Congratulations on looking for your first house! My husband and I went through this process last year. I had so much anxiety about it, but with a good deal of research on our end, we were pretty happy with how the process went for us.
When we started the house purchase process, we were approved for significantly more than we felt we could afford while still saving money toward other goals. What you can afford is up to you, not the bank. The bank will give you an idea of what you can be approved for, but it’s really up to you and your husband what you are comfortable paying!
There are several ways to get a loan without the full 20% down — you will just likely have to go a route other than a conventional mortgage, and depending on the kind of loan, you might be subject to having to pay private mortgage insurance, which will add to your monthly cost. We did a conventional loan with 20% down so I’m not an expert on the other loan options, but I know you definitely have options.
Something that was really helpful for us — we worked with a lender who runs a first-time homebuyer education class locally. She was especially well equipped to help answer our questions. We had gotten our preapproval from a different institution, but she was so great at helping us feel informed and in control of our home purchase that we got our mortgage through her bank. I never felt like she was trying to take advantage of us or our naivete. I wonder if there’s a first-time homebuyer class in your area? Or maybe you could call a few different banks or credit unions in your area to see if anyone can talk with you about your options as a first-time homebuyer?
On your end, it will be super helpful if you can start to gather your last few paystubs, all of your account statements, your tax returns, etc. That will help a lender determine what you can be preapproved for. And just getting that paperwork in order took me a pretty long time.
Also…this may sound silly, but I bought the Home Buying Kit for Dummies off Amazon. It has entire chapters dedicated just to budgeting, the approval process, and all the of the other processes you’ll encounter down the line. It was great to have a reference of what we *should* be doing when, and it helped us figure out what questions we needed to be asking so that we’d feel prepared every step of the way.
In terms of a realtor, make sure you find someone you trust and who seems on top of things. Have any of your friends purchased homes lately? They may be able to recommend (or warn against!) their own realtor. Your realtor is obviously a big part of the process once you’re really looking for houses, but I think you’re spot on making sure you’re comfortable with the financial side first.
Good luck and try to have fun!!!!!!!