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How to buy a house
A complete, plain-English guide to buying a home in the U.S. — from your first savings goal to the day you get the keys, with the real 2026 numbers and the steps that actually matter.
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Down payment programs, property taxes, and even who handles your closing differ by state. Start with yours.
Last updated June 2026
The complete guide
How to buy a house, step by step
Buying a house follows the same eight steps whether it is your first home or your fifth. The hard part is not the paperwork at the end — it is getting your money and your credit ready at the start. Do that well and the rest is mostly waiting and signing.
A little context for 2026: the median price of an existing home is about $429,300 as of mid-2026 (National Association of Realtors), and the average 30-year fixed mortgage rate is hovering near 6.4% — though rates move every day, so treat that as a snapshot, not a promise. The single most useful thing to know before you begin: you almost certainly do not need 20% down. Many buyers close with 3% to 5%, and some loans require nothing at all.
Here is the whole path, with the real numbers and a deeper guide linked at every step.
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01
Decide if you are ready to buy
Before you look at a single listing, get honest about three things: stable income, manageable debt, and a cash cushion. Lenders look hardest at your debt-to-income ratio (DTI) — your monthly debt payments divided by your gross monthly income.
A common guideline is the 28/36 rule: keep housing costs under about 28% of gross income and total debt under about 36%. Many programs allow more (up to 43%, sometimes around 50% with strong compensating factors), but lower is safer. Buying also only pays off if you stay put long enough to absorb the upfront costs — often three to five years. If you might move sooner or your income is shaky, renting can be the smarter financial choice. Run a true rent-vs-buy comparison that includes property taxes, insurance, and maintenance (budget roughly 1% of the home’s value per year), not just the mortgage payment.
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02
See how much house you can afford
Your price ceiling is not what a lender will approve — it is what you can comfortably carry. Work backward from a target monthly payment. A full payment, often called PITI, includes principal, interest, property taxes, and homeowners insurance, plus mortgage insurance if you put down less than 20% and any HOA dues.
A quick example on a $400,000 home with 10% down at a 6.5% rate: the loan is $360,000 and principal-plus-interest runs roughly $2,275 a month. Add property taxes (these vary widely by state — very roughly $300 to $700), insurance ($100 to $200), and mortgage insurance ($90 to $300), and the real payment is often $2,800 to $3,400. Use the 28% guideline as a sanity check: a $3,000 payment fits a gross income of around $107,000 a year.
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03
Save your down payment and closing costs
This is where the “20%” myth costs people years. You do not need it. Here are the real minimums by loan type:
- Conventional: as little as 3% down (often through first-time or HomeReady / Home Possible programs); 5% is common.
- FHA: 3.5% down with a credit score of 580 or higher (10% if your score is 500–579).
- VA (eligible veterans and service members) and USDA (eligible rural and suburban buyers): 0% down.
On that $400,000 home, 3% to 3.5% is $12,000 to $14,000 — not $80,000. You will also need closing costs, typically 2% to 5% of the price ($8,000 to $20,000), covering lender fees, title, the appraisal, and prepaid taxes and insurance, plus a small reserve on top. If you put down less than 20% on a conventional loan you will pay private mortgage insurance (PMI), roughly 0.3% to 1.5% of the loan per year, which you can cancel once you reach about 20% equity. Gift funds from family are allowed on most loans, and thousands of down payment assistance programs — usually run by state housing agencies — offer grants or low-interest second loans.
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04
Check and build your credit
Your credit score is the biggest lever on your interest rate, and a lower rate can save tens of thousands over the life of the loan. Rough minimums are 620+ for most conventional loans and 580 for FHA’s 3.5%-down option (down to 500 with 10% down) — but minimums only get you in the door. The best pricing goes to scores around 740 and up.
Pull your reports for free at AnnualCreditReport.com, dispute any errors, and focus on the two factors that move scores fastest: paying every bill on time and lowering your credit utilization (aim under 30%, ideally under 10%). One more rule while you are house-hunting: do not open or close accounts or take on new debt — a car loan or furniture financing changes your DTI and can sink an approval that was already in motion.
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05
Get pre-approved and pick your loan
A mortgage pre-approval is a lender’s written estimate of how much they will lend, based on verified income, assets, and credit. It is far stronger than a pre-qualification (a rough, unverified guess), and sellers expect to see one attached to your offer. Shop at least three lenders — banks, credit unions, and mortgage brokers — and compare the Loan Estimate each one gives you; rates and fees vary more than most people expect.
The main loan types:
- Conventional — the most common; best for solid credit and steady income.
- FHA — flexible on credit, but with higher insurance costs.
- VA / USDA — zero down for those who qualify.
- Jumbo — for loans above the 2026 conforming limit of $832,750 (higher in expensive areas, and $1,249,125 in Alaska, Hawaii, Guam, and the U.S. Virgin Islands); expect stricter requirements.
Most buyers choose a 30-year fixed rate for predictable payments. When you are ready, you can lock your rate to protect against increases while you close.
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06
Find a home and make an offer
Now the fun part. Decide whether to use a buyer’s agent (most buyers do — and under recent rule changes you will agree up front to how your agent is paid) or to buy without one. Write a short list of must-haves versus nice-to-haves, and only tour homes you can actually finance with your pre-approval in hand.
When you find the one, you submit a written offer: the price, your pre-approval, the closing timeline, and contingencies — conditions that let you walk away with your deposit if something goes wrong. The three most common are the financing, inspection, and appraisal contingencies. You will include earnest money (typically 1% to 3% of the price) to show you are serious; it is credited toward your purchase at closing. Expect to negotiate — counteroffers on price, repairs, and closing-cost credits are completely normal.
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07
Inspect, appraise, and clear underwriting
Once your offer is accepted you are “under contract,” and a 30-to-45-day clock starts. Three things happen, mostly in parallel:
- Home inspection — you hire an inspector ($300–$500) to check the home’s condition. If they find problems, you can ask the seller to fix them, request a credit, or walk away if you kept your inspection contingency.
- Appraisal — your lender orders an independent appraisal to confirm the home is worth what you are paying. If it comes in low, you renegotiate, cover the gap, or use your appraisal contingency.
- Underwriting — the lender verifies everything one last time.
Respond to document requests fast, and do not make any big financial moves — new loans, large deposits, or a job change — until after closing. Any of them can derail your approval at the finish line.
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08
Close and get the keys
At least three business days before closing you will receive a Closing Disclosure listing your final loan terms and the exact cash you need to bring — compare it line by line to your original Loan Estimate. Do a final walkthrough to confirm the home is in the agreed condition and any negotiated repairs are done.
At closing you sign the loan and ownership documents and pay your down payment and closing costs, usually by wire or cashier’s check. Beware wire-fraud scams — always confirm wiring instructions by phone using a number you look up yourself. Once the deed is recorded in your name, you get the keys. From accepted offer to this moment is typically about 30 to 45 days.
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Welcome home.
You own it. Now make it yours.
The money, at a glance
On a $400,000 home, a realistic all-in starting point looks like this: about $12,000–$14,000 down (3%–3.5%), $8,000–$20,000 in closing costs, and a small cash reserve. That is roughly $25,000–$35,000 total — far less than the $80,000 a full 20% down payment would require.
Put down less than 20% and you will add PMI (about 0.3%–1.5% of the loan per year) until you reach ~20% equity. Down payment assistance and gift funds can lower the cash you need even further.
Every situation, covered
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Quick answers
How to buy a house: common questions
How much money do I need to buy a house?
Less than most people think. You need a down payment (as little as 0%–3.5% depending on the loan), closing costs of about 2%–5% of the price, and ideally a small cash reserve. On a $400,000 home that can mean roughly $25,000–$35,000 all-in — not the $80,000+ a 20% down payment implies. See how much you really need →
Do I really need a 20% down payment?
No. A 20% down payment lets you skip private mortgage insurance, but most buyers put down far less. Conventional loans start at 3% down, FHA at 3.5%, and VA and USDA loans at 0% for those who qualify. Explore low- and no-money options →
What credit score do I need to buy a house?
It depends on the loan: roughly 620+ for conventional and 580 for FHA’s low-down option (down to 500 with 10% down). A higher score mainly earns you a lower interest rate, with the best pricing around 740 and up. Check the score by loan type →
Can I buy a house with no money down?
Sometimes. VA loans for eligible veterans and service members, and USDA loans for eligible rural and suburban buyers, offer zero down. Down payment assistance programs can also cover most or all of the upfront cash. See the zero-down paths →
How much are closing costs?
Typically 2%–5% of the purchase price — about $8,000–$20,000 on a $400,000 home — covering lender fees, title insurance, the appraisal, and prepaid taxes and insurance. Your Loan Estimate breaks them down line by line.
What is the difference between pre-qualification and pre-approval?
A pre-qualification is a quick, informal estimate based on numbers you state. A pre-approval is a lender’s written commitment after verifying your income, assets, and credit — and it is what sellers expect to see with an offer. How to get pre-approved →
How long does it take to buy a house?
From an accepted offer to closing is usually 30 to 45 days. Getting ready beforehand — saving, fixing credit, and getting pre-approved — can take months, so the full journey varies widely. See the full timeline →
What is PMI and how do I get rid of it?
Private mortgage insurance protects the lender when you put down less than 20% on a conventional loan, usually 0.3%–1.5% of the loan per year. You can request cancellation once you reach about 20% equity, and it falls off automatically at 22%.
What is the 28/36 rule?
A common affordability guideline: keep your housing payment under about 28% of gross monthly income, and your total debt payments under about 36%. Many loans allow higher ratios, but staying under these keeps your budget comfortable. Run your numbers →
Can I buy a house with bad credit?
Often, yes. FHA loans are built for lower credit, and fixing errors plus lowering your balances can raise a score quickly. Expect a higher rate than a top-tier borrower, not an automatic denial. Read the bad-credit guide →
Do I need a real estate agent to buy a house?
No, though most buyers use one. A buyer’s agent guides offers, negotiation, and paperwork; if you buy without one, a real estate attorney or title company can handle the closing. Buying without a realtor →
What is the 2026 conforming loan limit, and what is the median home price?
For 2026, the baseline conforming loan limit is $832,750 (higher in expensive areas), per the FHFA. The median existing-home price is around $430,000 as of mid-2026 (NAR), and the typical 30-year fixed rate is near 6.4% — though rates change daily, so always check current figures.