First Time Homebuyer in Chicago FAQ

1.)

Getting started

The first step is understanding your budget and getting pre-approved for a mortgage. Before touring homes, it helps to know how much a lender is willing to lend you and what monthly payment feels comfortable for you. Once you’re pre-approved, you can start searching for homes with confidence and move quickly when you find the right one.

Yes, getting pre-approved before house hunting is highly recommended. A pre-approval letter shows sellers that you’re a serious buyer and gives you a realistic price range for your search. It also helps uncover any financing issues early, so you can address them before falling in love with a home.

The amount you need depends on the home price, loan type, and your financial situation. In general, first-time buyers should plan for:

  • Down payment: often 3% to 20% of the purchase price

  • Closing costs: usually about 2% to 5% of the purchase price

  • Earnest money: commonly 1% to 3% of the offer price

  • Moving expenses and initial home costs

For example, on a $400,000 home, a buyer might need roughly $12,000 for a 3% down payment, plus additional funds for closing costs and reserves

A common target for first-time buyers is 3% to 5% down, depending on the loan program. While 20% down can help avoid private mortgage insurance (PMI), it is not required for many buyers.

Loan Type

  | Typical Minimum Down Payment

Convent.

| 3%

FHA

| 3.5%

VA

| 0% for eligible veterans

USDA

| 0% in eligible areas

Absolutely. Many first-time homebuyers purchase with less than 20% down. Conventional loans may allow as little as 3% down, and FHA loans allow 3.5% down for qualified buyers. If you put down less than 20% on a conventional loan, you’ll usually pay PMI, but this can often be removed later once you build enough equity.

Credit score requirements vary by loan type, but these are common guidelines:

Loan Type

 | Typical Minimum Credit Score

Convent.

| 620+

FHA

| 580+ for 3.5% down

VA

| Often 620+, varies by lender

In general, a score of 620 or higher is a good starting point, and higher scores can help you qualify for better interest rates and loan terms.

2.)

Working with a Realtor

No, you’re not legally required to work with a real estate agent, but having one can make the homebuying process much smoother. A buyer’s agent represents your interests, helps you find homes that fit your goals, schedules showings, negotiates on your behalf, coordinates inspections and deadlines, and guides you from your first tour all the way to closing. Having an experienced Realtor in your corner can help you avoid costly mistakes and make informed decisions throughout the process.

In many home purchases, the seller may offer compensation to the buyer’s agent, but this is no longer guaranteed. Following recent industry changes, buyer agent compensation is negotiable and should be discussed before you begin touring homes. I have never had a buyer pay me a commission out of pocket – 100% of my deals have been paid by the seller.

Before we start working together, we’ll review a buyer representation agreement that clearly explains how I’m compensated, so you’ll know exactly what to expect with no surprises. My goal is to make the process as transparent as possible while helping you negotiate the best deal on your new home.

The best time to contact a Realtor is before you start browsing homes online or attending open houses. Meeting early allows us to discuss your goals, budget, preferred neighborhoods, and timeline. I can also connect you with trusted lenders for pre-approval and help you create a strategy before you begin your search.

Even if you’re still several months away from buying, it’s never too early to start planning. Having a roadmap in place can save you time and help you feel confident when you’re ready to make an offer.

What does a buyers agent actually do?

A buyer's agent is your advocate throughout the entire homebuying process. My job is to help you make informed decisions, protect your interests, and guide you every step of the way.

As your Realtor I will:

  • Help you determine what you can comfortably afford.

  • Connect you with trusted local lenders, attorneys, inspectors, and other professionals.

  • Set up a customized home search based on your needs.

  • Schedule private showings and offer honest feedback on each property.

  • Research comparable sales to help determine a competitive offer price.

  • Negotiate price, inspection requests, credits, and other contract terms.

  • Coordinate inspections, attorney review, financing deadlines, and closing.

  • Schedule private showings and offer honest feedback on each property.

3.)

Choosing a Home

The right choice depends on your lifestyle, budget, and long-term goals.

Condos are a popular option for first-time buyers in Chicago because they’re often more affordable and require less exterior maintenance. Keep in mind that you’ll pay monthly HOA fees and may have building rules regarding pets, rentals, or renovations.

Townhouses offer more privacy and space than most condos, often with lower maintenance than a single-family home. Some townhomes have HOA fees, while others do not.

Single-family homes provide the most privacy, outdoor space, and freedom to make improvements. However, you’re responsible for all maintenance and repairs, which can lead to higher ongoing costs.

During our search, we’ll discuss your goals, budget, and future plans to determine which type of property is the best fit for you.

Buying a condo means you’re also buying into the building’s homeowners association (HOA), so it’s important to evaluate the building, not just the unit.

Before closing, we’ll review important documents to look for:

  • Healthy reserve funds for future repairs.
  • A reasonable budget with no major financial concerns.
  • Low delinquency rates on HOA dues.
  • Planned special assessments or major upcoming projects.
  • Rules regarding rentals, pets, and renovations.
  • Meeting minutes that may reveal recurring maintenance issues or resident concerns.

As your Realtor, I’ll help you review these documents and identify any potential red flags before you move forward.

It’s easy to focus on finishes like paint colors and countertops, but it’s important to look beyond cosmetic details.

During a home tour, pay attention to:

  • The overall layout and whether it fits your lifestyle.
  • Natural light throughout the day.
  • Signs of water damage or foundation issues.
  • The condition and age of major systems like the roof, HVAC, plumbing, and electrical.
  • Storage space and closet sizes.
  • Noise levels inside and outside the home.
  • Parking, outdoor space, and building amenities, if applicable.

Don’t worry about catching everything on your own. I’ll point out both the positives and potential concerns during our tours so you can make an informed decision before submitting an offer.

4.)

Making an Offer

Once you’ve found a home you love, we’ll work together to prepare a competitive offer. I’ll research recent comparable sales, current market conditions, and the property’s history to help determine a fair offer price.

Your offer includes more than just the purchase price. It also outlines important terms such as your earnest money deposit, financing, inspection contingency, closing date, and any requests for seller credits or personal property. Once the offer is submitted, the seller can accept it, reject it, or send back a counteroffer. I’ll guide you through each step and help you negotiate the best possible outcome.

Earnest money is a good faith deposit that shows the seller you’re serious about buying their home. In the Chicago area, it’s common for buyers to put down 1% to 3% of the purchase price, although the exact amount can vary depending on the market and the specific property.

The earnest money is typically applied toward your down payment or closing costs at closing. If the transaction falls through for a reason covered by your contract, such as a financing or inspection contingency, you can often receive your earnest money back.

Yes. In most transactions, nearly every part of the offer is negotiable, including the purchase price, closing costs, inspection repairs, seller credits, closing date, and even which appliances or personal property stay with the home.

The strength of your negotiating position depends on factors such as local market conditions, how long the home has been listed, the number of competing offers, and the seller’s motivation. I’ll provide market data and advice so you can make a competitive offer while avoiding overpaying.

If multiple buyers submit offers on the same home, the seller may ask everyone to submit their “highest and best” offer by a specific deadline. The seller will then choose the offer they feel is strongest, which isn’t always the one with the highest price.

In a competitive market, factors that can strengthen your offer include:

  • A strong pre-approval from a reputable lender.
  • A competitive purchase price.
  • Flexible closing dates that meet the seller’s needs.
  • Appropriate earnest money.
  • Fewer contingencies, when appropriate.
  • A buyer who is well-prepared and able to move quickly.

If you find yourself in a multiple-offer situation, I’ll help you develop a strategy that gives you the best chance of winning while staying within your budget and protecting your interests.

5.)

Under Contract

Once your offer is accepted, you’re officially under contract. From there, the transaction moves into several important stages, including earnest money, attorney review, the home inspection, financing, appraisal, and final preparations for closing.

I’ll help coordinate each step, keep track of important deadlines, and work alongside your lender and attorney to keep the transaction moving smoothly.

A home inspection is not always required, but I highly recommend one. An inspector evaluates the property’s visible systems and condition, including electrical, plumbing, HVAC, roofing, and other major components.

Even if a home looks beautiful, an inspection can uncover issues that aren’t obvious during a showing. The goal isn’t to find a “perfect” home, but to better understand what you’re buying before moving forward.

Finding issues during an inspection is completely normal. Depending on the findings and the terms of your contract, we may request repairs, ask for a seller credit, negotiate another solution, or determine that the issue is significant enough to reconsider the purchase.

I’ll help you understand which concerns are common maintenance items and which may warrant further discussion with your attorney or a specialist.

Toggle Content

A real estate attorney helps protect your legal interests throughout the transaction. They review the purchase contract, negotiate legal terms, review title and applicable property documents, and help prepare the transaction for closing.

In Illinois, having an attorney involved in residential real estate transactions is customary, and the Illinois State Bar Association emphasizes the importance of understanding and reviewing contract terms.

I can also connect you with trusted local real estate attorneys if you don’t already have one.

Attorney review is the period after the contract is signed when the buyer’s and seller’s attorneys review the agreement and may request changes or clarifications. The exact timeline depends on the contract, although many Illinois residential contracts provide a short review period, often around five business days.

During this time, your attorney may also work through inspection-related concerns and other contractual issues. I’ll stay in communication with you and your attorney throughout the process.

An appraisal is an independent professional opinion of the home’s market value. If you’re financing your purchase, your lender will typically order an appraisal to confirm that the property’s value supports the loan.

If the home appraises at or above the purchase price, the financing process generally continues as planned. If it appraises below the purchase price, we may need to review your contract and discuss options such as renegotiating, challenging the appraisal when appropriate, or addressing the difference in value.

The appraisal is different from a home inspection. An inspection evaluates the home’s condition, while an appraisal evaluates its value.

6.)

Financing & Closing

The timeline can vary depending on how long it takes to find the right home. Once your offer is accepted, most financed purchases typically take around 30 to 45 days to close.

During this time, you’ll complete the inspection and attorney review, finalize your financing, complete the appraisal, and prepare for closing. I’ll help keep track of deadlines and coordinate with your lender and attorney throughout the process.

Closing costs are expenses associated with finalizing your home purchase in addition to your down payment. They may include lender fees, appraisal costs, attorney fees, title-related costs, prepaid property taxes, and homeowners insurance.

Closing costs typically range from 2% to 5% of the purchase price, although the actual amount depends on your loan and property.

Your lender will provide estimates of your costs before closing so you can plan ahead.

Closing day is when the home officially becomes yours! Before closing, we’ll complete a final walkthrough to confirm the property is in the expected condition.

At closing, you’ll review and sign your final loan and ownership documents, provide any remaining funds needed to close, and your attorney will help guide you through the paperwork. Your lender is generally required to provide your Closing Disclosure at least three business days before a scheduled mortgage closing, giving you time to review your final loan details.

In most Chicago home purchases, you’ll receive the keys once the closing is complete and the transaction has officially funded.

That usually means you walk out of closing as a homeowner with the keys to your new home! Your attorney, lender, and closing team will confirm once everything is finalized.

7.)

After Closing

Once you have the keys, there are a few important things to take care of. Update your address, transfer utilities, review your homeowners insurance, and keep copies of your closing documents in a safe place. It’s also a good idea to change the locks and start learning the basics of your home’s major systems.

My relationship with my clients doesn’t end at closing. I’m always available if you need contractor recommendations, have questions about your home, or want to understand how your property’s value changes over time.

Home maintenance costs can come up throughout the year, so it’s a good idea to set aside money for both routine upkeep and unexpected repairs. A common rule of thumb is to budget around 1% to 2% of your home’s value per year for maintenance, although actual costs will vary depending on the property’s age, condition, and type.

Condo owners may have fewer individual exterior maintenance responsibilities, but should still plan for repairs inside their unit and potential HOA assessments.

A home warranty can provide additional coverage for certain appliances and home systems if they break down due to normal wear and tear. Whether it’s worth it depends on the home’s age, the condition of the systems and appliances, and your comfort level with unexpected repair costs.

Before purchasing a warranty, review the coverage, exclusions, service fees, and claim limits carefully. In some transactions, a home warranty may also be negotiated as part of the purchase.

The timing of a refinance depends on your loan type, lender requirements, and financial situation. Some loans may have waiting periods, while others may allow you to refinance sooner.

Homeowners often consider refinancing when interest rates decrease, their credit improves, they want to change loan terms, or they’ve built enough equity to potentially remove mortgage insurance. The key is comparing the upfront cost of refinancing with your potential monthly and long-term savings.

Ready to Start Your Homebuying Journey?

Buying your first home can feel overwhelming, but you don’t have to figure it out alone. Schedule a free 30-minute homebuyer consultation with me to talk through your goals, budget, timeline, and any questions you have about buying in Chicago.

No pressure and no commitment. Just a conversation to help you understand your next steps and feel confident moving forward.

Schedule Your Free 30-Minute Homebuyer Consultation