A First-Time Buyer’s Guide to Buying a Home

Learning how to buy a house starts with a budget, but local market conditions matter too. Inventory is up to 4.8 months of supply (NAR, September 2026), the median existing-home price is $417,500, and homes are sitting on the market a median of 33 days. In addition, NAR says higher inventory and lengthening market times give buyers improved negotiating power. Local conditions still determine room to negotiate price, repairs, and seller credits. Mortgage rates also affect affordability: Freddie Mac’s PMMS put the 30-year fixed at 7.18% on November 5, 2026. However, a survey average is not a rate quote.

This guide walks through the full process in order, with the numbers and documents that actually move a file forward.

Step 1: Check your credit and set a budget to buy a house

Pull your credit reports from Equifax, Experian, and TransUnion at annualcreditreport.com and look for late payments, collections, or balances you can pay down before you apply. Also, ask your lender which credit scores and borrower information its loan program uses.

Credit score minimums vary by loan type:

• Conventional: Fannie Mae removed its 620 minimum for new Desktop Underwriter (DU) casefiles created on or after November 16, 2025. Lenders may set stricter requirements.
• FHA: 580 or higher for 3.5% down; scores of 500 to 579 require at least 10% down under HUD rules. Lenders may require more.
• VA: No VA minimum; lenders set their own credit requirements.
• USDA: No USDA minimum; lenders still review credit history and repayment ability.

To budget for a house, add up gross monthly income and total monthly debt payments (car, student loans, minimum credit card payments). Then, lenders look at the back-end debt-to-income ratio (DTI), which is total monthly debt plus the new housing payment divided by gross monthly income. Fannie Mae DU allows up to 50% DTI, subject to its risk assessment. FHA manual underwriting can allow higher ratios with documented compensating factors. USDA uses 29% housing and 41% total debt benchmarks. Manual purchase waivers can allow 32% and 44% when all applicants have validated scores of at least 680 and an eligible compensating factor. However, USDA automated approvals do not require that waiver.

Our affordability guide walks through how to turn income and debts into a realistic price range.

Step 2: Save for the down payment and closing costs

To buy a house, you need two piles of cash: the down payment and the closing costs.

Down payment minimums by loan type:

• Conventional: 3% with eligible programs, including Conventional 97; other loans may require more.
• FHA: 3.5% with a credit score of 580 or higher.
• VA: potentially 0% for eligible borrowers, subject to entitlement, value, and lender requirements.
• USDA: 0% in eligible rural and suburban areas.

Closing costs generally run 2% to 5% of the purchase price, according to Freddie Mac. For example, assume a hypothetical $350,000 purchase, 3% down, and a 30-year fixed loan at 7.32%. That cost budget is $7,000 to $17,500, separate from the down payment. However, actual charges vary. Review lender and third-party fees, prepaid taxes and insurance, escrow deposits, and any upfront mortgage insurance on your Loan Estimate. The full breakdown is in our guide to how much are closing costs.

Family gift funds may help with upfront costs. Ask your lender about eligible donors, gift letters, and transfer documentation for your program. Check down payment assistance programs for help with upfront costs, and ask about eligibility, repayment obligations, and award limits.

Step 3: Pick a loan type that fits

Each program has its own trade-offs.

Conventional loans. Private mortgage insurance (PMI) is usually required below 20% down. For most borrower-paid PMI on a primary home, the servicer automatically terminates PMI when the balance is scheduled to reach 78% of original value, if payments are current. You can request cancellation at 80%, subject to payment history, no junior liens, and evidence the value has not declined. The Conventional 97 program allows 3% down on an eligible one-unit primary home when at least one borrower is a first-time buyer.

Government-backed loan programs

FHA loans. Backed by the Federal Housing Administration. HUD permits 3.5% down with a score of at least 580. Upfront mortgage insurance is 1.75% of the base loan. Under the schedule effective March 20, 2023, annual mortgage insurance premium (MIP) for terms over 15 years and base loans of $726,200 or less is 0.55% above 95% loan-to-value (LTV), or 0.50% at 95% or less. Larger base loans have higher rates. MIP lasts the mortgage term above 90% LTV and 11 years at 90% or less. Our FHA loan guidelines page covers the eligibility details.

VA loans. For eligible active-duty service members, veterans, National Guard, Reservists, and some surviving spouses. Eligible buyers may purchase with zero down and no monthly mortgage insurance. Under the fee schedule effective April 7, 2023, the first-use purchase funding fee with less than 5% down is 2.15% of the base loan; borrowers can finance it. Some borrowers are exempt, including eligible veterans receiving service-connected disability compensation. See our VA home loans overview.

USDA loans. USDA guaranteed loans allow zero down for eligible primary homes in designated rural areas. Check the property address and household income eligibility. The fee schedule read October 26, 2026, lists a 1% upfront guarantee fee and a 0.35% annual fee. More in our USDA mortgage loan guide.

Compare principal and interest payments

Hypothetical payment comparison on a $350,000 price with the same illustrative 7.32% fixed rate and 30-year term. These principal-and-interest payments exclude taxes, homeowners insurance, HOA dues, and mortgage insurance. Assume FHA upfront MIP and any VA funding fee are paid separately at closing:

• Conventional 3% down ($339,500 loan): about $2,332/month P&I.
• FHA 3.5% down ($337,750 loan): about $2,320/month P&I.
• VA 0% down ($350,000 loan): about $2,404/month P&I.

Taxes, homeowners insurance, HOA dues, PMI or MIP, and the VA funding fee change the real monthly cost. Because of this, ask every lender for a full payment estimate that includes those lines.

Step 4: Get pre-approved

A pre-approval letter says a lender is tentatively willing to lend up to a stated amount. However, it does not guarantee a loan. Lenders use pre-approval and pre-qualification differently, so ask what they verified. Sellers frequently require a letter before accepting an offer.

Your lender may request:

• Pay stubs covering the last 30 days.
• W-2s for the last two years, or documentation of other income.
• Federal tax returns for the last two years, depending on your situation.
• Two months of bank and investment statements (all pages).
• Government-issued photo ID.
• Documentation of the source of funds used for your down payment.

Our complete guide to pre-approval letters covers what the letter should say, how long it is valid, and what sellers look for. Before you buy a house, compare lenders within 14 days where possible. Scoring models generally group same-type loan inquiries made within 14 to 45 days as one inquiry; the window depends on the model.

Step 5: Hire a buyer’s agent

Interview two or three agents who work your target area and price range. Ask how many first-time buyers they closed in the past year, how they handle multiple offers, and how they vet inspectors. Since August 17, 2024, NAR rules require MLS participants working with a buyer to sign a written buyer agreement before touring a home together, including live virtual tours. Also, compensation is negotiable. Although you can request seller payment, you are responsible for payment under your agreement if no one else covers it.

A good agent will pull comparable sales (comps), draft offers, coordinate the inspection, and manage the back-and-forth with the listing agent through closing.

Step 6: Shop for homes and make an offer

Stick to the price range your pre-approval and your own budget support, not the maximum the lender shows. When you find a home, your agent will prepare a written offer that includes:

• Purchase price.
• Earnest money deposit and who will hold it; Freddie Mac describes 1% to 2% of the price as typical.
• Financing contingency, with conditions and deadlines for cancellation if financing fails.
• Inspection contingency with a negotiated deadline.
• Appraisal contingency specifying your options if the value comes in low.
• Closing date (usually 30 to 45 days out).
• Any requested seller credits toward closing costs or repairs.

NAR reported 4.8 months of supply and a 33-day median market time in September 2026. Ask your agent whether comparable local listings support requesting credits. For a primary-home purchase, Fannie Mae financing-concession caps depend on LTV and combined LTV if there is a second mortgage: 3% above 90%, 6% from 75.01% to 90%, and 9% at 75% or less, using the lower of price or appraised value. FHA and USDA generally cap seller contributions at 6% of the sales price. VA caps concessions at 4% of reasonable value; ordinary buyer closing costs do not count toward that cap. In addition, credits must meet program rules and cover eligible costs. The full breakdown is in our guide to seller-paid closing cost maximums.

If the seller counters, your agent will walk you through the trade-offs. Once both sides sign, you are under contract. Our guide to what happens after your offer is accepted covers the next 30 to 45 days in detail.

Step 7: Inspection and appraisal

Order the home inspection within your contingency window. Get a local inspection quote and ask which specialty inspections the property needs. For VA loans, check the wood-destroying insect inspection requirements for the property location and any issues noted in the appraisal.

The inspection report lists defects. You and your agent can:

• Accept the home as-is.
• Request repairs before closing.
• Request a seller credit at closing in lieu of repairs.
• Cancel under the inspection contingency if you meet its terms and deadlines; confirm the deposit-return procedure.

Your lender generally arranges an appraisal to assess the home’s value. Check your Loan Estimate for the appraisal charge. If the value comes in low, you can ask for a price reduction, discuss extra cash with your lender, request reconsideration with supporting information, or use your appraisal contingency if its terms allow.

Step 8: Underwriting

Your file goes to the underwriter, who verifies income, assets, credit, the appraisal, title work, and homeowners insurance. Expect to answer requests for additional documentation: an updated bank statement, a letter explaining a job change, proof that a deposit was from a specific source. Because missing documents can delay approval, respond the same day where you can.

Rules to follow between application and closing:

• Do not apply for new credit (car loan, credit card, store financing).
• Do not change jobs if you can avoid it. If you must, tell your loan officer first.
• Do not move large sums between accounts without a paper trail.
• Keep paying every bill on time.

Ask your lender which approval conditions remain and when the file can be cleared for closing.

Step 9: Closing

For most purchase mortgages, you must receive the Closing Disclosure at least three business days before closing. It shows loan terms, the monthly payment, cash to close, and closing costs. Compare it line by line to the Loan Estimate you received after application. Ask about anything that changed.

At closing, expect to receive or sign the promissory note, the mortgage or deed of trust, the Closing Disclosure, and other required documents. Confirm the accepted payment method and deadline with your closing agent. Because scammers may impersonate a settlement agent and send false instructions, verify wire instructions by calling a trusted number you obtained independently.

Confirm with your closing agent when funding, recording, ownership transfer, and possession are complete.

How long does it take to buy a house?

Freddie Mac describes 30 to 45 days from an accepted offer to closing as typical. Before that period, budgeting, credit work, pre-approval, and house hunting add time; how much depends on your situation and local listings.

Ask your lender and agent for a schedule tied to your contract. Inspection or appraisal repairs and missing documents can extend the process.

What to do next

To buy a house, start with your credit reports and a realistic budget, then get pre-approved with two or three lenders so you can compare rate, fees, and the full monthly payment side by side. Set your own spending limit, then compare official Loan Estimates after you have a property. Pre-approval does not commit you to a lender.