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Homebuying basics

Start here if you are figuring out whether buying a home makes sense for you

Start with the basics

You don't have to know everything to start. This page gives you the basics to weigh what fits your life now to help you put the pieces of homeownership together.

Here’s what this page covers:

  • Buying versus renting
  • Common misconceptions
  • Homebuying basics
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How do I know buying is right for me?

Buying isn't always the answer. See how others figured it out.

Now I'm building something for the future

"Owning has its challenges, for sure. But I know every payment builds my future. Our future. It's just the beginning."

We did the math

"A quick talk with a home mortgage consultant showed buying could actually be much cheaper. They ran our income and home options through a calculator and the results were surprising."

Renting is fine right now

"I'm single and just started a new job this year, it makes more sense for me to rent. I know I can be a little patient at the moment, so I can maybe make bigger moves down the road when it makes more sense for me."

Our advice: Start with your "why"

Before you crunch numbers or look at listings, ask yourself what is driving you to want to buy. Is it stability? Building wealth? When you know your why, every decision — big or small — becomes easier to make.

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Homebuying reality check

There's a lot of homebuying "advice" out there. Here is what's real, what could be true, and what's flat-out wrong.

Do I need a 20% down payment?

No. In some cases, down payments can be as low as 3% on fixed-rate loans or even 0% for qualified buyers. No down payment option may be available on VA loans for qualified borrowers.

Is it cheaper to rent than to own?

Not always. Depending on where you live, buying may actually cost less over time.

I heard I don't need perfect credit. Is that true?

True! There are many programs that may be available to individuals with credit scores that aren't spotless.

If I have credit card debt, can I still get a loan?

Yes. Some debt won't stop you, but less is always better. Lenders look at overall debt — the big picture.

Talk with a home mortgage consultant about loan amount, loan type, property type, income, first-time homebuyer, and homebuyer education requirements to discuss eligibility.

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Five things you'll want to know before you buy

APR, PMI, down payments. It all can sound complicated, but it doesn't have to be. We'll help break it all down for you.

APR is the cost to borrow money as a yearly percentage, while the interest rate is the percentage you pay a lender to borrow money. The APR includes not only the interest rate but also other expenses like loan processing fees, underwriting fees, and discount points.

A down payment is the money you pay upfront toward the purchase of your home. The rest is financed through a mortgage. Your down payment helps determine how much you borrow, your monthly payment, and whether private mortgage insurance (PMI) may be required. While a larger down payment has benefits, many first-time buyers purchase a home with less than 20% down.

PMI is part of the borrowing costs you typically pay to your lender for a conventional loan if your down payment is less than 20%. It’s required by lenders to protect themselves against potential losses that may come from a borrower defaulting on their loan.

You can think of your home equity as the total amount of home you currently own, in comparison to how much you have yet to pay back on your mortgage. As time goes on and you make mortgage payments, your home equity grows and can become one of the biggest financial benefits of homeownership.

Most lenders require homebuyers to secure homeowners insurance before they close. Homeowners insurance generally covers the costs of your belongings, as well as repairs due to fire, vandalism, or theft. It might also cover the costs of a temporary place to stay while your home is being repaired.

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Real support that meets you where you are

Need one-on-one housing counseling?

Wells Fargo partners with Housing Counseling Agencies to help guide you with friendly advice, smart budgeting tips, and personalized support to help you feel confident every step of the way.

Need help with your down payment?

Getting financial help with your home down payment with the Homebuyer Access® grant could be the push you need to get across the line. Combine it with other select programs to stretch your buying power even further.

Need help with your closing costs?

You could get up to $5,000 for closing costs with the Dream. Plan. Home.® closing cost credit. You can use the credit for one-time closing costs like processing and appraisal fees, and it can be combined with other select programs.

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You're not doing this alone

We're here for you with answers, tools, and a team of people who've got your back at every turn.

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Ready to continue your journey? Here's what's up next:

Financial prep

Feeling "ready" isn't about perfection. It's about clarity, curiosity, and knowing what steps come next. Whether you're working on your credit, stacking savings, or just now figuring out how all this works, this page is for you.

Learn more

Other steps

Related topics

With a low down payment, mortgage insurance will be required, which increases the cost of the loan and will increase the monthly payment.

Customers must meet all eligibility requirements for the VA program. Contact Wells Fargo to discuss current VA eligibility requirements.

The Homebuyer Access® grant may help customers purchase a home by providing a grant for a down payment, subject to eligibility requirements. Grant funds cannot be used in connection with the financing of a Wells Fargo real estate owned (REO) property purchase. Repayment is not required for the grant. To use the grant, the full award amount must be applied toward the down payment. We cannot apply less than the full amount. The down payment grant is available in certain areas. Eligibility for grant money will not be confirmed until underwriting is complete.

Eligibility requirements:

Loan type: The grant may be used with a Wells Fargo fixed-rate conventional loan only. Loan types, such as non-conforming loans, government loans, and conventional adjustable-rate mortgages, are not eligible. 

Income: There will be income limitations based on where the subject property is located.

Location: The borrower's verified current permanent residential address must be located in an eligible area or the subject property the borrower is purchasing must be located in an eligible area. 

Occupancy: The borrower must occupy the subject property they are purchasing as their primary residence.

Possible tax implications: Accepting and using grant funds may be considered additional taxable income and will be reported on Form 1099-MISC for the primary borrower (the first person listed on the loan) on the application. This means the borrower may owe taxes on that additional income. The grant funds received may also affect any eligibility for income-based assistance, such as government programs like student loan payment relief or other government payments that may be based on income. Before accepting this grant, customers should consider speaking with a tax advisor to understand if their taxes may be affected by this grant. 

The Homebuyer Access® grant may be combined with Dream. Plan. Home.® closing cost credit, Corporate Mortgage Benefit Program, Union Plus® Mortgage program, non-Wells Fargo funded down payment assistance programs (DAPs), Builder Credits, and the Employee Mortgage Program. Standard Agency underwriting guidelines apply.

The Dream. Plan. Home.® closing cost credit may help eligible consumers purchasing their primary residence. Income limits may apply based on the property location. The closing cost credit is available in certain areas and is not available with all loan types.

‍ Equal Housing Lender

Wells Fargo Home Mortgage is a division of Wells Fargo Bank, N.A.

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