Buying a home follows the same basic order for almost everyone. The ten steps below are listed in the order most buyers take them. Steps 1 through 3 happen before you tour a single house. Buyers who skip them tend to lose time, offers or money later.
Figure 1
A typical home purchase, week by week
Budget and credit check
Assistance research and education
Pre-approval
Home search
Offer and negotiation
Inspection and appraisal
Underwriting and closing
Weeks from start
Source: HouseBuyerGuides.com calculations. Example only. Getting ready can take longer if you need to raise a credit score or save. Contract to closing commonly runs 30 to 45 days.
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| From | To | |
|---|---|---|
| Budget and credit check | week 0 | week 6 |
| Assistance research and education | week 2 | week 8 |
| Pre-approval | week 6 | week 8 |
| Home search | week 8 | week 16 |
| Offer and negotiation | week 16 | week 17 |
| Inspection and appraisal | week 17 | week 19 |
| Underwriting and closing | week 17 | week 23 |
Step 01 of 10
Set a budget you can live with
Start with the monthly payment you are comfortable with, not the biggest loan a lender will offer. A mortgage payment usually includes principal, interest, property taxes and homeowners insurance, and it can also include mortgage insurance and HOA dues. Add in the costs that come with owning, such as repairs, utilities and maintenance, which renters often don't pay.
Lenders look at your debt-to-income ratio (DTI): your monthly debt payments, including the new mortgage, divided by your gross monthly income. Many lenders want it at or below about 43%, though some loans allow more. Our mortgage basics guide walks through the math.
You also need cash for:
- Down payment. From 0% (VA and USDA) to 3% or 3.5% (conventional and FHA) up to 20% or more.
- Closing costs. Lender, title, appraisal and government fees, plus prepaid taxes and insurance. See the closing costs guide.
- Earnest money. A deposit you put down when your offer is accepted. It is credited toward your purchase at closing.
- Inspection and appraisal. Usually paid before closing.
- A cushion. Money left over after closing for the first repair or a slow month.
Figure 2
Cash you need upfront, by loan type
- Down payment
- Closing costs
- Home inspection
VA or USDA (0% down)
Conventional (3% down)
FHA (3.5% down)
Conventional (20% down)
Source: HouseBuyerGuides.com calculations. Example: $300,000 home, 6.5% 30-year fixed rate for every loan type, closing costs estimated at 3% of the price. Real rates, fees and costs vary by lender, loan type and location. VA funding fees and USDA guarantee fees are assumed to be financed. Your earnest money deposit counts toward these totals.
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| Down payment | Closing costs | Home inspection | Total | |
|---|---|---|---|---|
| VA or USDA (0% down) | $0 | $9,000 | $500 | $9,500 |
| Conventional (3% down) | $9,000 | $9,000 | $500 | $18,500 |
| FHA (3.5% down) | $10,500 | $9,000 | $500 | $20,000 |
| Conventional (20% down) | $60,000 | $9,000 | $500 | $69,500 |
Step 02 of 10
Check your credit
Pull your free reports from all three bureaus at AnnualCreditReport.com and dispute anything that is wrong. Minimum scores depend on the loan. FHA allows scores as low as 580 with 3.5% down, conventional loans usually start around 620, and down payment assistance programs often require 620 to 660 or higher. Lenders can set their own minimums above these.
If your score is close to a cutoff, paying card balances down below about 30% of each limit and not opening new accounts before you apply can help. Our common hurdles guide covers credit fixes in more detail.
Step 03 of 10
Look for down payment assistance before you shop
Down payment assistance is the step most buyers skip. State housing finance agencies, cities, counties and nonprofits offer grants and low-cost or forgivable loans for the down payment and closing costs. Most require you to use a participating lender and finish a homebuyer education course, and some have income and price limits.
That changes the order of things. Pick your lender after you know which programs you want, because not every lender offers every program. Search your state or city on this site, use the program finder, or read the down payment assistance guide.
Step 04 of 10
Get pre-approved
A pre-approval is a lender's written statement of how much it is willing to lend you, based on your credit report and documents. You will usually provide:
- Pay stubs from the last 30 days
- W-2s or 1099s from the last two years, and tax returns if you are self-employed
- Two months of bank and investment statements
- Photo ID, and details on any debts, child support or alimony
Talk to at least two or three lenders. Within three business days of a full application, each one must give you a Loan Estimate, a standard three-page form that makes rates and fees easy to compare. Shopping several lenders within a short window generally counts as a single inquiry for credit scoring. Get pre-approved when you are ready.
Step 05 of 10
Choose a real estate agent
A buyer's agent finds homes, sets up showings, pulls comparable sales and negotiates for you. Since 2024 you usually sign a written buyer agreement before touring homes, and it spells out how your agent is paid. Read it before you sign. Ask any agent you interview whether they have closed deals that used down payment assistance, because those deals have extra paperwork and deadlines.
Step 06 of 10
Shop for a home
Write down your must-haves and your nice-to-haves before you start touring. Look at the things you can't change, such as location, lot, layout and commute, and give less weight to paint and fixtures. If you are using assistance, check the program's purchase price limit and property rules first. Some exclude certain condos, manufactured homes or homes outside a set area.
Step 07 of 10
Make an offer
Your agent writes a purchase offer that includes:
- Price and any seller credit toward your closing costs
- Earnest money amount and deadline
- Contingencies: inspection, appraisal and financing are the common ones. They let you back out, or renegotiate, without losing your earnest money if something goes wrong.
- Closing date, with enough time for any assistance program to approve the file
Expect counteroffers. When both sides sign, you are "under contract," and the contingency deadlines start counting.
Step 08 of 10
Inspect and appraise
Home inspection. Hire a licensed inspector to check the structure, roof, systems and safety items. Go to the inspection if you can. Then you can ask for repairs, a credit or a lower price, or cancel within your inspection period.
Appraisal. The lender orders an appraisal to confirm the home is worth the loan amount. FHA, VA and USDA appraisals also check basic safety and condition standards. If the value comes in low, see the hurdles guide for your options.
Step 09 of 10
Finish underwriting and lock your rate
The underwriter verifies everything you told the lender. Answer document requests quickly. Do not change jobs, open credit cards, finance furniture or move large sums of money without asking your lender first. Any of those can delay or derail the loan. Lock your interest rate when your lender says you can, and make sure the lock lasts past your closing date.
You will also choose a homeowners insurance policy and, depending on your state, a title company or closing attorney. Lenders require lender's title insurance. An owner's title policy is optional in most places but protects you, not the lender.
Step 10 of 10
Review the Closing Disclosure and close
At least three business days before closing, the lender must send your Closing Disclosure, which lists your final loan terms and costs. Compare it line by line with your Loan Estimate and ask about anything that changed.
Do a final walk-through within 24 hours of closing to confirm agreed repairs were made and the home is in the condition you expect. At closing you sign the loan documents and pay the remaining funds by wire or cashier's check. Then you get the keys.
After you move in
Keep your closing documents. Watch for your first payment date, and check that property taxes and insurance are paid from escrow. If you used down payment assistance, note any occupancy period or repayment terms. Selling or refinancing early can trigger repayment.