How to Buy a House: Step-by-Step Guide
Every step of buying a home, from budget and pre-approval to offer, escrow, underwriting and closing, with loan program tips and a glossary of every term.
- Step 1: Set Your Home Buying Budget — Know your price range and a monthly payment you're comfortable with before you look at a single listing.
- Step 2: Check and Strengthen Your Credit — Your credit score sets which programs you qualify for and the rate you pay. Check it early and fix what you can.
- Step 3: Save for Your Down Payment and Closing Costs — Plan for the full cash to close (down payment, closing costs, prepaid items and reserves), not just the down payment.
- Step 4: Choose the Right Loan Program — Compare programs on down payment, credit, mortgage insurance and total cost to find the one that fits you and the home.
- Step 5: Get Pre-Approved — A pre-approval verifies your income, assets and credit so sellers take your offer seriously.
- Step 6: Find a Home Without a Buyer's Agent — Search, tour and size up homes yourself, and keep the commission a buyer's agent would have taken.
- Step 7: Estimate the Payment and Cash to Close on the Home — Run real numbers on the exact home: the payment, cash to close and rate for every program you qualify for.
- Step 8: Write and Submit Your Offer — Write a state-specific purchase offer with the right price, deposit, contingencies and dates.
- Step 9: Negotiate and Ratify the Contract — Counter until you agree, then both sides sign. The ratification date starts every deadline in escrow.
- Step 10: Open Escrow and Deposit Your Earnest Money — Send your deposit to the escrow or title company on time, and verify wiring instructions by phone.
- Step 11: Complete Your Loan Application and Get Your Loan Estimate — Turn the pre-approval into a full application on this property and review your Loan Estimate.
- Step 12: Lock Your Interest Rate — Lock your rate so it can't rise before closing, for long enough to cover your closing date.
- Step 13: Schedule the Home Inspection — Hire a licensed inspector within your inspection period, then decide whether to ask for repairs or credits.
- Step 14: The Appraisal — An independent appraiser confirms the home is worth at least what you're paying, which protects you and the lender.
- Step 15: Title Search and Title Insurance — The title company confirms the seller can sell the home free of surprise claims, and insures it.
- Step 16: Get Homeowners Insurance — Bind a homeowners policy (and flood insurance if required) before closing, with your lender named on it.
- Step 17: Underwriting and Conditions — An underwriter verifies everything, issues a conditional approval, and you clear the remaining conditions.
- Step 18: Remove Your Contingencies — As each condition is satisfied, release the matching contingency in writing, on time.
- Step 19: Clear to Close — The underwriter has signed off on every condition. Closing documents and the Closing Disclosure come next.
- Step 20: Review Your Closing Disclosure — Compare the Closing Disclosure with your Loan Estimate at least 3 business days before closing.
- Step 21: Do the Final Walkthrough — Visit the home just before closing to confirm its condition, agreed repairs and included items.
- Step 22: Closing Day — Sign the loan and title documents, the lender funds, the deed records, and you get the keys.
- Step 23: After Closing: Your First Year as a Homeowner — Make your first payment, watch for a servicing transfer, file for tax exemptions and track your equity.