Buying a home is a big decision, and it can be a time-consuming process. It can take one to two months to shop for a home, plus 14 to 60 days to close on a house once you’re under contract.

Learning how to buy a house might feel overwhelming, but you can make the process more manageable by breaking it up into these six easy steps:

  1. Figure out how much house you can afford
  2. Get pre-approved for a home loan
  3. Hire a real estate agent
  4. Visit homes in person
  5. Make an offer on your favorite home
  6. Closing steps

1. Figure out how much house you can afford

Before you even start looking at homes online, figure out how much house you can comfortably afford with your current budget. Typically, the total value of your new home shouldn’t be more than three to five times your total household income.

If you have debt and a tight budget, choosing a less-expensive home so you can have a smaller mortgage payment could be a good idea. On the other hand, if you’re debt free and have fewer expenses, you might be able to splurge on a pricier home.

For example: If you have a household income of $50,000 and zero debt, you could potentially afford a home valued up to $250,000. But if you have student loans and a car payment, you might want to stick with a home valued at just $150,000 — three times your household income.

When figuring out how much you can afford, be as accurate with your budget as you can. It will have a big impact on your calculations and pre-approval application later on.

2. Get pre-approved for a home loan

Your next step is to get a mortgage pre-approval from a lender. When you’re pre-approved, you’ll get a letter from a mortgage broker or lender saying you’ll likely qualify for a mortgage up to a certain amount based on your current income and credit score. These letters are typically good for up to 60 days.

First-time homebuyer programs

If you’re a first-time homebuyer, you might be eligible for special mortgage programs like FHA Loans.

FHA Loans are backed by the government and issued by the Federal Housing Administration (FHA). They also come with lower credit score and down payment requirements, making them a good option for first-time homebuyers. With an FHA Loan, your credit score can be as low as 580, and your down payment can be as small as 3.5% of the home’s purchase price.

If you’re buying a $200,000 home, you’d need only $7,000 for the down payment with an FHA Loan. That’s much less than the 20% (in this case, $40,000) that’s usually suggested for a down payment.

3. Hire a real estate agent

A good real estate agent can help you navigate the homebuying process, schedule showings, lead negotiations with the seller, and guide you through the closing process.

To find a reliable agent, follow these steps:

  1. Ask friends and family for referrals: Word of mouth can be an excellent way to find a great agent. Ask contacts who they’ve used in the past.
  2. Attend open houses: Go to open houses in your target areas and talk to agents. You might meet someone who is a great fit.
  3. Check reviews: Read reviews of agents online at Zillow, RateMyAgent, and HomeLight.

Once you find an agent you trust, sit down with them and discuss your must-haves and wants for your new home. For example, you might want to consider:

  • School districts
  • Home size
  • Homeowners association dues
  • Number of bedrooms and bathrooms
  • Access to public transportation
  • Commute length
  • Proximity to things you enjoy doing

Depending on your budget, you might have to make some sacrifices and compromises to find a home you can afford. When making a list, be sure to prioritize what’s most important to you.

4. Visit homes in person

While online listings can give you an overview of what a home looks like and what features it has, try to visit prospective houses in person whenever possible. You can go to open houses, or you can ask your agent to schedule private showings of houses on the market. Seeing the home in person will give you a feel for the neighborhood and the flow of the home.

5. Make an offer on your favorite home

Once you find the perfect home, it’s time to make an offer. Your agent can offer support with this step. They can look up comparable sale prices in the area to help you create an appropriate offer. If you’re in a hot housing market, they can also make your offer more attractive to sellers, such as by offering an accelerated closing date.

In some cases, the seller might decide to counteroffer — this means they’ll come back with a higher price than you offered them. You can work with your real estate agent to decide whether the counteroffer is fair and if you want to proceed.

6. Closing steps

If you’ve made it this far, congratulations! That means the seller has agreed to your offer, and it’s time to move forward with closing. But there’s a lot of work to do before the deal is finalized.

Finalize your mortgage

Your next step is finalizing your mortgage. There are a few different options to consider:

  • 30-year fixed-rate mortgage: With a 30-year fixed-rate mortgage, your interest rate is the same for the duration of your loan term. This loan term will give you the lowest monthly payments, but you’ll pay more in interest because of the longer loan term.
  • 15-year fixed-rate mortgage: Under a 15-year fixed-rate mortgage, you’ll have the same interest rate for the length of your loan. You’ll have a higher monthly payment, but because of the shorter loan term, you’ll pay less in interest charges.
  • Adjustable rate mortgage (ARM): With an ARM, you’ll generally get a lower interest rate initially than you would with a fixed-rate mortgage. You might also get a lower payment, which could help you qualify for a larger mortgage. Both the interest rate and monthly payment can fluctuate over time with this option. But if you plan to sell your home within just a few years, opting for an ARM could make sense.

Get the home appraised

Lenders require a home appraisal before finalizing a deal. A home appraiser will look at the home and comparable houses in the area to decide what it’s worth. Because the appraisal is required to be independent, either your mortgage broker or your lender will request it — it isn’t something you go out and do on your own.

In some cases, the appraisal will come back higher than you offered, which is great for you as the buyer. But it could also come back lower than you offered. If that happens, the lender might require a larger down payment. You could try to negotiate a lower home price or even walk away from the deal altogether.

Hire a home inspector

While a home inspection isn’t required, having the home inspected before purchase is a good idea. A home inspection will tell you if there are any major issues with the home, such as problems with the foundation. It can also help you prepare for upcoming repairs, such as noting weaknesses in the roof.

If the home inspection comes up with significant problems, you can use it to negotiate a lower price or to ask the seller for assistance with the repairs.

Close on your home

You’ve made it to the end — it’s time to schedule a closing date. Closing can take anywhere from 30 minutes to a few hours. When you close, you’ll need to bring a cashier’s check for your down payment and closing costs, as well as complete some paperwork.

Closing costs are typically about 2% to 5% of the purchase price of the home. For example, if you’re buying a $300,000 home, that means you should be prepared to pay up to $15,000 in added closing costs. In some cases, you can roll closing costs into your home loan, but you’ll often have to pay a higher interest rate to do so.

Once the closing is complete, you’ll get the keys to your new house, and you’ll officially be a homeowner — congratulations!

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