rates. According to a 2023 study by the Consumer Finance Protection Bureau, mortgage rates can differ by around 50 basis points of the annual percentage rate. Shopping around for cheaper lenders can result in $100 a month (or more) of savings for first-time home buyers in today’s high-interest rate environment. Failure to shop is money lost.

What’s the best thing a prospective buyer can do to help themselves in this low affordability market?

Adams: Don’t wait because I don’t think that we’ll have an answer to the affordability issues soon. It will take some time, housing costs and closing costs continue to go up. The fee for credit reports is going up… Now is the time to start building that equity.

DiBugnara: To buy in this market, a prospective homeowner is going to be required to make sacrifices. Costs are high and the homes available are low. Finding homes that are below their budget and committing to make improvements over time is in my opinion the best value play.

Hale: Being informed is always a good move in any market conditions, and we have tons of data and research insights available to help. Another consideration in a low-affordability market is to not get carried away. It can be tempting to stretch your monthly budget or deplete your post-purchase savings account. This might work for the very young who have high earnings growth potential ahead or can rely on the bank of mom and dad as a safety net, but for other buyers it can put them in a potentially precarious position. Run the numbers, set a budget, and set up your home searches accordingly to keep yourself from getting carried away.

Sharga: There are a few ways to improve affordability, at least marginally. Look for smaller, slightly older homes; if you’re handy, look for homes that need a little TLC, as they’ll often be priced more attractively. Think about moving a little further from the city — prices tend to decline the further you get from city centers in many markets. Shop for your mortgage, and don’t automatically take the first loan offer you get. Set aside as much money as you can for a down payment — the bigger the down payment, the lower the monthly cost will be. And look into down payment assistance programs; there are literally dozens and dozens of them out there, and most lenders allow those funds to be used.

A couple of more extreme examples: look into manufactured housing — today’s manufactured homes are often extremely well built and high quality, and they cost less to build, so also cost less to buy; and if your situation permits, consider taking on a tenant and renting out a spare room to offset some of your monthly mortgage costs, or purchase a property with a family member — there are a growing number of multi-generational households across the country today, and affordability is one of the reasons for this.

Williamson: In addition to comparing mortgage rates, prospective buyers should focus on strengthening their financial profile to improve their chances of qualifying for a mortgage with a good rate. This includes saving for a larger down payment, reducing existing debts, and boosting their credit score. Additionally, consider exploring down payment assistance (DPA) programs. There are thousands of DPA programs available nationwide and locally, offering grants, loans, and credits to help qualified home buyers.

What’s a good way to tell if your local housing market favors buyers or sellers?

Nick Boniakowski, head of agent partnerships at Opendoor: While the housing market can be unpredictable, you can determine if the local market favors buyers or sellers by analyzing trends like delistings, speed of home sales and the number of active shoppers. Are prices increasing or decreasing in the area? If prices have been growing over several months, that’s a seller’s market — indicating buyers are willing to meet sellers where they are. You can also look at available local inventory. A balanced market, favoring neither buyers nor sellers, generally has several months of inventory. If there’s a surplus of inventory, the market favors buyers, and if there’s scarcity, the market favors sellers. Keeping a pulse on the nuances of the market helps any homeowner make more informed decisions.

DiBugnara: A good way to gauge the local market is if homes are staying on market a long time, and/or having price drops, these are signs of a buyer’s market. If open houses are full, homes are selling in less than 30 days with multiple offers and bidding wars are normal, you are experiencing a seller’s market.

Mark Fleming, chief economist at First American: The best way to tell when you are in a buyer’s or seller’s market is if you are competing with others to purchase a house. Many competing bids indicate a seller’s market — the seller gets to choose who they sell to. Zero, or only one or two bids, and the buyer is in control.

Renee Gaugler, loan officer at Cornerstone Home Lending: The best way is to connect with a really good Realtor. They know the market better than anyone and can really help you with that. Another way to determine this is to look at online home listings. If you see a lot of properties showing “price reduced” or showing more than 45-60 days on market, that’s a good indicator that it’s more likely a buyer’s market. If the only properties available have been on the market for just a few days and there isn’t a lot of inventory to choose from, then that’s an indicator of more of a seller’s market.

Hannah Jones, senior economic research analyst at Realtor.com: Buyers can get a sense of buyer-friendliness by using a site such as Realtor.com and taking stock of how long homes are sitting on the market, how many homes are seeing price reductions, and how many homes are for sale. Markets that are leaning more buyer-friendly will likely see ample inventory, longer time on market, and more price reductions. Shoppers can also rely on a local Realtor to guide them on how flexible sellers may be according to what they are seeing in the market.

Steve Miller, branch manager at Embrace Home Loans: In general, when you have a market that is serving up a low supply of inventory, this usually indicates a sellers’ market. However, if you notice a particular community or region that is seeing properties on the market for more than 30-45 days, this could be an indication where buyers have the ability to secure a home with contingencies such as inspections, appraisals, and financing that allows them a period of due diligence prior to settling. In some unique circumstances, it may also create opportunities for buyers to achieve seller subsidies or financial concessions to offset their closing costs.

The bottom line

Buying your first home could be as daunting as it is exciting. But preparing yourself and heeding advice from professionals can help you navigate the housing market.

If you’re ready to begin your path to homeownership, find a local lender and real estate professional you trust to get started.