{"id":25830,"date":"2021-08-16T13:42:51","date_gmt":"2021-08-16T20:42:51","guid":{"rendered":"https:\/\/www.homelight.com\/blog\/?p=25830"},"modified":"2025-01-16T05:44:16","modified_gmt":"2025-01-16T13:44:16","slug":"buyer-what-do-i-need-to-buy-a-house","status":"publish","type":"post","link":"https:\/\/www.homelight.com\/blog\/buyer-what-do-i-need-to-buy-a-house\/","title":{"rendered":"What Do I Need to Buy a House? 42 Simple Steps to Homeownership"},"content":{"rendered":"

Have you been dreaming about homeownership? Maybe you\u2019re picturing yourself floating around in your backyard pool, or working from home in your beautifully lit corner office. Perhaps you\u2019ve already picked out your kitschy wallpaper, or started browsing homes on all the big listing sites. You know, just in case! The pool and the wallpaper are a good jumping-off point, but if you haven’t asked yourself the big question (“what do I need to buy a house?”), then you may need to back up a step or five.<\/p>\n

Buying a house is a dream for millions of people, and homeownership remains a cornerstone of American life. But if you don\u2019t know where to start \u2014\u00a0or what you need \u2014 then it\u2019s a dream that won\u2019t manifest.<\/p>\n

HomeLight to the rescue! We\u2019ve rounded up expert advice from all across our Buyer Resource Center<\/a> and enlisted the help of top Massachusetts agent Rosemary Mancuso<\/a> to walk us through what first-time buyers need to buy a house. Let\u2019s get to it!<\/p>\n

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Source: (Persnickety Prints \/ Unsplash)<\/figcaption><\/figure>\n
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Think you may want to buy a house? Start here<\/h2>\n

There\u2019s so much to think about when buying a house<\/a>. You have to weigh budget, location, lifestyle, and future goals, amongst other needs.<\/p>\n

How do you know where to begin? How do you know if you\u2019re ready and have everything you need? How do you know if buying a home is something you should even pursue at all?<\/p>\n

Unfortunately, there\u2019s no hard-and-fast guideline that can definitively tell you whether you should buy a house, or exactly how you should approach the process.<\/p>\n

But one thing you can<\/i> do right now? Familiarize yourself with how homebuying works to help you decide if it\u2019s something you\u2019re ready to take on. Plus, if you do<\/i> decide to take the leap, you\u2019ll be ready to tackle your home purchase like a pro<\/a>.<\/p>\n

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42 steps to buying a house<\/h2>\n

Look, we\u2019d love to tell you buying a home is simple, easy, cheap, and will be over before you know it. Unfortunately, if we said that, we\u2019d be fibbing!<\/p>\n

The fact is, buying a home is a complex, stressful, and often overwhelming experience.<\/p>\n

One thing that can help simplify it? Breaking the process down into smaller steps. So without further ado, here\u2019s a step-by-step rundown<\/a> of what you can generally expect when you buy a home.<\/p>\n

1. Assess your readiness<\/h3>\n

First things first: Are you even ready to buy a home<\/a>?<\/p>\n

Do you have a secure source of income? Some savings you can use toward a down payment and closing costs? Are you prepared for the responsibilities of home maintenance, mortgage payments, and everything else that comes along with homeownership?<\/p>\n

Buying a home is one of the biggest financial decisions you\u2019ll ever make, so spend some time mapping out what your life will look like as a homeowner, and make sure you\u2019re ready for such a big step.<\/p>\n

2. Research your market<\/h3>\n

There\u2019s much to learn about your local real estate market before diving into making offers. What are home prices like in your area? How quickly do homes move off the market? What neighborhoods offer a strong rate of home value appreciation?<\/p>\n

What amenities do you need to have nearby \u2014 whether schools, places of worship, community centers, commuting options, or daycares?<\/p>\n

Now\u2019s the time to spend learning everything you can about your desired area to make sure buying there is a good fit for you.<\/p>\n

3. Create a list of new home needs<\/h3>\n

You should also nail down what you need in a house. Not sure where to start? Mancuso has some ideas:<\/p>\n

\u201cHow many bedrooms? How many baths? Do you have a dog? Do you need a fenced-in yard? What\u2019s important to you about your next home? One buyer might say they need a garage, one might say a finished basement area for a home office,\u201d she shares.<\/p>\n

Another thing Mancuso urges buyers to consider is whether they\u2019re up for a project or need something more ready-to-go.<\/p>\n

\u201cCan you do updates? Are you open to doing some sweat equity in the beginning?\u201d she prompts.<\/p>\n

Painting walls and replacing floors can add instant equity to your home \u2014 but these jobs require hard work, and they\u2019re not for the buyer who wants a flawless, move-in ready abode.<\/p>\n

Create a list of must-haves to inform your budget and shopping. You can always narrow it down later if needed.<\/p>\n

4. Do some neighborhood testing<\/h3>\n

While you\u2019re in the preparation stages of buying a home, it\u2019s a good idea to spend some time in the neighborhoods you might end up in. Driving through is one thing, but actually spending time in a neighborhood is quite another.<\/p>\n

Check out the library, coffee shops, grocery store, and local restaurants. Chat up the locals if possible, and ask them what life is like in their community. You can even rent a hotel room or a home stay to get a real feel for what life<\/i> will be like in your new spot.<\/p>\n

You might be surprised by how informative even one visit can be!<\/p>\n

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5. Take a hard look at your credit<\/h3>\n

Like it or not, your credit score<\/a> is going to play a huge role in whether you qualify for a mortgage, not to mention the terms you\u2019re offered by a lender.<\/p>\n

To a lender, your credit score is a big indicator of how well you manage and pay off debts. The higher your score, the more likely you\u2019ll be approved for a mortgage, and the better rate you\u2019ll be offered. The lower your score, the harder it will be to qualify for a mortgage \u2014 plus, you\u2019ll probably be offered a higher rate.<\/p>\n

That\u2019s not to say you can\u2019t<\/i> buy a home if you have low<\/a> or no credit<\/a>, but doing so may be an uphill battle.<\/p>\n

There\u2019s no time like the present to get your credit in order. Grab your free annual credit report for all three credit bureaus (Experian, TransUnion, and Equifax) from government-approved site AnnualCreditReport.com<\/a>.<\/p>\n

Scour it for any negative events like missed payments or bills gone into collection. You should work to repair these issues before applying for a mortgage if you want to qualify for the best rates.<\/p>\n

6. Repair your credit if needed<\/h3>\n

If your credit score is too low to qualify for a home loan, or you\u2019re not happy with the rate you\u2019d get with your current score, you might consider spending some time repairing your credit<\/a> before buying a house.<\/p>\n

For those with distressed credit, it may even make sense to enlist the help of a financial advisor or a nonprofit credit repair service. Be patient, though \u2014 credit repair can take six months to two years.<\/p>\n

If you\u2019re just looking to boost your score a few points to snag a better rate, that\u2019s usually an easier lift. Looking for some can\u2019t-miss credit tips? Check out our guide to six foolproof ways to improve your credit<\/a>.<\/p>\n

7. Determine your new home budget<\/h3>\n

Speaking of credit and qualifying for home loans, it\u2019s ultra-important to start thinking about your home budget sooner rather than later.<\/p>\n

The lender has their own way of calculating what you can afford based on your income, debts, savings, credit score, and more, but you should also be thinking about what you can realistically afford<\/i> based on your lifestyle and future financial goals.<\/p>\n

To get started, use a home affordability calculator<\/a> to see how much home you may be able to qualify for. And while you\u2019re weighing such consequential decisions, it\u2019s always a good idea to consult a trusted financial advisor.<\/p>\n

8. Estimate your down payment and closing costs<\/h3>\n

During the budgeting process, you should also think about how much you want to set aside for down payment and closing costs.<\/p>\n

It\u2019s a myth that you need to put 20% down on a home<\/a>, but you\u2019ll probably need to put something<\/i> down. Your down payment can be as low as 3%, or even 0% if you qualify for a zero-down loan<\/a>. Though if you make a smaller down payment, you may need to pay mortgage insurance (more on that soon).<\/p>\n

Looking for more guidance on your down payment? Try our simple down payment calculator<\/a>.<\/p>\n

As for closing costs, they can add up to between 2% and 5% of the loan amount. Some lenders will let you roll the majority of your closing costs into your loan instead of paying them upfront, but most buyers end up paying them in cash at closing.<\/p>\n

To get a better idea of your estimated closing costs, you can check out our easy-to-use closing costs calculator<\/a>.<\/p>\n

9. Save, save, save<\/h3>\n

Now that you\u2019ve spent some time running the numbers, you\u2019re probably wishing you had more in savings. Don\u2019t we all?<\/p>\n

If you don\u2019t have enough to cover a down payment and closing costs without wiping out your accounts, you may need to spend some more time saving money.<\/p>\n

This can be frustrating, especially when home prices are outpacing your ability to save<\/a>. But unfortunately, for most buyers, it\u2019s a necessary part of preparing for homeownership.<\/p>\n

For loads of expert tips on how to save up for a home, grab our 54-page guide<\/a> that will put you on the path to ownership in no time.<\/p>\n

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10. Weigh your loan options<\/h3>\n

Did you know there are multiple types of home loans, and they all have different qualifications and unique features that work for certain buyers?<\/p>\n

Here\u2019s a quick breakdown:<\/p>\n\n\n\n\n\n\n\n
Loan type<\/td>\nMinimum credit score<\/td>\nMinimum down payment<\/td>\nFeatures<\/td>\nBest for<\/td>\n<\/tr>\n
Conventional<\/a><\/td>\n620<\/td>\n3%<\/td>\nCompetitive rates, widely available, lower fees than FHA loans.<\/td>\nBuyers with strong credit and qualifications<\/td>\n<\/tr>\n
FHA<\/a> (government-backed)<\/td>\n580 (but can go down to 500 if down payment is 10% or higher)<\/td>\n3.5%<\/td>\nAccessible home loans for buyers with lower income and distressed credit. Highest fees and rates on the market.<\/td>\nBuyers with lower credit who don\u2019t want to wait to own a home<\/td>\n<\/tr>\n
USDA <\/a>(government-backed)<\/td>\n640<\/td>\n0%<\/td>\nLower fee loans for rural properties. Buyers must meet income limits.<\/td>\nLow- to middle-income buyers with solid credit who live in qualifying areas.<\/td>\n<\/tr>\n
VA <\/a>(government-backed)<\/td>\nTechnically no minimum, but lenders usually look for 620 or higher<\/td>\n0%<\/td>\nCompetitive rates and low fees, but some of the stricter qualification requirements.<\/td>\nQualifying service members, veterans, and spouses<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

For more in depth information on mortgage basics, head to our mortgage 101 guide<\/a> for buyers.<\/p>\n

11. Look into first-time homebuyer programs<\/h3>\n

Many first-time buyers don\u2019t realize there are special programs built just for their needs. These programs include down payment and closing cost assistance<\/a> and special loans for first-time buyers<\/a>. They\u2019re designed to make homeownership more accessible and affordable. We\u2019ll cover these programs more in-depth in a bit.<\/p>\n

12. Look into lenders<\/h3>\n

You should also spend some time researching lenders. While getting a great rate is always important, there are other factors to consider, too:<\/p>\n