First-Time Home Buyer Advice: Fourth Quarter 2025

Expert guidance 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 by geography.

Strained affordability pushed many prospective home buyers to the sidelines in recent times. However, conditions are improving in many places around the country.

To gain insights and (hopefully) make matters easier, The Mortgage Reports spoke with industry experts to help guide borrowers in 2025’s fourth quarter. Answers may have been edited for brevity and clarity.

In this article (Skip to…)

• What is unique about Q4’s housing market?
• What programs should first-time buyers leverage?
• Top advice for Q4 first-time home buyers

What makes the fourth quarter’s housing market and/or home buying conditions unique?

Hector Amendola, president at Panorama Mortgage Group:

Many markets are shifting into what we would call a buyer’s market. That gives buyers more leverage to find the right home at the right price. Sellers are often offering concessions such as covering closing costs or reducing list prices, and competition is less intense than in recent years. This creates an opportunity for buyers to secure a home they love in the neighborhood they want, often with better terms.

Ralph DiBugnara, president at Home Qualified:

This year’s fourth quarter market is different because of a combination of lower mortgage rates as well as a year of decreased real estate sales. Almost all markets have seen a reduction in homes sold compared to 2023 and 2024. Buyers have gotten priced out because of a lack of homes for sale and unaffordable payments based on elevated interest rates. In September, mortgage rates hit their lowest levels of 2025 and it’s starting to reignite buyers coming to market. That, plus an increase of refinances, means more cash to buy and gives a busy outlook for the quarter.

Charles Goodwin, head of bridge and DSCR lending at Kiavi:

Less competition and motivated sellers. It’s the biggest buyer’s market we’ve seen in a long time. As the holiday season approaches, many potential buyers and sellers put their plans on hold. This seasonal slowdown means there are typically fewer buyers competing for homes, which can give you more leverage. Sellers who list their homes in Q4 are often highly motivated to close a deal before the end of the year. This motivation can lead to more willingness to negotiate on price, closing costs, or home repairs.

Joey Hansen, senior loan officer at Group Mortgage:

We may see some of the market’s “stubbornness” ease up in the fourth quarter. For much of the year, buyers have pushed for steep price reductions to offset higher mortgage rates, and sellers have tried to resist and hold firm in hopes of maximizing their profits. If interest rates continue to tick lower, we could see affordability improve for buyers, and transaction volumes rise for sellers.

Hannah Jones, senior research analyst at Realtor.com:

The fourth quarter typically brings seasonal advantages for home shoppers, and this year shifting market conditions may amplify them. October has historically been the best month for buyers, offering more inventory, less competition, and lower prices compared to the summer peak. In 2025, the market is the most buyer-friendly it has been in years, and mortgage rates have eased from earlier highs. Together, these trends suggest buyers may find better opportunities than in recent years. Still, with rates above 6% and sticky home prices, many low- to middle-income and first-time buyers may continue to face affordability challenges.

Tony Julianelle, CEO at Atlas Real Estate:

Rates are off the 2025 highs but choppy. The 30-year fixed has hovered near the low-6s in late September (Freddie Mac PMMS ~6.30% on Sept. 25), and forecasters Paul often cites are clustered ~6.3%–6.7% into Q4. Translation: better than the summer peaks, not a straight glide path. Demand signals are thawing from very low levels. Pending home sales rose 4.0% in August and 3.8% YoY—momentum that tends to spill into Q4 closings. Existing sales were essentially flat MoM but up YoY in several regions. Buyers are probing again when payments pencil.

Builders are dealing—hard. Confidence is weak, but future sales expectations just hit a six-month high as they dangle incentives and price trims (nearly two-thirds offering incentives per NAHB). Q4 is seasonally deal-friendly and builders want to make the year. A fresh supply wildcard: tariffs. New/raised lumber and wood-product tariffs into October add modest cost pressure to new homes—UBS pegs it at roughly ~$1,000 per unit—so some builders may pull forward price protection and rate-buydown offers before those costs flow through.

Macro sets the floor. Core PCE is still above target (~2.7% YoY for August). If inflation re-accelerates—or tariffs ripple into goods prices—rate relief could stall. Q4 is a window, not a guarantee.

Shawn King, EVP and co-founder at Arrive Home:

We’re going to see mortgage rates settle in the 6% range for the remainder of 2025. While this is still higher than many remember from previous years, it’s better than what we saw in 2023-2024, so we may see consumers accepting these conditions and opting to make a purchase in Q4.

We’re seeing our average price per transaction drop several percentage points right now, so it’s a more favorable time to buy than it has been in recent months. This, coupled with the fact that there’s an uptick in supply with homes staying on the market longer, that has created an opportunity window for buyers in the market right now.

We’re also seeing other indicators that are signaling increased affordability. For example, our lender interest-rate securitizations have dropped about 15 basis points from the same time last year. While it will likely take the market a month or so to realize that reduction, it’s bound to instigate some market activity.

Sam Williamson, senior economist at First American:

The fourth quarter brings a housing market in transition. In many Southern and Western metros, buyers are gaining leverage as inventory rises and price cuts become more common. In contrast, supply remains tight in the Midwest and Northeast, keeping competition and prices elevated. What stands out this season is growing seller frustration.

Despite active listings topping 1 million for the fourth consecutive month in August, pending sales remain near multi-decade lows, and homes are lingering longer on the market. Rather than adjust prices, many sellers are pulling listings, unwilling to meet buyers where they are. While falling mortgage rates and steady income gains are nudging affordability in the right direction, elevated home prices continue to constrain demand. The result: a market at a stalemate, with buyers and sellers waiting each other out.

What advantages or programs should first-time home buyers leverage?

Amendola: This environment is especially favorable for down payment assistance programs. In a competitive seller’s market, sellers tend to favor offers with stronger cash positions, and buyers using assistance programs can be at a disadvantage. But in today’s market, sellers are far more open to these types of offers. That means first-time buyers can access valuable programs that reduce upfront costs without worrying about being overlooked.

Goodwin: First-time buyers can leverage several programs and benefits to make homeownership more accessible and affordable. FHA loans require as little as a 3.5% down payment and have more lenient credit score requirements than conventional loans. Conventional loan programs like HomeReady and Home Possible backed by Fannie Mae and Freddie Mac, can allow for a down payment as low as 3%. Many states, counties, and cities offer grants and low- or no-interest loans to help with down payments and closing costs. These can often be combined with other loan programs. Also, first-timers should not be afraid to negotiate!

Hansen: First-time home buyers should do their homework before they shop. There are programs designed just for you, including low down payment options, affordable housing loans, and other incentives that can make a real difference in both your interest rate and overall affordability. When comparing lenders, ask directly: “As a first-time buyer, what programs or benefits can you offer me?” You might be surprised at the savings and flexibility available. And don’t forget to look at the seller’s side of the table. Many sellers are willing to help by covering part of your closing costs or even buying down your interest rate. These are called seller concessions, and they can give your budget some breathing room.

Jones: First-time buyers can soften affordability challenges by leveraging federal loan programs like FHA, VA, USDA, or exploring low down payment options from Fannie Mae and Freddie Mac. Many states and cities also offer down payment assistance, tax credits, or savings accounts to help with upfront costs.

In today’s market, builder incentives, seasonal advantages, and seller concessions can further reduce expenses. Along with incentives, such as mortgage rate buydowns, builders are increasingly catering to buyer demand by building smaller, more affordable homes, which may be a great option for first-time buyers. By utilizing the programs for first-time home buyers and taking advantage of more favorable market dynamics, first-time buyers can expand their options and improve affordability despite high rates and prices.

Julianelle: Down-payment assistance is deeper than people think. The count of programs hit a record high this summer; more allow repeat buyers and first-gen buyers, widening eligibility. Pair DPA with a 3%-down conforming, 3.5%-down FHA, or zero-down VA/USDA to compress cash to close.

Builder incentives plus temporary buydowns. Q4 is prime time for 2-1 buydowns, closing-cost credits, and option incentives on spec homes. Stack these with lender credits and DPA to reduce both monthly and upfront costs (NAHB notes incentives remain widespread). Programs matched to profile. FHA for thin credit or higher DTI; HomeReady/Home Possible for 3% down with income-based pricing breaks; VA/USDA for eligible zero-down borrowers.

King: First-time buyers who were considering utilizing down payment assistance last year will see that it is notably cheaper to do with the recent rate drop. This is good news for those who need help covering the down payment on a home and could take advantage of DPA programs out there that support that. First-time buyers should look into what DPA programs lenders are offering and see how it might help them make their purchase more achievable.

Williamson: First-time buyers should take full advantage of programs designed to reduce upfront and monthly costs. Low down payment programs, such as FHA (3.5% down) and VA loans, can significantly lower entry barriers. Many state and local housing finance agencies also provide down payment assistance or closing cost grants, which can make a meaningful difference in today’s high-cost environment. Beyond financing programs, first-time buyers can also leverage builder incentives on new construction, such as closing cost credits, free upgrades, and rate buydowns that reduce monthly payments. Cash-strapped buyers can also consider lender credits to offset closing costs—though these often come with higher interest rates. Finally, buyers can check with their employer to see if any homeownership benefits, such as employer-sponsored mortgage discounts, are available.

What’s your top first-time home buyer advice for Q4 2025?

Amendola: Don’t try to time the market. It’s nearly impossible, and many people who waited for the “perfect” time in past years ended up watching prices climb. Now some are still waiting for a crash that may never come. Instead, focus on your own readiness. If you find a home that fits your needs and budget, that’s the right time to buy.

DiBugnara: Create a budget and stick to it. There are still not enough homes for sale to meet demand if mortgage rates drop much lower. The demand will increase and bidding wars will be upon us again. It’s important to not overpay for a house that isn’t yours out of fatigue from multiple rejected offers.

Goodwin: Get your finances in order now. Before you start house hunting, get pre-approved for a mortgage. This shows sellers you’re a serious buyer and can help you act quickly when the right home comes along. Pay down debt and avoid taking on new credit to boost your credit score and improve your debt-to-income ratio.

With mortgage rates still elevated and inventory tight in some areas, you may need to adjust your expectations beyond your dream house. Consider smaller homes, different neighborhoods, or properties that need some minor cosmetic updates. A “turnkey” property that’s move-in ready might be worth the cost if you can’t afford renovations later.

Don’t be afraid to negotiate with sellers. In a less competitive market, you can often ask for concessions like the seller covering closing costs or making certain repairs. Work with a knowledgeable agent who is an expert in your desired area. They can help you find motivated sellers, identify negotiating opportunities, and navigate the nuances of the Q4 market.

Hansen: Preparation is everything. A full preapproval, or better yet, a loan that’s already underwritten, helps your offer rise to the top and gives sellers confidence you can close. If you need down payment help, don’t wait until you’ve found “the one” to call a family member for a gift. Line up those funds now so they’re seasoned, documented, and ready when it counts. And be sure to talk through documentation early on in the process. If a family member is helping you, make sure they know in advance what paperwork will be needed. That way, there are no surprises or delays once you’ve found your perfect home.

Jones: Solid planning is key to a successful homebuying experience. While the market has softened, persistently high mortgage rates and prices mean affordability remains a challenge. Setting, and sticking to, a realistic budget is essential to ensure housing costs stay manageable over the long term, rather than relying on the hope of refinancing later. Working with a real estate agent is a great way to get boots-on-the-ground knowledge about your local market. An agent can also help you navigate favorable negotiations, especially as homes sit longer and sellers are eager to close.

Julianelle: Get payment-first, house-second. Underwrite your monthly at today’s rate band (~6.3%–6.7%) and only treat future refis as upside, not plan A. Lock with a float-down if available. Shop the total offer, not just price. A $12k seller credit that buys the rate down 75–100 bps often beats a $12k price cut for year-one affordability. Builders are motivated in Q4; make them prove it in writing.

Exploit program stacking. Pre-qual for DPA at the state/city level, then layer lender credits and builder concessions. The data shows programs are plentiful; the win is stitching them together cleanly. Time and test. In Q4, stale listings and end-of-year builder quotas create negotiating windows. Make data-anchored offers backed by payment math and comparable sales.

King: Market conditions are more favorable than they were last year for first-time home buyers, so I say go for it. You can never predict if the market is going to go up or down, but one thing that has been consistent is that purchasing a home is a sound economic investment and a proven way to build generational wealth.

Williamson: Avoid the FOMO trap. First-time buyers should approach this market with a long-term mindset. Rather than chasing short-term rate dips or stretching for a home that strains the budget, focus on financial readiness and smart decision-making. The fourth quarter often brings less competition and more motivated sellers, especially in markets with rising inventory. Use this to your advantage by negotiating confidently and being selective. A well-priced home in a neighborhood that fits your lifestyle will serve you better than a rushed purchase driven by fear of missing out. Your first home should fit your life, not just the market moment.

The bottom line

Buying your first home can be as intimidating as it is exciting. But preparing yourself and heeding sound professional advice 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.