For those trying to close their homes, especially for first-time home buyers, the increased mortgage rates and rising house prices raise challenges. Nowadays, homebuyers need to budget much higher costs to buy a home than they needed a few years ago.
Mortgage rates have almost doubled since 2020, while the median U.S. home sales price has risen by $100,000 in the past five years.
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These trends even greatly increase affordable home mortgages, thus increasing barriers to entering the housing market for ordinary Americans.
Berkshire Hathaway Home Services (BHHS) provides useful advice for buyers looking to buy a home within their budget in 2025, despite the headwinds of the housing market.
Although prices are significantly higher for consumers, effective research, financial planning and upgrade expectations can enable buyers to succeed while hunting.
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Financial preparation will give you a step ahead in the housing market
One of the most practical and common home ownership advice is to make sure you are in a good financial position before starting the home purchase process. Determining your home budget based on your family income will help you target realistic down payments, while first-time home buyers typically range between 10% and 20%.
Ideally, all types of debt should be paid off before hunting, but it is common to have some low interest debt (such as student loans). However, taking high interest debt from a credit card or personal loan (usually above 8% interest rates) may affect your ability to make mortgage payments or get mortgage approval.
More information about buying a home:
- Dave Ramsey
- Housing experts reveal surprising ways to lower mortgage rates
- Americans buying a home may see significant housing cost changes in 2025
- Financial veteran warns Americans to buy homes now
BHHS blog recommends that qualifying for a mortgage can help relieve stress on shopping.
“Eligibility for a mortgage loan tells you that the best loan is the best, the interest rate you will pay, how much you can spend on the home purchase price, and whether you want to pay for private mortgage insurance.”
Certain qualities of compromise (such as square feet or buying a fixture – upper instead of a new home) can also help new home buyers stay within budget.
Home ownership comes with hidden fees and fees
While down payments and home prices will focus most when purchasing a home, appraisal fees, home inspection fees, title insurance, upfront fees, lending fees and real estate attorney fees can quickly increase unforeseen fees.
Although both the seller and the buyer pay the closing cost, the seller usually deducts the cost from the sales proceeds, and the buyer must pay out of the money.
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These settlement costs can account for up to 6% of your house price. Median home sales price in January 2025 is $419,200, which means closing the average U.S. home price is over $25,000
If you put down less than 20% of your home on your home like most first-time home buyers – your lender may require you to pay an additional upfront fee when it is closed.
The BHHS blog also stressed that buying a home is a long-term investment, noting: “Constructing stocks takes time, so plan to stay in your home long enough to “repay” your closure expenses – it may take five to seven years to Profit or interruption of sale.”
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