How to Buy a House: Steps, Costs & Timeline

To buy a house, check your credit, set a budget, save for a down payment and closing costs, get preapproved, then make an offer and move through inspection, appraisal, underwriting, and closing. The average purchase loan closes about 37 days after application, and you can start with as little as 3% to 3.5% down.

Buying a house is a sequence of decisions, and the order matters. Get the first three steps right (credit, budget, cash) and the rest moves faster. Below is the exact order a loan officer and underwriter would walk you through.

Are you ready to buy a house?

You are ready when you can cover the down payment, closing costs, and a full monthly payment, still keep an emergency fund, and plan to stay for several years. If one of those is missing, a few months of prep can change the answer.

• Income: about two years of steady work history helps most loan programs.
• Cash cushion: many advisors suggest keeping 3 to 6 months of expenses saved after closing, since repairs are now your bill.
• Debt: a lower DTI gives you more loan options and a lower payment.
• Time horizon: NAR reports owners who sold last year had lived in their homes a median of 11 years. Buying and selling both cost money, so very short stays rarely pay off.

Compare your options with the rent vs. buy calculator.

What do you need to buy a house?

You need steady income, a credit history a lender can score, cash for a down payment and closing costs, and a debt-to-income (DTI) ratio the loan program accepts. Lenders check each one before final approval.

Here is what an underwriter asks you to prove:

• Income: about 2 years of work history, recent pay stubs, and W-2s. Self-employed buyers usually provide 2 years of tax returns.
• Credit: a credit report and scores from the bureaus the lender pulls.
• Assets: about 2 months of bank statements, plus the source of your down payment.
• Debts: car loans, student loans, credit cards, and child support all count toward DTI.
• ID and paperwork: government ID, Social Security number, and housing history.

What credit score do you need to buy a house?

It depends on the loan. FHA allows 3.5% down with a 580 score, and Fannie Mae's automated system no longer has a hard 620 floor, though lenders and mortgage insurers can still set their own minimums.

Fannie Mae removed the 620 minimum for loans run through Desktop Underwriter on case files created on or after November 16, 2025, and now weighs the full file: credit history, income, assets, and the property. That does not mean any score is approved. A lower score usually means a larger down payment, a lower DTI, or a higher mortgage insurance cost.

For FHA loans, 580 is the standard line for 3.5% down. Scores from 500 to 579 can qualify with 10% down, but many lenders set a higher floor. Details are in our FHA loan requirements guide.

How much do you need for a down payment?

You can buy with 3% down on some conventional loans and 3.5% down on an FHA loan, and VA and USDA loans can go to 0% for eligible buyers. A 20% down payment avoids private mortgage insurance, but it is not required.

On a $350,000 home, the minimums look like this:

• 3.5% FHA: $12,250
• 5% conventional: $17,500
• 10% (the typical first-time buyer): $35,000
• 20% conventional (no PMI): $70,000

How much house can you afford?

Lenders look at your DTI: total monthly debts, including the new payment, divided by gross monthly income. Many approvals aim for 43% or lower, and automated approvals can go higher when the rest of the file is strong.

Say you earn $6,000 a month before taxes:

• $6,000 × 43% = $2,580 in total monthly debts
• Subtract a $500 car and student loan payment
• That leaves about $2,080 for the full housing payment

Now turn that into a loan size. If taxes, insurance, and mortgage insurance take about $450 of the $2,080, about $1,630 is left for principal and interest. At 7.25%, every $100,000 borrowed costs about $682 a month in principal and interest, so $1,630 supports a loan near $239,000. At today's rates, the payment you can carry buys less house than it did a few years ago.

Run your own numbers with the home affordability calculator.

Which loan type is right for buying a house?

FHA and conventional loans fit most first-time buyers, VA and USDA fit buyers who qualify for zero down, and jumbo is for amounts above the conforming limit. Pick based on credit, cash, and how long you plan to stay.

• FHA Loan: scores of 500–579 need 10% down, and lenders may set a higher floor. MIP lasts the life of the loan with under 10% down, or 11 years with 10% or more.
• Conventional Loan: 3% down is for HomeReady and Home Possible, which have income limits. You can request PMI removal at 80% LTV.
• DTI benchmarks: FHA 43%, conventional up to 50% with DU approval, VA Loan 41% plus a residual income test, USDA Loan 29% housing and 41% total.
• Loan limits (one-unit, most counties): FHA from $541,287; conventional $832,750 baseline, up to $1,249,125 in high-cost areas; VA has no cap with full entitlement; USDA has no formal cap but has household income limits.

Should you choose a fixed-rate or adjustable-rate mortgage?

Most first-time buyers choose a 30-year fixed-rate loan because the rate and the payment never change. An adjustable-rate mortgage (ARM) starts lower but can rise after its fixed period ends.

• 30-year fixed: the lowest payment among fixed terms and the most common choice.
• 15-year fixed: a lower rate and far less total interest, with a higher monthly payment.
• ARM: a lower starting rate can help you qualify, but ask about the adjustment dates and the rate caps before you choose it.

How much does a $350,000 house really cost per month?

On a $350,000 home at an example 7.25% rate, an FHA loan with 3.5% down is about $2,499 a month before taxes and insurance, and a conventional loan with 5% down is about $2,407. FHA asks for $5,250 less cash up front but costs about $92 more each month here.

What do underwriters check when you buy a house?

Underwriters verify that your income, assets, credit, and the property match what you wrote on the application. Most delays come from missing paperwork, not from the loan itself.

These are the points that trip buyers up most often:

• Bank statement deposits: Payroll deposits are easy to document. A large cash deposit, or a transfer from an account that is not yours, needs a paper trail. Each program defines what counts as "large," so ask your loan officer before you move money.
• Gift funds: Family can often help with the down payment, but you need a signed gift letter and proof of the transfer. The donor can't have an interest in the sale.
• Automated approval vs. manual underwriting: Most loans run through an automated underwriting system first (Fannie Mae Desktop Underwriter or Freddie Mac Loan Product Advisor). A "refer" result sends the file to a person, who applies stricter limits on DTI, credit, and reserves.
• Lender overlays: A lender can be stricter than the agency minimum, for example by asking for a higher credit score on FHA. Two lenders can give two answers on the same file, so compare more than one.
• Conditions: After review, you may get a list of items to clear, such as an updated pay stub, a written explanation for a deposit or credit inquiry, or proof of homeowners insurance. Answer each one quickly.
• Changes before closing: Your lender can recheck your credit and employment right before closing. A new car loan or a job change can undo an approval.

What are the steps to buying a house?

1. Check your credit: Pull your free reports at AnnualCreditReport.com. Fix errors and pay down card balances before you apply, since lower utilization can lift your score.
2. Set a budget using DTI: Include principal, interest, taxes, insurance, and mortgage insurance, and keep your emergency fund intact.
3. Save for the down payment, closing costs, and reserves: Ask about gift funds and down payment assistance in your state.
4. Get preapproved: Preapproval means a lender has reviewed your documents and credit; prequalification is a quick estimate. A preapproval letter usually expires after a set period, often 60 to 90 days.
5. Choose your loan and rate type: Use the comparison above, then confirm with your loan officer.
6. Find an agent and sign a buyer agreement
7. Tour homes and make an offer: Your offer sets the price, earnest money, and contingencies.
8. Complete the inspection and appraisal: Negotiate repairs or credits if problems show up.
9. Clear underwriting: Answer every condition fast, lock your rate when the timing is right, and buy homeowners insurance.
10. Review the Closing Disclosure, walk through, and close: You must receive the Closing Disclosure at least 3 business days before closing. Compare it with your Loan Estimate line by line.

After you apply, your lender must send a Loan Estimate within 3 business days. If you compare lenders, do it in a short window: credit scoring models usually count mortgage inquiries made within roughly 14 to 45 days as one.

What happens after your offer is accepted?

You pay earnest money, then complete the inspection and appraisal, negotiate repairs or credits, clear underwriting, and buy homeowners insurance before closing. Each step has a deadline in your contract.

• Earnest money: a good-faith deposit held in escrow, usually applied toward your cash to close. Your contract's contingencies decide when you can get it back, so read them with your agent.
• Inspection: you choose and pay for it. If it finds problems, you can ask for repairs or a credit at closing. A credit keeps the deal moving while you pick your own contractor.
• Appraisal: the lender orders it, you pay for it, and it protects the lender. If it comes in below the price, the lender lends on the lower value, so you may need to renegotiate or bring more cash.
• Homeowners insurance: your lender will require it. Have the policy start on closing day, with coverage that matches the cost to rebuild, which can differ from the purchase price.
• Underwriting: answer every condition within a day or two.

How long does the home buying process take?

The average purchase loan closes about 37 days after application, and most buyers spend a few months preparing and house hunting before that. The ICE figure below is a national average, so your timeline can run longer or shorter.

How much are closing costs when you buy a house?

Closing costs are commonly 2% to 5% of the purchase price, about $7,000 to $17,500 on a $350,000 home. They are separate from your down payment.

Closing costs include lender fees, the appraisal, title insurance, recording fees, and prepaid items such as property taxes and homeowners insurance. The Loan Estimate and Closing Disclosure list every line. In some deals, the seller agrees to pay part of these costs, within your loan program's limits. Ask your loan officer whether a seller credit or a rate buydown fits your deal.

What are the biggest mistakes to avoid before closing?

Do not change jobs, open new credit, or move large sums between accounts until the loan closes. Each one can force the underwriter to reopen your file.

• Financing a car, furniture, or a new card: New debt changes your DTI, and credit is often rechecked before closing.
• Moving money without a paper trail: Keep statements for every account you use, and deposit gifts only as your loan officer directs.
• Shopping on rate alone: Compare full Loan Estimates, including fees and mortgage insurance.
• Skipping the inspection: No loan program covers a failing roof or foundation for you.
• Ignoring the full monthly cost: Property taxes, insurance, HOA dues, and repairs all add to the payment you actually carry. Closing practices, transfer taxes, and assistance programs also vary by state, so check yours.

Conclusion

Start with your credit report and a real budget at today's rates, then get preapproved so you know your price range before you tour a single home. Those two steps remove most of the guesswork and give you something to bring to a seller.

Rize Mortgage offers FHA, conventional, VA, USDA, and jumbo purchase loans. A licensed loan officer can show your payment on more than one loan and at more than one rate. Start your mortgage application or talk to a loan officer when you are ready.