Steps to Buying a House: The First-Time Buyer's Checklist
Buying a house is a sequence, not a leap. Here are the eight steps in order — what each costs at this week's rates, how long it takes, and what to have ready before you move to the next.
The steps to buying a house are: set a budget, check your credit, save for the down payment and closing costs, choose a loan, get pre-approved, make an offer, get through inspection, appraisal and underwriting, and close. The order matters. Buyers who sort out money and paperwork before they tour homes negotiate from strength; buyers who fall for a house first find out what they can afford at the worst possible moment.
Where buyers start this week: the median U.S. home sold for $393,300 (Census, Q3 2026) and the average 30-year fixed rate is 7.18% (Freddie Mac, Nov 5, 2026). With 20% down that's about $2,561 a month including property taxes and insurance, which takes a household income of roughly $110,000 to keep housing at 28% of gross pay — against a median household income of $87,460. Most first-time buyers put down far less than 20%, so step 3 below shows the cash you really need.
Step 1: Set a budget you can live with
Start with the payment, not the listing price. Lenders size your loan with two ratios — housing costs around 28% of gross monthly income and all debts around 36% (up to 45% on many conventional loans and 43% or more on FHA) — but the most a lender will approve is rarely the amount you should spend.
The payment that counts is more than principal and interest: it includes property taxes, homeowners insurance, HOA dues and, with less than 20% down, mortgage insurance. Find your number with the home affordability calculator, pressure-test it with how much house you can afford, and price a specific home with the mortgage calculator with taxes and insurance.
Step 2: Check your credit
Your score sets which loans you can get and the rate you pay. Typical floors are about 620 for conventional loans and 580 for FHA with 3.5% down (500 with 10% down); every step above that lowers your rate and, on a conventional loan, your PMI. See the minimum credit score by loan type and what each band pays in mortgage rates by credit score.
Three to six months before you apply: pay every bill on time, pay credit cards down below 30% of their limits (10% is better), check your reports at all three bureaus for errors, and don’t open new accounts or finance a car.
Step 3: Save for the down payment and closing costs
Twenty percent down is not required. Conventional loans start at 3% for first-time buyers, FHA at 3.5%, and VA and USDA at zero — but every loan still needs closing costs, and less down means a bigger loan and mortgage insurance.
Cash to buy a $400,000 home, by loan and down payment, with a 700 credit score at this week's program rates (Optimal Blue, Nov 5, 2026). Closing costs use the common 2%–5%-of-price range, which includes prepaid interest and the first escrow deposit.
| Loan and down payment | Down payment | Closing costs | Cash to close | Monthly payment |
|---|---|---|---|---|
| Conventional, 3% down | $12,000 | $8,000–$20,000 | $20,000–$32,000 | $3,284 |
| FHA, 3.5% down | $14,000 | $8,000–$20,000 | $22,000–$34,000 | $3,198 |
| Conventional, 5% down | $20,000 | $8,000–$20,000 | $28,000–$40,000 | $3,225 |
| Conventional, 10% down | $40,000 | $8,000–$20,000 | $48,000–$60,000 | $3,079 |
| Conventional, 20% down | $80,000 | $8,000–$20,000 | $88,000–$100,000 | $2,585 |
| VA, 0% down (first use) | $0 | $8,000–$20,000 | $8,000–$20,000 | $3,076 |
Monthly payment = principal and interest + mortgage insurance (PMI, FHA's annual premium; the VA funding fee and FHA's upfront premium are financed) + $437 for property tax and homeowners insurance at the U.S. medians (U.S. Census Bureau, 2024 American Community Survey (1-year microdata)). The 3%-down conventional loan is for first-time buyers or income-limited programs; VA needs military eligibility; USDA loans (also 0% down) need an eligible rural address and a household income under the limit.
Short on cash? Every state's housing agency runs down payment assistance programs, and sellers can pay part of your closing costs if you negotiate it into the offer.
Don’t empty your savings to close. Lenders often want to see reserves, and a buyer with 5% down and an emergency fund is safer than one with 20% down and nothing left. Test different down payments with the down payment calculator.
Step 4: Choose a loan type
- Conventional — the most common loan, from 3% down; PMI below 20% that comes off as you build equity.
- FHA — for lower scores and smaller down payments; a 1.75% upfront premium and an annual premium that usually lasts as long as the loan. Compare the two in FHA vs. conventional.
- VA — for eligible service members and veterans: no down payment and no monthly mortgage insurance.
- USDA — no down payment in eligible rural and suburban areas, with income limits.
You’ll also pick a term: a 30-year loan keeps the payment low; a 15-year costs more each month but far less in interest. All the options side by side are in types of mortgage loans.
Step 5: Get pre-approved and compare lenders
A pre-approval is a lender’s written estimate of what it will lend you, based on your verified income, assets, debts and credit — stronger than a pre-qualification, which is just a conversation. Sellers expect one with every offer. Have ready: two years of W-2s or tax returns, recent pay stubs, two months of bank statements, and ID.
Compare at least three lenders. Lenders don't price alike: on comparable 2025 conventional purchase loans, the middle half of 57 large lenders charged median borrower-paid loan costs of $4,634 to $6,224 — and that's before differences in rate. Apply with all of them within a couple of weeks; credit scoring counts multiple mortgage inquiries in a short window as one. Lender-by-lender figures are on the mortgage lenders page.
Each lender must send a three-page Loan Estimate within three business days of your application, in the same format, so you can compare rates and fees line by line.
Step 6: Find a home and make an offer
A buyer’s agent finds listings, sets up showings and writes the offer. Since 2024 you sign a written agreement with your agent before touring, which spells out how they’re paid — read it and negotiate if you need to.
Your offer names a price and includes your pre-approval letter, an earnest money deposit (typically 1% to 3% of the price, held in escrow and credited at closing) and contingencies — your ways out:
- Inspection — renegotiate or walk away if the inspection finds serious problems.
- Appraisal — protection if the home appraises for less than your price.
- Financing — your deposit back if the loan falls through.
Waiving contingencies can win a bidding war, but it puts your deposit at risk. First-time buyers should keep the inspection contingency unless they fully understand what they’re giving up.
Step 7: Inspection, appraisal and underwriting
Once your offer is accepted, the clock starts:
- Home inspection — usually within the first week to ten days; a few hundred dollars, paid by you.
- Rate lock — lock your rate with the lender for long enough to cover the closing date, commonly 30 to 60 days.
- Appraisal — ordered by the lender to confirm the home is worth the loan. FHA and VA appraisals also check minimum property standards.
- Underwriting — the lender verifies everything again and may ask for more documents. Answer fast, and don’t change jobs, open credit or make large unexplained deposits until you close.
- Title search and homeowners insurance — the title company clears the title; you buy a homeowners policy that starts on closing day.
Step 8: Close
At least three business days before closing, the lender must send your Closing Disclosure. Compare it line by line with your Loan Estimate and ask about anything that changed. Wire your cash to close only after confirming the instructions by phone with your title company at a number you already know — wire fraud targeting homebuyers is common.
Do a final walk-through to confirm the home is in the agreed condition, then sign the loan documents. Once the deed is recorded, the keys are yours. Estimate the final bill with the closing cost calculator, and see what each line means in closing costs explained.
How long does it take to buy a house?
| Stage | Typical time |
|---|---|
| Getting ready: budget, credit, savings | A few months to a year or more |
| Pre-approval | A few days to a week |
| House hunting | A few weeks to several months, depending on your market |
| Offer to accepted contract | A few days |
| Contract to closing: inspection, appraisal, underwriting | About 30 to 45 days |
| Closing Disclosure before closing | At least 3 business days |
Once you’re under contract, most of the wait is the appraisal, title work and underwriting. Answering lender requests the same day is the single best way to keep your closing on schedule.
Your home-buying checklist
- Budget and target payment worked out
- Credit reports checked, balances paid down
- Down payment, closing costs and an emergency fund saved — or assistance lined up
- Loan type chosen
- Pre-approval letter in hand; three Loan Estimates compared
- Agent agreement signed; offer with earnest money and contingencies
- Inspection done, rate locked, appraisal in, underwriting conditions cleared, insurance bought
- Closing Disclosure reviewed, wire instructions verified by phone, final walk-through done
Looking for help with the down payment? Start with first-time home buyer programs in your state.
Frequently asked questions
What are the steps to buying a house?
1) Set a budget you can live with. 2) Check and improve your credit. 3) Save for the down payment and closing costs. 4) Choose a loan type. 5) Get pre-approved and compare lenders. 6) Find a home and make an offer.
7) Get through inspection, appraisal and underwriting. 8) Review the Closing Disclosure and close.
How long does it take to buy a house?
From an accepted offer to closing usually takes about 30 to 45 days, mostly for the appraisal, title work and underwriting.
Getting ready — saving, fixing credit, getting pre-approved — often takes months, and the house hunt anywhere from a few weeks to several months depending on your market.
How much money do you need to buy a house?
On a $400,000 home: about $14,000 for an FHA down payment (3.5%) plus $8,000–$20,000 in closing costs, or $22,000–$34,000 in total. With a 3%-down conventional loan for first-time buyers it's a little less; with 20% down, $88,000 or more. Keep an emergency fund on top.
Is $10,000 enough for a down payment on a house?
It can be. $10,000 covers 3% down on a home up to about $333,333 with a first-time-buyer conventional loan, or 3.5% on about $285,714 with FHA — but you'll also need closing costs, so in practice it stretches further with seller credits or down payment assistance. VA and USDA loans need no down payment at all.
How much house can I afford on $70,000 a year?
About $250,000 with 20% down at this week's 7.18% average rate, keeping principal, interest, property tax and insurance at 28% of gross income ($1,633 a month). Less down, other debts or a higher tax area lower that.
See the affordability report for other salaries, or run the affordability calculator.
Can I afford a $400,000 house on a $100,000 salary?
It's a stretch at this week's rates. With 20% down at 7.18%, a $400,000 home costs about $2,604 a month with taxes and insurance — 31% of a $100,000 gross income, against the 28% housing guideline; lenders may still approve it if you have little other debt, since total debts can reach 36% or more.
With a smaller down payment the loan and mortgage insurance push the payment higher, and car or student-loan payments count against you too.
What credit score do you need to buy a house?
About 620 for a conventional loan, 580 for FHA with 3.5% down (500 with 10% down) and around 640 for USDA; VA sets no minimum, though most lenders look for about 620. See the minimum credit score by loan type.
How much is earnest money?
Typically 1% to 3% of the price, paid within a few days of an accepted offer and held in escrow. It counts toward your down payment or closing costs at closing.
Your contingencies decide whether you get it back if the deal falls through, so read them before you sign.
Sources
- CFPB — Buying a house: tools and resources for homebuyers
- HUD — Buying a home
- U.S. Census Bureau — Median sales price of houses sold (MSPUS, via FRED)
- U.S. Census Bureau, 2024 American Community Survey (1-year microdata)
- FFIEC — HMDA data browser
How the figures on this site are calculated and tested: methodology · editorial policy.
This guide is general educational information, not financial advice. Confirm specifics with a licensed lender or advisor.