3 Money Moves You Must Make Before Buying Your First Home in 2025
Written by
Laura Bogart
Edited by
Kristen Mae
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Perhaps you’ve dreamed of owning a home since you were a teenager, imagining all the amazing sleepovers you could host. Or maybe years of living in a tiny basement apartment have finally inspired you to become a homeowner. Whatever your reason, you may be wondering what you need to do financially to open the door to your new home — especially when reports about the housing market can seem quite dire.
While the news about the market may feel a little scary these days, your situation is far from hopeless. Many experts have said that you should worry less about finding the “perfect” time to buy — spoiler: there is no perfect time — and focus more on getting your financial house in order.
By making a few essential money moves, you can put yourself in the best position to hold the keys to your dream home this year.
Pay Down Debt and Improve Your Credit
A higher credit score opens the doors to mortgage preapprovals and lower interest rates, expanding your options for making homeownership a reality. A score of 700 or higher is ideal, so taking steps to repair any issues with your credit is essential.
Start by reading through your credit report to understand where you can improve. If necessary, reach out to your creditors to negotiate a repayment plan that works for you — potentially improving your record of on-time payments.
If credit card debt is dragging down your score, you should prioritize paying it off. Fortunately, there are strategies to help, such as the snowball or avalanche method.
Save as Much as You Can
Ensuring you’re in a strong financial position to buy a home means saving — and saving a lot. As you start to get serious about homeownership, you’ll need to build your mortgage reserves.
Mortgage reserves are extra assets that show a lender you can cover your monthly mortgage payments. Think of them as an emergency fund for your mortgage — you can tap into them if you’re hit with an unexpected crisis, like a job loss or medical emergency.
So, what counts as mortgage reserves? Eligible assets include checking and savings accounts, bonds, stocks, money market funds, mutual funds, CDs and trust accounts. Vested funds in a 401(k) or other retirement account also count, as does the cash value of a life insurance policy. If a loved one gifts you money toward a home purchase, it can count, though they’ll need to sign a letter to the lender stating the money is a gift, not a loan.
Research Local Programs That Can Make Homeownership Easier
Many homebuyers — especially first-time home buyers — may feel like they have to go it on their own when it comes to financing their home. However, many states and cities offer special homebuying programs designed to make purchasing a home more accessible.
For instance, Maryland alone offers a wide range of home loan and mortgage assistance programs tailored toward helping people afford their homes. A quick Google search for “homebuying programs in Massachusetts” reveals options like the ONE Mortgage program and MassHousing Down Payment Assistance.
Taking a few moments to research local programs can help you find crucial assistance that can reduce financial burdens and emotional stress associated with buying a home.
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