How To Buy a House: A Step-by-Step Guide for 2026

The home-buying process involves more than touring your dream home and signing on the dotted line. Buying a home is one of the biggest financial decisions you'll ever make, and there are lots of steps between you and your new front door.

But the process is manageable when you know what to expect. This step-by-step guide walks you through how to buy a house, from setting your budget to getting the keys in hand, along with what to watch out for. 

What are the steps to buying a house?

Buying a house can take months or even years, so it's helpful to break the process down into small, digestible steps. Here’s what you need to do to get a mortgage and close on a home:

1. Save for a down payment and closing costs
2. Determine how much house you can afford
3. Get pre-approved for a mortgage
4. Find a real estate agent
5. Start house hunting and make an offer
6. Schedule a home inspection and appraisal
7. Secure financing and finalize your mortgage
8. Close on your home

Step 1: Save for a down payment and closing costs

A mortgage down payment is money you put down toward the purchase of your home. It's usually the highest upfront cost during the purchase process because banks want you to have an ownership stake in the house to protect their interests. However, the specific amount you need depends on the type of loan you choose.

• Conventional loans: Down payment requirements vary by lender, but a minimum 20% down payment is necessary to avoid private mortgage insurance (PMI).
• FHA loans: You can qualify for an FHA loan with 3.5% down with a credit score of 580 or higher, or 10% down with a credit score of 500 to 579. 
• VA and USDA loans: If you meet eligibility criteria, you can buy a home with $0 down.

The larger your down payment, the lower your monthly mortgage payment. You may want to save more than your lender requires to keep your payments affordable and eliminate the need for PMI. 

You can also use your down payment as your earnest money deposit. Most sellers require a deposit totaling 1% and 3% of the purchase price after you make an offer to ensure you can't just walk away from the sale without a good reason.

You'll also need to save for closing costs, which are upfront transaction fees that usually total between 2% to 5% of the purchase price. For a $400,000 home, that’s $8,000 to $20,000 out of pocket.

Step 2: Determine how much house you can afford

Before you start browsing listings, you need to know what you can afford. 

Lenders use your debt-to-income ratio (DTI) to set borrowing limits. DTI compares your total debts, including the new home loan, with your gross income (income after taxes and deductions). 

DTI requirements for a mortgage vary, but many lenders want a ratio of 36% or less, while some lenders accept applications with a DTI as high as 43%.

Keep in mind, a lender might approve you for more than you actually want to spend, so use a mortgage calculator to see how different loans fit into your budget.

Step 3: Get pre-approved for a mortgage

Before you start househunting, you should get a mortgage pre-approval. This is the first step in getting a mortgage. 

Pre-approval helps you understand what your loan will look like, helps you close more quickly, and shows sellers you're a serious buyer, so you're more likely to get an offer approved.

During the pre-approval process, your lender takes a close look at your finances to determine if you’ll likely qualify to borrow, how much you can borrow, and what rate you'll likely pay. You'll need to submit a lot of financial paperwork, so using a mortgage pre-approval checklist is a good idea. In general, you’ll need to provide:

• Photo ID
• Bank and investment account statements
• Recent pay stubs, W-2s, 1099s, and/or tax returns
• Information about outstanding debts/loans

Preapproval usually requires a hard credit check, which will cause a small, temporary dip in your credit score — typically less than 5 points, according to myFICO.

Make sure you get a pre-approval, not a pre-qualification, as there are important differences between mortgage pre-approvals and prequalifications:

• A mortgage pre-qualification is a quick, informal estimate based on self-reported financial information.
• A mortgage pre-approval is a more thorough process that involves submitting documentation and undergoing a hard credit inquiry. Pre-approvals carry more weight with sellers.

Mortgage pre-approvals typically last between 30 and 90 days, but always ask the lender how long yours is good for, so you know your timeline.

Step 4: Find a real estate agent

A good real estate agent does more than just open the door to homes you want to see. Agents offer market expertise, negotiation skills, and contract know-how.  Your agent should:

• Answer any questions you have during the home-buying process 
• Identify fairly priced homes
• Spot red flags
• Draft competitive offers
• Guide you through contingencies, counteroffers, and purchase paperwork

Look for an agent who is familiar with your target neighborhood and communicates in a way that works for you. Ask friends and family for referrals, read online reviews, and interview several potential agents before committing.

Step 5: Start house hunting and make an offer

Househunting is the most fun part of buying a house, but it can also be one of the most emotionally charged steps. 

As you tour homes, try to stay objective. It’s easy to fall in love with a property, but make sure you evaluate the neighborhood, commute times, school district, walkability, square footage, acreage, and long-term resale potential. Does the house actually meet all your needs?

When you find a home you want to buy, your agent will help you put together a purchase offer that includes your proposed price, financing details, ideal closing date, and any contingencies (conditions that must be met for the sale to proceed). Common contingencies include:

• Financing contingency: This protects you if your mortgage falls through.
• Inspection contingency: This lets you back out of the sale, request repairs, or renegotiate the price based on inspection findings.
• Appraisal contingency: This helps you avoid overpaying if the home appraises below the offer price.

Along with your offer, you’ll typically submit an earnest money deposit totaling 1% to 3% of the purchase price to show sellers you’re serious. If the deal falls through due to a contingency, you get this money back, but if you back out without a valid reason, you'll forfeit the deposit.

Step 6: Schedule the home inspection and appraisal

Once your offer is accepted, you'll typically want to complete two critical evaluations of the home, including:

• A home inspection: Your inspection contingency sets a time limit (usually around a week) for a licensed inspector to examine the property and provide a detailed report about its condition. The goal is to find red flags so you can request repairs, renegotiate the deal, or walk away if there are major issues.
• A home appraisal: You'll also have a set time to complete an appraisal, based on your appraisal contingency. A licensed appraiser compares the home and its features to properties that sold recently in the area to determine the home's fair market value. If the appraised value comes in lower than the purchase price, you’ll either need to renegotiate with the seller, bring more money to the table to meet the lender's loan-to-value requirements, or walk away using the appraisal contingency.

You pay for both the home inspection and appraisal. However, you’re typically responsible for hiring your own inspector while the bank chooses an appraiser.

Step 7: Secure financing and finalize your mortgage

After your offer is accepted and inspections are complete, your mortgage goes into underwriting. Underwriters are professionals who manage the lender’s risk. They'll verify the documentation you submitted and request additional information or clarification if necessary. Responding quickly to their requests keeps things on track.

You should also ask your lender if you can lock in your interest rate, which guarantees your rate won't change during the underwriting process, even if mortgage rates increase. Rate locks are generally available for 30, 45, or 60 days. 

Once underwriting is complete, you’ll receive a clear to close, which means the lender has approved your loan and you’re almost at the finish line.

Step 8: Close on your home

Closing day is the final step. If all goes to plan, you’ll end the day with the keys to your new home.

A few days before closing, you’ll receive a Closing Disclosure. This five-page document outlines:

• The final terms of the loan
• The amount you’ll owe at closing
• Your estimated monthly payments. 

Review the closing document carefully to flag any concerns immediately.

Before closing, you’ll also do a final walkthrough of the home to make sure it’s in the agreed-upon condition and that any negotiated repairs were completed.

At closing, you’ll sign multiple documents, including the mortgage, promissory note, and deed of trust. You’ll also pay your closing costs and down payment, and your earnest money will be transferred to the seller.

The closing process typically takes an hour or two. When it’s all said and done — and your signing hand is cramping — the home is yours.

How long does it take to buy a house?

The time it takes to buy a house can range from several weeks to a year or more. While Zillow estimates the process takes an average of four to five months, your timeline can vary greatly based on your personal situation. 

• Saving and shoring up your credit: Saving for a down payment and closing costs could take anywhere from a few months to a few years, depending on your income, expenses, and savings goal. You may also need to spend time improving your credit score before qualifying for a mortgage.
• Shopping: Some people spend days shopping for a home, while others spend weeks, months, or even years. The availability of homes, the competitiveness of the market, and how selective you are will all affect how long this stage takes. 
• Pre-approval: Getting pre-approved involves compiling and submitting documents and agreeing to a hard credit check. While some lenders advertise same-day pre-approvals, the process can take a few days or longer, depending on the lender and your financial situation.
• Offer: When you submit an offer, the seller typically gets a day or two to respond. If the seller counters, you have additional time to accept or submit a counteroffer. The timeline for this step could be quick if everyone agrees right away, but it could be lengthy if there’s some back and forth.
• Underwriting process: How long the underwriting process takes depends on your lender’s specific process and any issues that arise. It typically takes between a few days and a few weeks. If you’re paying cash, you eliminate this step, but you’ll still want to complete a home inspection and appraisal.
• Closing: Getting from offer to closing day typically takes 30 to 60 days. Closing itself should only take a couple of hours (and a lot of signatures).

How much money do you need to buy a house?

The amount of money you need to buy a house is largely determined by the price of the home you're interested in, along with the type of mortgage you can qualify for. The more expensive the house, the more expensive all the other associated costs become.

The table below shows common house-buying costs to budget for. The table also breaks down closing costs and mortgage prepaids by common line items:

Common mistakes to avoid when buying a house

When buying a house, it’s easy to be won over by remodeled kitchens and cute patio spaces. But a home is a major purchase that requires careful consideration. Here are a few common house-buying mistakes to avoid:

Skipping pre-approval

A pre-approval letter isn’t required, but skipping this step makes it more challenging to get an offer accepted in a competitive market. Pre-approval shows sellers that you’re likely to get the funding you need to complete the purchase.

“Affordable homes in certain price ranges are selling quickly, sometimes in a matter of days,” says realtor Alexei Morgado, founder and CEO of Lexawise, a real estate exam prep company. “In many of those situations, you’re competing with cash buyers. Pre-approval is the bare minimum a financed buyer needs to be seriously considered.”

Beyond optics, pre-approvals also help you set a firm budget so you don't fall in love with a home you can’t afford.

Underestimating closing costs

Many first-time buyers focus so much on the down payment that they’re blindsided by closing costs. At 2% to 5% of the purchase price, these costs can add up. And that’s before moving expenses, any immediate repairs, and new furniture to fill the space.

“What I tell [first-time buyers] is that the down payment is just the entry fee,” says Morgado. “Before you even get to closing day, you’ve already spent money on earnest money, inspections, and possibly an appraisal. Then, closing day itself brings lender fees, title charges, prepaid insurance, and escrow setup for taxes. And when all of that clears, you still need a cushion in your account.”

Ignoring inspection results

A thorough inspection helps you understand problems you may need to address in the first few years of home ownership. So what do you do if an inspection report comes back with lots of red flags?

You have a few options:

• Back out of the purchase. You should be able to recoup your earnest money if you had a contingency clause in your contract. You'll just lose the cost of the inspection.
• You can renegotiate. You can ask a seller to fix issues or reduce your offer price by the cost of the necessary repairs.
• You can ignore the inspection results. If the home's problems aren’t a huge concern, you may want to move forward with no changes to the deal — especially if it’s a seller’s market or the seller has a backup offer. But be careful. Even in a seller’s market, it can be smart to walk away from a home that could become a money pit.

While minor issues, such as a broken garbage disposal, aren’t a huge deal, issues like old roofs, knob-and-tube wiring, foundation issues, and corroded main lines typically shouldn't be ignored because they could lead to expensive repairs.

If your inspector recommends hiring a second, more specialized inspector — such as a plumber offering a sewer scope or a structural engineer to analyze the foundation — it’s a good idea to take that advice.

Overextending budget

Before looking at any houses, calculate how much you can spend and stick to it. Filter out homes that are more expensive from online searches and inform your real estate agent that your max price is firm. Also, do your own research and consider houses well under your budget. Just because you can spend up to a certain amount doesn’t mean you have to or should. 

Sticking to your budget is important to avoid becoming “house poor,” which strains your monthly budget for decades and puts you at higher risk of foreclosure.