5 Credit Card Tips for First-Time Homebuyers
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Written by
Harrison Pierce
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Edited by
Amen Oyiboke-Osifo
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Reviewed by
Jasmin Baron
According to Zillow, the median sale price for a home in the U.S. is $363,000 as of May 2025. If you are a first-time homebuyer, odds are you don’t have that much money sitting in your bank account, so you’ll need to apply for a mortgage. Qualifying for a mortgage can be challenging, but you can improve your chances of approval by taking a few strategic steps, starting with managing your credit cards before applying. Here are five credit card tips for first-time homebuyers.
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Consider Your Finances
To qualify for a mortgage, you’ll likely need a down payment. A conventional mortgage typically requires a minimum of 3% to 5% of the purchase price. If your down payment is below 20%, you may need to have private mortgage insurance to protect lenders in the event of default. Try to start saving as early as possible for a down payment and to determine how much you can afford.
There are additional mortgage requirements, such as proof of income and cash reserves. Before buying a home, prioritize finding steady employment and adding to your rainy day fund. Apart from saving for a down payment, lenders might want to see that you have additional savings to help cover your remortgage if you were to lose your job. Also, avoid carrying large amounts of credit card debt during the application process — lenders will review your debt-to-income ratio, and high credit card balances could hurt your chances of approval. Pay down that debt before you start shopping around for a mortgage.
Build Your Credit Score
If you are a first-time homebuyer applying for a mortgage, you want to ensure your credit score is as high as possible. Conventional mortgages generally require a credit score of 620 or above. To secure the lowest interest rates, aim for a credit score of at least 780.
Ideally, you have a history of making on-time payments on your credit cards or other loans. If so, keep it up. If not, ensure that you pay on time every month, both before and during the homebuying process. You should also lower your credit utilization ratio. Try to pay off as many debts as possible, including credit cards, student loans and personal loans. The more available credit you have, the better.
Avoid Making Large Purchases or Opening New Accounts
When you’re going through the home buying process, avoid opening a new credit card or getting another loan that requires a hard inquiry on your credit report. Understanding the difference between hard and soft inquiries and how new accounts can impact your average account age, thereby potentially lowering your score, is crucial. Try to avoid opening any new accounts for six months before you apply for a mortgage, and wait until you’re in your new home.
A common mistake new homebuyers make is financing a purchase of a refrigerator, oven, washer, dryer or other home appliances during the home-buying process. Logically, it makes sense. If I’m buying a new home that doesn’t come with these appliances, and they can take weeks (or months) to be ready due to supply chain issues, shouldn’t I go ahead and buy them before I close on my house? That answer is a resounding no, unless you’re paying cash. These purchases can impact your credit score and significantly affect your ability to buy your home.
Review Your Credit Report
In addition to focusing on your credit score, review your credit report for errors. If your credit report shows late credit card payments, duplicate accounts or an incorrect balance, you should contact the credit bureau to fix it. The bureau is required by law to investigate the dispute, give the information to the company that reported the information about you, and give you a report with findings.
Incorrect information on your credit report can seriously impact your ability to get a mortgage, so it’s a great idea to review your report regularly. Mortgage lenders typically pull reports from all three major credit bureaus — Equifax, Experian and TransUnion — so be sure to check each one.
Use Credit Cards Wisely Once You Move In
Once you’re in your new home, credit cards can be a valuable resource. Your first home is likely bigger than your apartment or college dorm, so you’ll probably need to buy a lot of furniture, bedding, kitchen supplies, cleaning supplies or outdoor equipment.
One of the most underrated credit card perks is an introductory annual percentage rate (APR) offer on purchases. You can apply for a new credit card with an introductory APR period on purchases that can last for up to two years. When you use your card to buy things for your new house, you can pay your balance off over time without accruing interest. This is incredibly helpful if you’ve just put most of your savings into your down payment.
Plus, the best rewards credit cards will earn points, miles or cash back on your purchases. If you’re spending thousands on new furniture and house supplies, you should at least earn travel or cash-back rewards on those expenses.
Bottom Line
Buying a home can be an exciting, scary and stressful process. If you want to increase your odds of getting approved for a mortgage with the lowest interest rates on the market, you should start saving and working on your credit score, as well as being mindful about credit card use. Once you find a home you love and you are moving in, consider applying for a credit card with a low introductory APR period on purchases to avoid paying interest for a period of time. The most important thing is to enjoy your first home purchase.
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