First-Time Homeowners Insurance

Consult our guide to learn how much homeowners coverage you need for your first home.

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Home insurance for first-time home buyers

A home is a major investment — not only of time but also of financial resources. Once you’ve closed on your home, the next step is insuring your new asset. Let’s walk through the steps you should take to insure your new home affordably and effectively.

 

Table of contents:
  1. What information do you need to get a home insurance quote?
  2. Insuring your home: 6 key steps
  3. What is the average cost of homeowners insurance?
  4. First-time home buyer programs
  5. Additional resources

 



What information do you need to get a homeowners insurance quote?

While you can find an in-depth guide to homeowners insurance here, we’ll outline below the key information you need to get home insurance quotes.

 

Your new address

Your prospective insurer will use your address to gather basic details about your home. 

 

Your personal information and insurance claims history

Every state allows insurance companies to utilize different factors to determine rates — for both home and car insurance. Begin the insurance comparison process with an understanding of your credit score and claims history. Although home insurance companies will check this via your CLUE report and a soft credit check, anything you don’t reveal will impact your premium.

 

Info on additional safety features and extras

This includes fire alarms, sprinklers, or home security hardware. These components can help lower your overall insurance premium.

 

The age of your roof

This information may come prepopulated with your address, but you should have an idea of your roof’s age. Like your home’s safety features, this can impact your premium.

 

The type — and amount — of coverage you need

Most quoting experiences will offer an explanation of what each coverage provides but understanding your assets and how that applies to home insurance coverage will be important. Ask yourself how much liability and personal property insurance you need. Keep any special items such as jewelry, watches, and pieces of art in mind.

Here is an in-depth article discussing what homeowners insurance does and does not cover and lists some special considerations.

 

Insuring your first home: tips and important info

Now that we’ve outlined what information you need to get a home insurance quote, let’s detail some key steps and takeaways to keep in mind as a first-time buyer.

 

1. Research the company’s claims satisfaction 

You don’t want to find out after a major claim your current provider doesn’t have a good history of handling claims. Subpar insurance companies will look for opportunities to get out of compensating you for your losses — or at least make it more difficult to recoup funds. Make sure you check the satisfaction of each insurance company's claims prior to purchasing a policy.

Google Reviews, the Better Business Bureau, and J.D. Power are good starting points when researching insurance providers.

 

2. Think coverage first, price second

Your home is a major financial investment. Compared to the actual cost of your home, your insurance is significantly less expensive. With this in mind, don't skimp on coverage just to save money. In the event of a catastrophic loss, i.e., a total loss, you'll only be hurting yourself by limiting your coverage. 

 

3. Understand what your insurance covers and how much coverage you need

Understand what perils your policy covers — and doesn't cover. Insurance companies will often exclude certain causes of loss from coverage, providing the option to add coverage back via an endorsement. Review the coverage you might need and how much to purchase with an insurance agent before you need the coverage.

Below are the basic coverage components of a homeowners policy.

*First-time homeowners might not understand the difference between dwelling coverage (calculated at a replacement cost value) and the market value of the home. Dwelling coverage is designed to repair or replace the home if it’s damaged as a result of a covered loss. This cost is independent of the market value of your home.

The dwelling coverage replacement value will not match the market value of the insured home. A mortgage lender might require you to raise the value of your replacement cost and your insurance company might not allow this. Speak to a representative at your insurance company if this happens.

 

4. Consider location-specific weather events 

If you live in an area prone to natural disasters, it’s unlikely you will have insurance coverage for these perils. Hurricanes or other flooding events will not be covered by your homeowners insurance. If your home is located near the coast, you need to buy flood insurance through FEMA. Other natural disasters worth considering include earthquakes, tornadoes, wildfires, mudslides, and sinkholes. If you live in an area prone to these events, consult your insurance company regarding the best course of action.

 

5. Insure high-value items individually

Coverage for certain valuables will be limited by your insurance company because of their high value — this is known as an insurance company’s sub-limit of liability. Below is a list of the common limitations and typical maximum reimbursement amounts (minus the deductible). 

Sub-limitPropertyLimitations
$200Money, Gold, Coins 
$1,500Jewelry, watches, fursTheft-only
$1,500Watercraft, trailersTheft-only
$2,500Firearms 
$2,500Silverware 
$2,500Business propertyOn-premises
$500Business propertyOff-premises
VariesElectronics


If you own any of these items, consider adding a personal property endorsement or scheduled endorsement to your insurance policy. A personal property endorsement will raise your content coverage for that entire item classification — for example, the total value of your jewelry collection. A scheduled personal property endorsement is a common approach when insuring one very valuable item, such as an engagement ring. This would require an appraisal, but is the best way to protect your belongings.

 

6. Consider bundling policies

Most major insurance providers offer different insurance products, including car insurance, home insurance, renters insurance, and life insurance. You can earn discounts if you bundle multiple policies with the same company. By bundling policies with the same company from which you carry homeowners insurance, you could earn a discount on each of the products.

 

7. Compare rates carefully

Once you have an idea of which coverage — and how much insurance — you need, compare quotes from as many insurance companies as possible. Research reviews and compare premiums. Although it can be a tiring process, it’s certainly easier than dealing with a sub-optimal insurance provider after a claim

 

Find homeowners insurance by comparing rates!

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What is the average cost of homeowners insurance?

The average price will vary based on your location, your home, and you. Using a methodology outlined here, we checked insurance rates from the top carriers in the US. Bear in mind, these rates should be evaluated as rough averages. Based on your location and coverage needs, your rates will differ.

Insurance ProviderAverage Annual Premium
Allstate$1,635
Farmers$2,027
Liberty Mutual$1,830
Nationwide$1,737
State Farm$1,501
Travelers$1,709
USAA$1,736

 


 

First-time home buyer programs

Homeownership may seem out of reach for some Americans, but there are many government programs that make it possible for even those with a low or moderate-income. Such programs are available to new home buyers at both the national and state level. These programs are designed to help new homeowners with down payments, closing costs, home loans and finding competitive interest rates. To help you navigate this oftentimes confusing area of finance, we put together a list of some of the options to help get you started. 

*Please note that some of these programs may have dramatically reduced activity during the COVID-19 pandemic. The CARES Act may have offered relief to homeowners who have taken advantage of these programs through the forbearance of loan repayments. 

 

Home buyer programs

Some of the following programs are available through the U.S. Department of Housing and Urban Development (HUD). Most of these programs can directly benefit potential home buyers by offering loans or grants, though all are meant to increase the ability of average- or lower-incomeAmericans to purchase homes. 

 

FHA loans

The first stop for many potential home buyers seeking their first mortgage is an FHA loan. While the government itself isn't technically providing the loan, the Federal Housing Administration does insure your loan, allowing you to get a better interest rate from your lender, oftentimes better than a conventional loan. First-time home buyers can benefit from low down payments and low closing costs. Furthermore, with the backing of the FHA, qualifying for credit from a mortgage lender can be much easier. 

 

Fannie Mae and Freddie Mac

Fannie Mae and Freddie Mac were created by Congress to help middle- and low-income home buyers find reasonable loans. These government-chartered programs don’t actually provide loans themselves, but work with mortgage lenders to back home loans or to purchase them on the secondary market, creating liquidity in the market and allowing lenders to write more loans. Both offer a number of resources to prospective homeowners. 

Fannie Mae also runs HomePath, a site that lists foreclosed homes, while Freddie Mac operates the Home Steps site which also lists available homes. 

 

Good Neighbor Next Door

This HUD program offers homes in selected "rejuvenation areas" with discounts as high as 50% of the list price. To be eligible for the program, you must be a trained emergency medical technician, firefighter, law enforcement official or teacher (pre-K through 12th grade). Furthermore, you must commit to live in the home for a minimum of 36 months. 

 

Home ownership for public housing residents

HUD offers programs to help residents of public housing the opportunity to purchase their housing units. Through HUD’s Section 32, low-income families can find themselves on the path to homeownership. More information can be found via your local public housing authority. 

 

Indian Home Loan Guarantee program

The Section 184 Indian Home Loan Guarantee program is designed to assist Native American communities by providing access to capital and a pathway to homeownership. Section 184 loans are available for homes on or off native lands. These can be previously existing homes, newly constructed, or rehabilitated. The loans can also be used to refinance current loans.

The Section 184A Program is a similar federal program available for native Hawaiians to access 

 

Energy Efficient Mortgage homeowners program

If you qualify for home financing, you could also benefit from the Energy Efficient Mortgage (EEM) program. Essentially, this allows borrowers to qualify for a larger loan in order to make upgrades to the home’s overall energy efficiency. Borrowers could also use an increased loan amount to buy a newer or more energy-efficient home. Refinancing options are also available to retrofit your home with energy-saving upgrades. 

 

Section 203(k): rehabilitation mortgage insurance 

Those looking to buy a house in need of repairs could find HUD’s Section 203(k) program particularly helpful. Section 203(k) insures loans made for the use of home rehabilitation, allowing homeowners to make minor or drastic repairs to the home. The program is available to all prospective buyers, including first-time home buyers.

 

Home buying programs for veterans

Veterans Affairs also offers a number of loan assistance programs to veterans.  VA loans are available to active-duty and retired servicemen and women. These mortgage loans are technically provided through private lenders, though a portion of the loan is guaranteed by the VA, providing you with better terms. Alongside home loan assistance, the VA also offers grants and can also help with refinancing. In addition to the options listed below, make sure to research state-specific benefits or programs that may be available where you live.

  • Purchase Loans and Cash-Out Refinance: This is the VA’s primary VA loan and home refinance option, allowing for competitive interest rates and low or no money down upfront. 
  • Interest Rate Reduction Refinance Loan (IRRRL): This mortgage program helps borrowers secure better interest rates on a previous VA loan.
  • Adapted Housing Grants: Assists with home adaptations for veterans with permanent disabilities. 
  • Native American Direct Loan (NADL): This program is available for eligible veterans (spouses) who are of Native American descent and allows assistance with buying or building a home on federal trust land. 

 

USDA loans

For those in rural areas, USDA loans can provide a great opportunity for homeownership. The program guarantees 90% of a home loan for borrowers who wish to build, purchase, or rehabilitate an eligible rural property. In many cases, this could be done for no money down. 

To be eligible for a USDA loan, you must meet the following criteria:

  • Meet income requirements (not exceeding 115% of national median income)
  • Be a U.S. citizen, Qualified Alien, or U.S. non-citizen national
  • Use the property as your primary residence 
  • Live in an eligible rural area 

 

State-specific programs

In addition to the federal programs listed above, many states offer their own programs for first-time home buyers. Each state has its own types of programs providing various levels of assistance. This could include downpayment assistance, closing cost assistance, or even grants in some cases. Furthermore, many states also offer comprehensive home buyer education programs that can help prospective buyers navigate the best state and federal options for their needs. 

Depending on the program — and the state in which you live — you may have to meet certain eligibility criteria, including credit scores, income limits and caps on the purchase price of your home. For instance, some low-income borrowers may not be eligible for all programs, but shouldn’t be discouraged from looking into all of the available options.

In short, those making their first foray into homeownership would do well to research these state-level assistance programs. This list below links to each state's housing authority where you can find more information about first-time home buyers assistance in your state. 

 

StateState Housing Authority
AlabamaAlabama Housing Finance Authority
AlaskaAlaska Housing Finance Corporation (AHFC)
ArizonaArizona Department of Housing
ArkansasArkansas Development Finance Authority
CaliforniaCalifornia Housing Finance Agency (CalHFA)
ColoradoColorado Housing and Finance Authority (CHFA)
ConnecticutConnecticut Housing Finance Authority (CHFA)
DelawareDelaware State Housing Authority
FloridaFlorida Housing Finance Corporation (FHFC)
GeorgiaGeorgia Dream
Hawaii

Hawaii Housing Finance & Development Corporation (HHFDC)

IdahoIdaho Housing and Finance
IllinoisIllinois Housing Development Authority (IHDA)
IndianaIndiana Housing and Community Development Authority (IHCDA)
IowaIowa Finance Authority
KansasKansas Housing Resources Corporation (KHRC)
KentuckyKentucky Housing
LouisianaLouisiana Housing Corporation
MaineMaine Housing Lenders
MarylandMaryland Department of Housing and Community Development (DHCD)
MassachusettsMassHousing Lenders
MichiganMichigan State Housing Development Authority (MSHDA)
MinnesotaMinnesota Housing Finance Agency (MHFA)
MississippiMississippi Home Corporation
MissouriMissouri Housing Development Commission (MHDC)
MontanaMontana Housing
NebraskaNebraska Investment Finance Authority (NIFA)
NevadaNevada Housing Division
New HampshireNew Hampshire Housing Lenders
New JerseyNew Jersey Housing and Mortgage Finance Agency (NJHMFA)
New MexicoMFA New Mexico
New YorkState of New York Mortgage Agency (SONYMA)
North CarolinaNorth Carolina Housing Finance Agency (NCHFA)
North DakotaNorth Dakota Housing Finance Agency (NDHFA)
OhioOhio Housing Finance Agency
OklahomaOklahoma Housing Finance Agency (OHFA)
OregonOregon Housing and Community Services (OHCS)
PennsylvaniaPA Housing Finance Agency (PHFA)
Rhode IslandRhode Island Housing
South CarolinaSC Housing
South DakotaSouth Dakota Housing
TennesseeTennessee Housing Development Agency (THDA)
TexasTexas Department of Housing and Community Affairs (TDHCA)
UtahUtah Housing Corporation
VermontVermont Housing Finance Agency (VHFA)
VirginiaVirginia Housing Development Authority (VHDA)
WashingtonWashington State Housing Finance Commission (WSHFC)
Washington DCDistrict of Columbia Housing Finance Agency (DCHFA)
West VirginiaWest Virginia Housing
WisconsinWisconsin Housing and Economic Development Authority (WHEDA)
WyomingWyoming Community Development Authority (CDA)

 

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Ross Martin
Ross Martin LinkedIn

As a licensed insurance agent, Ross is responsible for researching and writing about all matters related to insurance. He has a background in writing and education, as well as a master's degree from Royal Holloway, University of London. He has been quoted by CNET, iDriveSafely.com and Kin Insurance.