Buying a home for the first time involves seven stages -- credit check through closing day -- and takes three to six months from preparation to ownership, according to the National Association of Realtors. Each stage has its own costs, documents, and decisions. Knowing what comes next, and in what order, is the most useful preparation you can make.
Step 1: Check Your Credit and Fix Problems Before You Apply
Your credit score determines whether you qualify for a loan and at what rate. Lenders pull reports from all three bureaus and use the middle score. Pull your own reports first at AnnualCreditReport.com (the federally mandated free site) and check for:
- Errors -- the CFPB estimates about one in five consumers has at least one. Dispute in writing; resolution takes 30 to 45 days.
- Derogatory marks -- collections, charge-offs, and bankruptcies. Some can be negotiated; others need time.
- High utilization -- carrying revolving balances below 30 percent of available credit (ideally below 10 percent) can raise a score within one to two billing cycles.
Conventional loans typically require a score of 620; FHA loans accept 580 with 3.5 percent down, according to the CFPB. The gap between a 620 and a 740 score on a $300,000 mortgage can exceed $100 per month in interest, according to Freddie Mac pricing data.
Warning
Do not open new credit accounts, finance a vehicle, or take on new installment debt from the start of the home-buying process through closing day. New accounts and inquiries lower your score and shift your DTI -- either can cause a lender to revise or withdraw your pre-approval.
Debt-to-income ratio (DTI) -- all monthly debt payments divided by gross monthly income -- matters equally. Most conventional lenders prefer total DTI below 43 percent; some approve up to 50 percent with compensating factors, according to Fannie Mae. Calculate yours: add student loans, car payments, and card minimums, then divide by gross monthly income.
Step 2: Get Pre-Approved by a Lender
Pre-approval is a written statement from a lender that it will lend up to a specified amount, subject to verification and a satisfactory appraisal. It is different from pre-qualification, which is an informal estimate based on self-reported numbers and carries no weight with sellers.
To get pre-approved, you will submit two years of tax returns, two to three months of bank statements, recent pay stubs, and authorization to pull your credit. The lender must then issue a Loan Estimate within three business days -- a standardized three-page document the CFPB requires that shows your rate, estimated monthly payment, and projected closing costs in a format comparable across lenders.
Tip
Get pre-approval letters from at least two or three lenders. Rates and fees vary enough to save thousands over the life of a loan. Multiple mortgage inquiries within a 45-day window count as a single inquiry on your credit report, according to FICO -- so there is no meaningful credit penalty for shopping.
Common loan types a first-time buyer will encounter:
| Loan Type | Minimum Down Payment | Minimum Credit Score | Mortgage Insurance |
|---|---|---|---|
| Conventional (conforming) | 3% (some programs) | 620 | PMI if <20% down; cancellable |
| FHA | 3.5% (score 580+) | 580 | MIP for life of loan if <10% down |
| VA | 0% | No official minimum; lenders often set 620 | None |
| USDA | 0% (rural/suburban eligible areas) | No official minimum; lenders often set 640 | Annual fee, not PMI |
PMI (private mortgage insurance) on conventional loans costs 0.5 to 1.5 percent of the loan amount per year, according to Freddie Mac -- $1,500 to $4,500 annually on a $300,000 loan -- until equity reaches 20 percent. See Down Payment Requirements by Loan Type (2026) for a full comparison.
Step 3: Set Your Real Budget, Including Closing Costs
Your pre-approval amount tells you what a lender will loan. Your actual budget -- what you should offer -- is a smaller number that accounts for all ownership costs.
Closing costs run 2 to 5 percent of the loan amount, according to Freddie Mac -- $7,000 to $17,500 on a $350,000 purchase, separate from your down payment. Main line items: origination fees (0.5 to 1 percent of the loan); title insurance ($500 to $1,500 for the lender's policy); appraisal ($300 to $600); escrow/settlement fees ($1,000 to $2,500); and prepaid items including one year of homeowners insurance, prepaid mortgage interest, and two to three months of property tax and insurance reserves.
For a full line-by-line breakdown, read Closing Costs Explained: What Buyers Actually Pay.
Beyond closing, budget for ongoing costs that renters rarely carry directly:
- Property taxes: the national effective property tax rate was approximately 0.87 percent of assessed value in 2024, according to ATTOM Data Solutions -- but rates vary by state and county from under 0.3 percent in parts of Hawaii to over 2 percent in parts of New Jersey.
- Homeowners insurance: the national average premium was $2,285 per year in 2024, according to the Insurance Information Institute. Coastal, flood-prone, and wildfire-risk areas carry higher premiums.
- HOA fees: if applicable, typically $200 to $500 per month for single-family homes in established communities, according to the Community Associations Institute.
- Maintenance: plan for 1 to 2 percent of the home's value per year -- $3,000 to $6,000 on a $300,000 home -- as a cash reserve, not a guaranteed annual expense.
Key takeaway
Your pre-approval amount is not your budget. Subtract closing costs, moving expenses, and a three-month cash reserve. What remains is the maximum you should offer.
Step 4: Find a Buyer's Agent
A buyer's agent represents your interests: evaluating whether an asking price is reasonable, structuring your offer, and coordinating the inspection and closing. Compensation rules changed in August 2024 following a National Association of Realtors settlement -- buyers now sign a written representation agreement before touring, and compensation is negotiated separately rather than assumed to come from the seller.
When interviewing agents, ask how many buyers they represented in your area and price range in the past year and how their compensation agreement works if the seller will not contribute. The alternative -- purchasing through the seller's agent in dual agency -- means one agent legally serves both parties and cannot fully advocate for either.
Step 5: Search for a Home and Make an Offer
Set search parameters based on your finalized budget -- not your pre-approval ceiling. Prioritize commute access, school district, flood zone designation (searchable by address on FEMA's Flood Map Service Center), and the age of major systems: roof, HVAC, electrical, and plumbing.
When you find a property that fits your needs, your agent will pull comparable sales ("comps") -- recently sold homes in the same neighborhood with similar size and condition. Comps, not the asking price, are the basis for your offer amount.
A standard offer includes: offer price; earnest money of 1 to 3 percent of the purchase price (held in escrow, at risk if you back out without a contractual reason); contingencies for financing, inspection, and appraisal; proposed closing date (typically 30 to 60 days); and personal property inclusions such as appliances.
Warning
Waiving contingencies can strengthen an offer but carries real risk. Waiving inspection means you accept the property as-is. Waiving financing means your earnest money is at risk if the loan falls through. Never waive a contingency without understanding what you are giving up.
Step 6: Inspection, Appraisal, and Final Loan Approval
Once a seller accepts your offer, three processes run in parallel.
The home inspection is ordered and paid for by you -- typically $300 to $500. A licensed inspector examines the structure, roof, foundation, electrical, plumbing, and HVAC systems and produces a written report within 24 hours. Attend the inspection in person when possible. After receiving the report, you can accept the home as-is, request repairs, negotiate a price reduction, or exit using your inspection contingency.
To understand what inspectors look for and which findings are real negotiating points, read what-a-home-inspection-covers.
The appraisal is ordered by your lender and costs $300 to $600. A licensed appraiser sets the property's market value based on comparable sales; lenders will not loan above that value. If the appraisal comes in below your purchase price, your options are: renegotiate the price, cover the gap out of pocket, or exit using your appraisal contingency.
Final loan approval ("clear to close") follows after underwriting verifies your financials, the appraisal, and the title search. Do not change jobs, make large purchases, or move funds between accounts during underwriting without speaking to your loan officer first.
Step 7: Closing Day
Closing is the legal transfer of ownership, typically one to two hours at a title company or attorney's office (some states permit remote online notarization). At least three business days before closing, your lender must provide a Closing Disclosure -- a CFPB-required document showing final loan terms and itemized costs. Compare every line to your Loan Estimate: lender-controlled fees cannot increase at all; third-party fees can increase up to 10 percent in aggregate. If anything looks wrong, raise it before closing day.
Bring government-issued ID, a certified or cashier's check (or wire transfer confirmation) for the Closing Disclosure amount, and proof of homeowners insurance with the lender listed as loss payee. You sign the loan documents, settlement statement, and deed. Keys are released once the deed records with the county -- often same day, sometimes the next business day.
| Stage | Typical Timeframe | Key Participants | Approximate Cost to Buyer |
|---|---|---|---|
| Credit check and repair | 1 to 3 months | Buyer, credit bureaus | None (dispute fees rarely apply) |
| Pre-approval | 1 to 5 business days | Buyer, lender | Possibly a credit pull fee (~$25-$50) |
| Home search and offer | 2 weeks to 3 months | Buyer, buyer's agent | Earnest money (1-3% of price, held in escrow) |
| Inspection | Within 10 days of acceptance | Buyer, inspector | $300 to $500 |
| Appraisal | 1 to 2 weeks | Lender, licensed appraiser | $300 to $600 |
| Underwriting / clear to close | 2 to 4 weeks | Buyer, lender | None additional |
| Closing | 1 to 2 hours | Buyer, seller, title company, agents | Closing costs: 2-5% of loan (Freddie Mac) |
For a complete line-by-line breakdown, see Closing Costs Explained: What Buyers Actually Pay.
To compare loan programs before your pre-approval appointment, Down Payment Requirements by Loan Type (2026) covers conventional, FHA, VA, and USDA side by side.
First 30 days after closing: change the locks; locate the water shutoff and electrical panel; file for homestead exemption if your state offers one (some deadlines are as short as 30 days); set up automatic mortgage payments; and keep the Closing Disclosure, deed, and title policy in permanent storage.
Key takeaway
The buyers who reach closing without surprises are the ones who read every document before they sign it: the Loan Estimate at pre-approval, the purchase contract before submitting an offer, the inspection report before deciding to proceed, and the Closing Disclosure three days before closing. Each document answers questions the next stage will raise.
Frequently asked questions
How long does it take to buy a house from start to finish?
Most first-time buyers take three to six months from the day they start seriously preparing -- checking credit, saving, and getting pre-approved -- to closing day. Once you are in contract on a specific home, the period from accepted offer to closing typically runs 30 to 60 days, according to the National Association of Realtors.
How much money do I need saved before buying a home?
Plan for a down payment of 3.5 to 20 percent of the purchase price, plus closing costs of 2 to 5 percent of the loan amount, according to Freddie Mac. On a $350,000 purchase, that is $12,250 to $70,000 for the down payment and $7,000 to $17,500 in closing costs -- separate sums, both due at or before closing.
What credit score do I need to buy a house?
Conventional loans typically require a minimum score of 620, while FHA loans accept scores as low as 580 with a 3.5 percent down payment, according to the Consumer Financial Protection Bureau. Higher scores qualify for lower interest rates, which meaningfully reduces the total cost of the loan over time.
Do I need a real estate agent to buy a house?
You are not legally required to work with a buyer's agent, but most first-time buyers benefit from one. Agents help you evaluate comparable sales, navigate offer contingencies, coordinate the inspection, and review the closing disclosure. Buyer's agent compensation rules changed in August 2024; ask any agent upfront how they are paid.
What happens if the home appraises below the purchase price?
If the appraisal comes in below the agreed purchase price, you have three main options: renegotiate the price with the seller, cover the gap between the appraised value and the purchase price out of pocket (called an 'appraisal gap'), or walk away using your appraisal contingency. Your contract language determines exactly which options are available.