Generic materials-related problems foreseen in connection with the operation of a fusion power plant present a major challenge for the development of magnetically confined fusion as a commercial power generation option. In this review, we focus on the predictive capabilities of first-principles-based atomistic models for radiation defects and phase stability of body-centred cubic Fe-Cr-based ferritic-martensitic and ferritic steels and tungsten alloys, which are presently under consideration as candidate structural materials for the first wall and diverter applications. Density-functional calculations predict that low-Cr iron alloys are stabilized by intra-atomic exchange, giving rise to magnetism and changes in interatomic chemical bonding. Magnetic effects are also responsible for the fact that the atomic structure of radiation defects in iron and steels is different from the structure of defects formed under irradiation in non-magnetic body-centred cubic metals, for example vanadium or tungsten. Ab initio-based magnetic cluster expansion-based Monte-Carlo simulations showed unusual non-collinear magnetic configurations forming at interfaces and around Cr precipitates in FeCr alloys. In W-Ta and W-V alloys, ab initio calculations helped to identify several low temperature ordered inter-metallic phases that are not included in the existing phase diagrams based on high-temperature experimental data. Ab initio calculations have also made it possible to predict atomic structures of point defects formed in these alloys under irradiation.