Congratulations! You’ve made the decision to purchase your first home. You’ve run the numbers and gotten all your ducks in a row — now it’s time for you as eager homebuyer to test the market.

Finding a house can be relatively easy. Finding a home that fits a budget, the owner’s needs, and his or her future is another matter altogether.

So where to start?

With 150 years of guiding first-timers through the home-buying process, Penn Community Bank has a few pointers.

Setting Parameters

After assessing that, yes, an individual is eager for a self-owned roof over his or her head, the next consideration involves just what that roof represents.

In other words, how much “house” is in the budget?

Metrics can help shoppers set some reasonable parameters:

• A home’s cost should not exceed three times an owner’s annual salary
• A homeowner’s total debts — including mortgage payments — should not exceed one third of monthly income. The effect of a mortgage payment on this sum can be determined by calculating total monthly income and subtracting:
  • Fixed expenses like car payments
  • Variable expenses like credit card and utilities expenses
  • Monies set aside as savings

Keeping this latter calculation in mind prevent first-timers from overbuying to the point of putting other financial obligations at risk.

Also, this above calculation will likely be part of the formal preapproval process, a financial exercise that provides an early indication of how much in borrowings a mortgage applicant can support.

The Hunt!

With a ballpark idea of what a budget can withstand, it’s time to start hunting for that dream home.

A licensed realtor can be an asset in this task, especially when armed with an overview of a shopper’s position on affordability. But online searches, where financial floors and ceilings on what’s payable can be set, can also winnow down options while staying in budget.

As first-time homebuyers start out, it’s best to be flexible.

Prior to running from open house to open house, it’s a good idea to list the particulars a home must have vs. those it might be nice to have. This delineation can apply to everything from location to number of bedrooms to whether there’s a garage in which to tuck your wheels at night.

If your financial foundation (and patience) can handle it, the trend of house hacking may be a way of affording a larger-scale property using a smaller wallet. House hackers purchase multifamily properties, move into one room, and rent out the rest.

Scaled-down versions of house hacking are also possible. Homeowners can turn a basement or attic into a separate apartment or even list space on a short-term rental platform. A quick check of neighborhood zoning laws, however, might be helpful beforehand.

Some other caveats can keep first-time homebuyers out of financial hot water:

• Stick to the lower end of your budget. Unexpected expenses are part and parcel of owning a residence. The first major expense — dryer’s on the fritz, a window is leaking — can easily eclipse the ability to handle the monthly mortgage payment.
• Avoid ever-escalating bidding wars. This is no purchase to make out of emotional attachment to four walls and a roof, no matter how stunning they may be.
• Forget about “keeping up with the Joneses.” If a brother-in-law can afford the multi-room, 12-foot-ceilinged, wet-bar-in-the-basement castle, good for him. Each buyer needs to sign on for what’s right for him or her.

Next Steps

Once an ideal home has been found, it’s time to make an offer. This back-and-forth can be stressful, but the negotiation will conclude eventually.

And for homebuyers coming out on the right side of it, a new home address may not be far behind.

More Information

For tips and insight on the first-time home-buying process, download Penn Community Bank’s free The Basics: Buying Your First Home eBook.