Do you want to find the best home warranty as a first-time buyer?
Perfect, you’re in the right spot. In this guide, you’ll learn:
- What is a home warranty plan for first time home buyers?
- How much does coverage for first time buyers cost?
- Is a home warranty service contract for new home buyers worth it?
- How do warranty contracts for new home market buyers work?
- What are the best home warranty companies and plans for first time home buyers?
- And much more!
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You’ve spent years building up enough for a down payment and countless hours scanning through real estate listings to find your first home. Eventually, you close on your dream house, move in, and sit down to relax, only to realize that your beautiful new home actually needs quite a few repairs on major appliances and systems.
What's In This Guide?
Unfortunately, home repairs are one of the many realities of owning a house. But, as a first-time buyer, figuring out precisely how much to budget for these annual repairs can be tricky. Even if you have your budget figured out, when you realize that you are now solely responsible for finding an HVAC specialist that can come repair your heating in the middle of a cold winter night, the whole process can seem like an insurmountable challenge.
Thankfully, a quality home warranty policy for first-time buyers can alleviate a lot of the stress you feel as a new homeowner. The trick is getting the right plan for your unique needs.
We know how challenging it can be to find a good home warranty policy. So, we’ve created this guide to finding the best policies for first-time buyers, plus our home warranty reviews of the top-rated options available on the market today.
Top 5 Best Home Warranties For First Time Buyers
What Are Warranties Meant For First Time Home Buyers?
A home warranty for a first-time buyer is a way to protect yourself from unexpected repair bills on your home systems and home appliances. With a warranty plan, you get free or highly-reduced repair service on any covered item, such as your air conditioner or dishwasher.
In exchange for an annual premium and a small service call fee whenever you submit a claim, a home warranty provider will also send a qualified service provider to your home to assess, diagnose, and repair any issues in your appliances or major systems.
So, you can think of a home warranty for a first-time buyer as a way to protect yourself financially from the often substantial costs of homeownership. These plans also come with the added bonus of easy home repairs for greater peace of mind when something malfunctions in your new house.
How Much Will A First Time Buyer Pay For A Home Warranty?
In general, a first-time buyer home warranty costs around $300-$600. However, this cost will vary quite a bit depending on the size of your new home and where the property is located.
The last major factor that determines how much your warranty will cost is the type of plan and the amount of coverage you want. Here are some of your plan options:
Best Home Warranty For First Time Buyer Coverage?
Choice Home Warranty is our top pick for first time buyers. Why? Their plans offer good all-around coverage for both systems and appliances and they won’t deny coverage if you’re buying a home with older items.
Systems Plans Or Appliance Plans
Top home warranty companies will let you choose between policies for either your home systems or your major appliances, also known by some companies as “basic coverage.” These plans are a good option if you just want to protect a specific set of appliances or systems in your new home.
Basic plans are generally your most cost-effective option for all-around coverage of systems and appliances, and cover only your home’s most essential systems and appliances. The actual terms of coverage will vary from plan to plan, but you can usually expect protection for most kitchen appliances, heating, electrical, and plumbing, at a minimum.
Alternatively, if you know that the home seller had just had the major appliances replaced or recently redid the plumbing or electrical system, these plans can be a cost-effective way to get coverage for your first year of homeownership.
Comprehensive Plan/Combo Plan
If you like the coverage that you can get from a basic plan but still want more protection, a comprehensive policy or a “combo plan” might be your best bet. With a comprehensive plan, you get everything found in a company’s basic policy, plus some premium coverage on things like air conditioning, refrigerator, and plumbing stoppages.
Comprehensive plans usually have higher premiums than basic plans, but they are often the best choice for people that want total protection on their home.
Build Your Own Plan
Your last home warranty policy option is a build your own plan. These highly customizable policies are an ideal choice for homeowners that want maximum flexibility over their coverage.
The drawback to this type of plan is that they tend to be more expensive upfront. But, since they give you the freedom to choose precisely how much coverage you need, you may be better protected financially from major repairs down the line.
Optional Coverage Options
Add-on items are perfect for the new homeowner that has unique items in their first home. Not everyone will need pool coverage, but it is nice to know that if you decide to have this backyard luxury, coverage is available.
Is A Warranty Policy Worth It For First Time Buyers?
We get it: After paying your down payment, closing costs, and moving fees, you’re probably looking at the cost of a warranty annual premium and are saying, “Are home warranties worth it?”
We’re happy to say that, yes, home warranties are definitely worth it. Here’s why:
Coverage For Costly Home Repairs
Owning a home is expensive. Not only do you have to pay your mortgage, utilities, and property taxes, but you have to be ready to handle any major repair costs that come your way.
However, these repair bills can quickly eat away at your savings and your monthly income. With a home warranty plan, though, you get financial protection from costly repair bills. This means more money in your pocket for the future.
Quick And Easy Home Service For Repairs
One of the other major benefits of a home warranty is an efficient repair service. Indeed, this is one of the biggest advantages for first time home buyers who may not be familiar with the local service technician options in their area.
With a warranty plan, you simply need to submit a claim to your policy provider. Then, the company will send a qualified repair specialist to your home, saving you the time and hassle of having to find your own service provider.
Protects Your Real Estate Investment
Purchasing your first home is a major investment, so it’s important that you protect your assets as much as possible. To ensure that your home continues to grow in value over the years, you need to be ready to pay for regular repairs and maintenance costs on your house.
These repair costs can quickly eat away at your budget, though, particularly if you just spent a significant portion of your savings on a down payment as a first time home buyer. So, with a warranty plan, you can get financial assistance with these much needed repairs and upgrades. Over time, this repair coverage will help you gain a better return on your investment if you choose to sell it in the future.
Covers What Homeowners Insurance Won’t
If you’re a first-time buyer, you might be wondering why you need a home warranty plan when you already have to buy a home insurance policy. While these two coverage options sound similar, though, they’re not at all the same thing.
Homeowners insurance covers you financially if there is any damage to your home as a result of a fire, earthquake, flood, or natural disaster, as per the terms of your contract. A home insurance policy, though, will not offer any monetary assistance if you need to replace your air conditioning or ductwork.
In these situations, you’ll have to pay out of pocket for home repairs, unless you have a warranty plan. Home warranties are designed to protect you from repair costs on issues with appliances and systems that happen as a result of regular wear and tear.
Simply put, your warranty covers what your insurance policy won’t, giving you complete protection from any future issues in your home.
How Do Home Warranties For First Time Buyers Work (Are They Unique)?
For the most part, the home warranty plans you can get as a first-time buyer are available to any buyer, seller, or existing homeowner. Here’s how a home warranty works to help you with home repairs:
Step 1: Find Your Dream Home
The first step in this process is to find your dream home. Since warranty plans vary in cost based on your home location and size, it’s impossible to buy a policy before you know what home you want.
Once you’ve made an offer, you can start asking warranty companies for a free quote to get an idea of how much your plan will cost.
Step 2: Get A Home Inspection
After you make an offer, your mortgage lender will almost certainly require that you get a home inspection before closing. Even though this isn’t technically required by most warranty companies, it’s always a good idea because it can find any pre-existing conditions that may not be covered under your plan.
If you do find any pre-existing issues with the home that wouldn’t be covered under your plan, it’s best to talk with the seller and deal with them before closing. That way, you can be confident that any issues that crop up are covered under your policy.
Step 3: Choose A Warranty Plan
Now that you are close to closing on your first home, to decide on your warranty plan officially.. Regardless of the type of plan you choose, be sure to completely read through the contract and terms/conditions, so you’re aware of any conditions on your coverage.
Step 4: Submit A Claim
Once you have your home warranty plan in place to protect your home, you can go ahead and submit a claim whenever you need a repair on an appliance or system. Most top-rated companies have a 24/7 call center in place to help process your claims, and many others will also have an online claims portal to help you get the service you need.
Step 5: Pay A Service Fee
When you submit a claim under your home warranty protection plan, you’ll pay a small service fee. This fee varies from plan to plan but is usually between $60-$120.
In general, this fee is paid just once per repair claim, and you can think of it as similar to a copay at your doctor’s office.
Step 6: Get Great Home Repair Service
Finally, as soon as your claim is processed, your home warranty service will send a qualified repair technician to get your house back in working condition.
The local contractor will assess, diagnose, and repair any issues in your home. Your warranty provider will then cover the cost of the service up to the value listed on your contract.
Looking for more tips for first time home buyers? Check out this video from real estate experts on everything you might run into during your home journey.
Top Home Warranties For First Time Buyers Reviewed:
Choice Home Warranty Review (Best Overall Home Warranty)
Why Do We Like Choice?
Out of all the home warranty companies we reviewed, Choice Home Warranty has the most comprehensive plans, good payout limits, minimal number exclusions, quality customer service, and affordable cost.
Choice has two main home warranty plans. The “Basic Plan” and the more comprehensive “Total Plan” covering 15 home appliances (dishwasher, etc) and systems (duct work, water heater, etc). They also have “Optional Coverage” for add on items most homeowners don’t usually have, which include pools and spas, well pump, sump pump, roof leaks, other extraneous items.
Based on our review, Choice’s “Total” plan covers these items at a more affordable price point than its competitors although has a few more exclusions, which is how they can justify charging a lower monthly payment.
The thing about home warranties is that they are a bit complicated with a lot of moving parts that may confuse most homeowners on what’s covered versus what’s not covered.
A key deciding factor in our review looking for the best home warranty company is finding one with top quality customer service to help customers like you walk through the claims process so you don’t have to worry about nasty surprises when you need service.
That said, Choice has 24 hours a day 7 days a week 365 days a year availability and a 48 hour response time to get a contractor out to your home. Other providers tend to have slower response times and are less communicative about when technicians are assigned to your claim.
Policy On Pre-Existing Issues or Older Units?
Choice covers appliances regardless of age or existing wear and tear, so you don’t need to worry about signing up and not getting covered due to age assuming you’ve properly maintained the item over it’s life.
What’s not covered is if you or someone else breaks the unit regardless of when it happens. All home warranties, regardless of company, won’t cover a unit you break through negligence or misuse (i.e., baby sticks chocolate bar into VCR).
- Good Limits (up to $1,500)
- Minimal Exclusions
- More Affordable
- Only 15 Home Appliances & Systems Covered
American Home Shield Review (Editor’s Choice)
Why Do We Like American Home Shield?
Far and away the most thorough and transparent home warranty company we reviewed is American Home Shield. They are the gold standard. If you spend any amount of time on their website, it’s clear that they are very upfront about what they do cover and don’t cover when compared to their competitors.
In fact, they go out of their way to tell you they cover things their competitors don’t like rust or plumbing stoppages.
They also have the best home warranty coverage with an astounding 21 systems and major appliances including trash compactor, smoke detectors, and clothes washer. They also have the fewest number of exclusions with the highest dollar limit payout amounts ranging from $1,000 – $3,000 per claim.
Think of American Home Shield as the “BMW” or “Mercedes” of home warranty companies. More expensive than Choice, but with better coverage and limits.
Policy On Pre-Existing Issues or Older Units?
Very similar to Choice, American Home Shield covers old systems and appliances that break down due to wear and tear, but they do not cover pre-existing issues or negligence related to the misuse of your appliance or system!
- Highest Payout Limits (up to $3,000)
- Widest Coverage (21 systems and appliances)
- Fewest Exclusions
- Most Expensive
Select Home Warranty Review (Most Affordable)
Why Do We Like Select Home Warranty?
Select Home Warranty made our list as a best budget friendly home warranty option. They have lower limits ranging from $500 – $2,000 per claim but also lower service fee costs and potentially reduced annual premiums as low $325 per year if you opt into multiple year contracts, far below other competitors.
If you opt for their “Platinum Care” they are on-par with other providers in terms of what they actually cover.
Overall, a great budget option for people who want a home warranty but can’t afford Choice or American Home Shield.
Policy On Pre-Existing Issues or Older Units?
Very similar to Choice and American Home Shield, Select covers old systems and appliances that break down due to wear and tear, but they do not cover pre-existing issues or negligence related to the misuse of your appliance or system!
- Most Affordable Service Contracts
- Roof leaks Are Covered In Their Platinum Plan
- Ultra Pushy Sales
- 3 Days To Submit Claim
- Weaker Network Of Contractors
Total Home Protect Review (Best For Larger Systems)
Why Do We Like Total Home Protect?
Total Home Warranty made our list as a home warranty with above average protection on more robust systems like septic systems and roof coverage.
Their monthly cost comes out to around ~$45 per month for their basic “Gold” plan, which puts them on the more expensive side of the scale when compared to other top home warranties on our list with better coverage.
Most home warranties do not cover anything related to your roof but Total Home Protect does, which we found to be unique to their offering helping them crack our top list.
Policy On Pre-Existing Issues or Older Units?
Very similar to Choice and AHS, Total Home Protect covers old systems and appliances that break down due to wear and tear, but they do not cover pre-existing issues or negligence related to the misuse of your appliance or system!
- You Can Choose Your Own Technicians
- Roof Coverage
- More Exclusions Than Most Competitors
- The Worst BBB score
- Low Payout Limits ($500)
First American Home Warranty Review (Best Customer Service)
Why Do We Like First American Home Warranty?
First American Home Warranty made our list as a home warranty with above average customer service mixed with in with a decent price point.
The only drawback was that they aren’t nationwide lacking coverage in the following states: ND, MN, WI, IL, NY, VT, NH, ME, MA, CT , RI , DE, AL, HI, LA.
Their plan options include a “Basic“ plan, which only covers appliances and will run you about $28 per month. Their combo plan, which covers major systems and appliances branded the “Premier” plan costs around to ~$43 per month.
Overall a good home warranty provider, but just lacking the coverage, which would have helped make a better case for “best overall home warranty company”.
Policy On Pre-Existing Issues or Older Units?
Again, all of the home warranty providers seem to have adopted a similar policy in that they cover “old” appliances and systems that break down due to wear and tear, but they do not cover pre-existing issues or negligence related to the misuse of your appliance or system!
- Great Customer Service (B+ BBB Score)
- Online Chat Support
- Not Available In 15 States
- Can’t Choose Your Own Contractor
Final Thoughts On Home Warranties For First Time Buyers
Buying your first home is stressful enough without having to worry about the cost of home repairs. A home warranty can help you stay on top of regular home maintenance without wiping away your savings.
Plus, for first time buyers, home warranties make it easier to find reputable service providers when something breaks or malfunctions in your new house. So, warranty plans are a must-have for anyone that’s about to purchase their first home.