buying a house checklist

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Homebuying Process: 15 Steps to Buying a House

The steps to buying a home include getting your finances ready and finding the right mortgage lender, but there's fun stuff, too

When you're looking at lenders, determining that they offer the type of loan you want is the first step. (If you've decided on an FHA loan and they aren't an FHA-approved lender, move on to the next one.) But beyond that basic hurdle, you'll want to look at how their sample rates compare with today's mortgage rates, find out what closing costs you’ll be responsible for and compare mortgage origination fees. You'll likely find some of this info right on their websites; to get some numbers, you'll have to speak with a loan officer.

Get preapproved for a mortgage

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Find a real estate agent

Make an offer

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You've got your preapproval in hand and know what kind of house you're looking for, so let's find someone to help you look. The right real estate agent can make a huge difference throughout the process of buying a house, from knowing the ins and outs of the local market to providing moral support when the search feels endless to helping you negotiate with a seller.

It's a good idea to interview at least three agents. Ask people you know who've recently bought a home whether they'd recommend their agent. There's just one hard-and-fast “don't” here: Don't use the real estate agent who's selling the home you're hoping to buy. You want your own agent who will advocate and negotiate on your behalf.

Found a home that's right for you? Now's the time to make an offer. Your real estate agent can be a tremendous resource here, providing you with comparable sales information and any intel about the sellers they might have gleaned from the sellers' agent (like if they've already found a new place and are extra motivated to sell). You may also want help from a real estate attorney. In some states, a lawyer is required to be part of any real estate transaction.

Get a mortgage

Go shopping!

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Yes, this step merits an exclamation point — it's time to take scrolling through online real estate listings to the next level and actually see some homes in person. Make the most of your walk-through, since you might only see a home once in person before you make an offer — especially in a hot market. Try not to be thrown off by other home shoppers or by the seller's agent (who may or may not be in attendance).

Quantify the goal and make sure you can track its progress.

Clearly define the goal, people, and important steps involved.

You know the property you want to buy and how much you'll have to pay for it. Now you'll choose a lender to get a mortgage from (you can go with a lender that preapproved you, or start fresh with a different one). Even with an online-first lender, you'll often work closely with a loan officer to complete the actual application.

This is a paperwork-heavy process, so get ready to do a lot of uploading. Here's what you're likely to need:

W-2 forms from the past two years (possibly more, if you've changed employers).

Pay stubs from the past 30 to 60 days.

Proof of other sources of income (including documentation of any gift money).

Federal income tax returns from the past two years.

Recent bank statements (usually for the last couple of months).

Details on long-term debts like car or student loans.

ID and Social Security number

Add a short description of your goal here

Get homeowners insurance

Achievable

Relevant

Review and adjust the goal until it’s realistic.

Explain why the goal is important and how it fits into the bigger picture.

It might feel a little strange to take out an insurance policy on a home you don't actually own yet, but most lenders make securing homeowners insurance a condition of giving you a mortgage. You'll want enough coverage to fully replace the home (which might not be the same as your purchase price or the appraised value), and typically the policy should become effective on your closing date.

You know your homebuying budget, and you've decided what type of home loan will work for you. Now it's time to start shopping for a mortgage lender. There are lots of lenders out there, including big brick-and-mortar banks with familiar names, online-only nonbank lenders and smaller, local banks and credit unions that may offer more personalized service.

Timely

Set deadlines for the goal.

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nerdy tip

Goal

1. Make sure you're ready

Goal objective 5

Get your finances in order

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Make sure you are ready

get your finances in order

Goal

Add a short description of your goal here

Goal

Clearly define that Buying a house may be the biggest financial decision you'll ever make, so before you take the plunge you want to be sure your finances are solid.

Using a home affordability calculator can help you determine your budget by taking into account your income, debts, location and down payment amount (more on down payments in a moment). You'll be able to see how your monthly mortgage payments might add up and how your finances could look as a homeowner.

This can be important for keeping your ambitions down to earth. You might be able to qualify for a sizable mortgage, but that doesn't mean you actually want to commit that much of your budget to housing..

Check your credit score, too. A higher credit score is the single most powerful way to earn a lower mortgage interest rate. Know the mortgage options for your credit score. If your credit score could use some work, it may be worthwhile to hold off on homeownership and see what you can do to build up your score..

Sure, there's being financially ready to buy a house (see Step 2 for that). But are you emotionally ready? Even if it's just going to be your starter home, you're making a big financial commitment and putting down some roots.

You'll want to think about your other goals for the next few years. Are you buying with a partner, and if yes, are you on the same page when it comes to money? Is there any chance you'd need to relocate for work? Are you thinking of starting a family? These big-picture questions can add to the pros (or cons) of whether this is the right time to buy a house.

4. Create a wish list

Nerdy Tip

Asking for a credit at closing rather than for the seller to complete needed repairs can help keep the transaction moving. The seller simply rebates you an agreed-upon amount for specific improvements. That can save you a bit of cash at closing, plus handling the repairs yourself (whether DIY or with a pro) ensures the work will be done to your satisfaction.

Make a plan for the down payment

Schedule a home inspection

Have the home appraised

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A list of must-haves and nice-to-haves for your house is definitely one of them. Whether you’re looking for a starter home or somewhere you can imagine living for years to come, there are lots of little details, but here are some of the bigger decisions you might make when drawing up your list:

Detached house or attached unit?

Whats your ideal location?

Move-in-ready or fixxer upper?

When you've determined what you can afford, you can figure out how much you want to save for a down payment. Though 20% down payments used to be the norm, many homeowners opt to put down less. A smaller down payment requires less money upfront, but it means you'll have to pay mortgage insurance, which typically increases your monthly payment. The type of home loan you use also impacts the minimum down payment required.

If this is your first home or if you haven't owned a house in a while, you may also want to look into state first-time home buyer programs. Many offer financial help, including down payment assistance. And if you have a friend or family member who can afford it, you may also use gift money to increase your down payment. Rules about gift money vary by loan program.

A basic home inspection can raise issues you might face down the road and point out any necessary repairs. This visual assessment covers all aspects of the house and its systems, from the foundation to the roof. If you have a particular concern, like mold or radon, you may want to get one of the more specialized types of home inspections in addition to a standard inspection. And if the home has features such as a pool, septic system or retaining walls, you may want to have these inspected as well.

You should choose the home inspector and pay for the home inspection. If it uncovers problems that weren't included in the seller's disclosures, you may be able to negotiate with the seller

Quantify the goal and make sure you can track its progress.

Clearly define the goal, people, and important steps involved.

The home appraisal is completely separate from the home inspection. While the home inspection is for your peace of mind, the appraisal is really for the lender, which doesn’t want to lend you more money than the home is actually worth. An appraisal looks closely at the home you're buying and at comparable recently sold homes to determine the market value of the property.

Nerdy Tip

You'll want to set aside money for more than just the down payment. Closing costs generally run from 2% to 5% of the total cost of the loan. It's also a good idea to have some emergency funds in case the home needs unexpected repairs.

Find the right mortgage for you

Close on your new home

Negotiate any repairs or credits with the seller

Relevant

Achievable

Review and adjust the goal until it’s realistic.

The type of mortgage you use to buy a house affects what you'll need to qualify for the loan (including the required down payment amount) and how you'll pay it back. Choosing the right home loan can boost your chances of approval and may save you thousands in the long run.

Before you decide which type of mortgage to pursue, it’s important to learn the advantages and drawbacks of each one. Here are some of the main types of mortgages:

Conventional loans are mortgages that are not guaranteed by the federal government. They offer low minimum down payments, but have more stringent qualifications.

FHA loans are mortgages backed by the Federal Housing Administration. These are generally easier to qualify for than conventional loans, but have stricter requirements for mortgage insurance.

VA loans from the Department of Veterans Affairs are for active or former service members and eligible spouses. VA purchase loans allow you to make no down payment.

Jumbo loans are mortgages for houses that are more expensive than standard lending limits. These usually require larger down payments and higher credit scores.

Renovation loans let you wrap the costs of home improvements into the total amount of the home loan. Especially when mortgage rates are low, this can be a way to borrow more money for repairs while paying less interest than you would with another type of home improvement loan, like a personal loan.

Though some items, like prorating property taxes or HOA fees, will already have been addressed in your offer letter, you may still have some items to negotiate before closing.

Your ability to negotiate can hinge on what kind of market you're facing. In a strong seller's market, it can be difficult to get concessions, since the seller can simply go to their next offer. But if it's an issue that will come up with any buyer — for example, a necessary repair that will get flagged by any home inspector — you may still have leverage. And in a buyer's market, almost any aspect of the transaction can be negotiated, including having the seller pay some of your closing costs or loan points.

Explain why the goal is important and how it fits into the bigger picture.

You've finally made it to the last step! Getting familiar with the standard closing documents ahead of time can make the closing process less nerve-wracking.

Your lender must provide you with the closing disclosure at least three days before the actual closing. You can compare it with your Loan Estimate to see whether and how any closing costs have changed. This will let you know how much total cash you’ll need to close.

On or close to closing day, you'll do a final walk-through with your real estate agent. You'll probably be buzzing with excitement, but make sure to check that everything’s as agreed upon (for example, that all the appliances that are supposed to be included in the sale are still there).

It's been a whirlwind of emotion and seemingly endless paperwork, not to mention that you may have just written the biggest check of your life

Timely

Set deadlines for the goal.