Buying a home in 10 steps

Buying a home is a major milestone and a significant financial decision that involves careful planning and research. It typically begins with assessing your financial readiness — reviewing your credit score, determining your budget and getting preapproved for a mortgage.

Once you have a clear understanding of what you can afford, the next step is to identify your needs and preferences, such as location, size, amenities and proximity to work or schools. Working with a real estate agent can help streamline the process, from finding suitable properties to negotiating offers.

After a seller accepts your offer, the process moves into the due diligence phase, which can include home inspections, appraisals and finalizing your mortgage. It's important to review all documents carefully and understand the terms of your loan and any contingencies in the purchase agreement.

Closing the deal involves signing legal paperwork, paying closing costs and officially transferring ownership. While the process can be complex, being well-informed and prepared can make buying a home a rewarding and successful experience.

Let Homes.com walk you through the steps:

1. Assess your financial readiness

Several factors are key in determining your financial readiness to buy a home. Unless you plan to pay all cash for your property, you'll likely take out a mortgage. Lenders will typically require you pay a set amount upfront called a down payment. And they will want evidence that you can afford the monthly payments.

It’s a common myth that you need to put down 20% to buy a home; there are numerous programs and incentives out there that require less. Nevertheless, determining how much you have for a down payment often dictates what you can buy. Saving up often requires doing a deep dive into your budget, avoiding the urge to splurge, and cost-cutting.

Next, you need to determine what monthly payments you can afford. Financial advisors typically recommend you spend no more than 28% of your monthly pay on housing, and that can include more than just the mortgage payment. There's also maintenance and other costs to consider.

A mortgage calculator can give you an idea of the kind of terms you can afford.

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2. Get preapproved for a mortgage

There are numerous mortgage lenders and programs available, and it requires research to determine which program and rate work best for you, regardless of whether you are taking out a 10-, 15-, or 30-year home loan. Numerous federal, state, and city programs can help first-time homebuyers with the mortgage and/or down payment.

A mortgage calculator can give you an idea of the kind of terms you can afford. By plugging in different numbers, you will be able to see how even small changes in the mortgage rate can add hundreds of dollars to your monthly payment and tens of thousands to what you pay over the term of your loan.

It pays to shop around for the terms that work best for you, as rates and options can vary among lenders depending on your down payment, income and credit history.

Homebuyers commonly ask whether it is better to be prequalified or preapproved for a mortgage? A prequalification is just an estimate of how much you might be able to borrow. It’s based on self-reported financial information like your income, debts and assets. The “self-reported” part is key. There’s no hard credit check. Being preapproved for a mortgage is a formal assessment of your income, debt, and assets — one that sellers take more seriously.

Your credit score can weigh heavily on whether you qualify for a loan, the interest rate you get and even the types of loans you’re eligible for. Low score? You may qualify for a government-backed loan if it's below 620, but it will likely come with stricter terms.

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3. Find a real estate agent

Real estate agents are licensed by states to sell real estate. They can represent buyers, sellers or both. An agent with a Realtor designation is a member of the National Association of Realtors. A broker is someone licensed by the state to run a real estate brokerage. Agents can have various other credentials. Here are just a few:

GRI – Graduate, Realtor Institute
ABR – Accredited Buyer’s Representative
SRS – Seller Representative Specialist
CRS – Certified Residential Specialist
SRES – Seniors Real Estate Specialist
PSA – Pricing Strategy Advisor
MRP – Military Relocation Professional

Experts say you should find agents knowledgeable of the area you have your heart set on and see how many sales they’ve handled. What neighborhoods do they focus on? Homes.com’s Agent search feature can help you with that.

You can also ask for referrals on social media chat groups. Ask friends, family, and coworkers whom they’d recommend. Workplace discussion threads are a great place to find an agent — you may find out that a home where you want to live may hit the market soon.

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4. Start house hunting

House hunting today typically starts online by searching a city where you want to move.

On Homes.com you can filter your search by dozens of factors that are important to you, including neighborhoods, agents and open house information. Listings have an affordability calculator, price history, maps, transit details, bike scores, environmental scores and estimated future home values.

Compiling a list of needs and wants will help you narrow your search further.

“Create a short list of your must-haves, deal breakers, and the features you can live without,” said Amanda Elhassan, a real estate agent with Keller Williams Realty in Livermore, California. “If my client knows they absolutely don’t want a fireplace, eliminate every home with one from the start. If walkability or yard size is essential, filter accordingly. The goal is to refine the searches, so you’re only viewing homes that align with top priorities.”

There are several questions you can ask yourself to determine your priorities:

How many bedrooms?
How many baths?
What kind of setting — urban, suburban, rural — appeals to you?
How long does it take to get to the bus stop or train station? Or how is traffic in the morning and evening? Try visiting neighborhoods at different times of day to get a feel for the area.
What are your parking needs?
How far is it from the grocery stores, the cleaners or your favorite coffee shop?
How much yardwork do you want to do?
If you are looking at a condo complex:
- Which amenities are must-haves? A pool? A fitness center?
- Is there a laundry room on-site or in the unit?
- Is smoking or vaping allowed?
- Do you want/need one that allows pets?

Once you have a good idea of what you want, it’s time for in-person tours. You can call or message the listing agents to schedule a showing or attend an open house.Don't try to see more than three to four homes at a time. After visiting a home, evaluate whether it meets your needs and wants.Keep a list of the homes you visited so that you can make side-by-side comparisons. When visiting, observe the street, the traffic, the parking and other factors that could impact you if you lived there. Narrow the search until you are ready to make an offer.

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5. Make an offer

Making an offer involves more than just naming a price. You’ll need to decide on how much money you are willing to put down to show your good faith in making a purchase — something called earnest money. You may want to make your offer contingent on an inspection or your ability to secure financing. You'll want to establish dates to close the deal and move in. A well-structured offer shows the seller you’re serious and organized. It’s also your first opportunity to set the tone for negotiations.

The strength of your offer often depends on the market you’re buying in. In a so-called seller’s market, you may need to offer above the asking price because of the competition from other buyers. In a buyer’s market, you may have more room to negotiate on price or request repairs because the sellers find it difficult to get their list price. Either way, your real estate agent can help you analyze comparable sales “comps” and guide you in crafting an offer that’s appealing to the seller and aligned with your budget.

You may be tempted to waive contingencies to sweeten your offer but consider this: They are there for your protection. For example, making your offer contingent on a home inspection can uncover problems that could cost you a lot of money to fix, and give you room to negotiate for a repair or price cut. The appraisal contingency allows you to back out of the deal if your mortgage company assesses the property for far less than your offer to buy. Otherwise, you’d be responsible for coming up with the difference.

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6. Schedule a home inspection

Once your offer is accepted, many then schedule a home inspection to uncover any maintenance surprises. Rotting window sills? There may be an issue with the window — a fix you can ask the seller to make before closing. An old air-conditioning unit with a mouse infestation? That may be a deal-breaker for you or something you want to discuss with the seller. You are the best arbiter of what your budget can afford down the line.

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7. Get a home appraisal

An appraisal tells lenders the home is worth the amount you would be borrowing to pay for it. It is different from the assessments communities do for taxation purposes. The latter is done to calculate the annual property tax bill, not to reflect the current market value.

In a highly competitive market — one in which prospective buyers may be offering above the asking price — there can be a gap between the loan amount and the appraised value. You, the seller, or both of you would need to cover that gap for the sale to go through.

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8. Secure your financing

In this stage, you will finalize your mortgage application with your lender. Even if you’ve been preapproved, this stage involves a deeper dive into your financials — think updated pay stubs, bank statements and documentation of any large deposits or debts. During this time, avoid big financial changes like opening new credit accounts or making large purchases, as these can affect your credit score and debt-to-income ratio.

Next, stay in close contact with your loan officer to track the underwriting process. This is when the lender’s team verifies your information and assesses risk. They may request additional documents or clarifications, so responding quickly helps keep things on schedule. Once underwriting is complete and the appraisal is approved, you’ll receive a “clear to close” notice. At that point, you’ll review and sign your final loan documents, locking in your interest rate and setting a closing date.

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9. Close the sale

Closing on a home sale is the final step in the real estate transaction process, where ownership of the property officially transfers from the seller to the buyer. This event typically takes place at a title company, attorney’s office, or virtually, and involves signing a significant amount of paperwork. Key documents include the deed, bill of sale, closing disclosure and loan documents if the buyer is financing the purchase. Both parties review and sign these documents to confirm the terms of the sale, the final purchase price and any contingencies that have been met.

Once the documents are signed, the buyer provides the funds for the purchase, which may include a down payment and closing costs. These funds are usually wired to the escrow or title company, which then disburses the money to the appropriate parties — such as the seller, real estate agents, and any lien holders. The title company also ensures that the title is clear of any encumbrances and records the new deed with the local government, officially making the buyer the new owner of the property.

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10. Move in

You’ve done it. You are now a homeowner. However, your new property won’t feel like a home until you are moved and settled in.

The process of moving should start long before closing day. Book moving companies or rental trucks about four to six weeks ahead of time to ensure they’ll be available. Start packing your nonessential items as you work through the closing process. Pack your last essential items a few days before moving.

“The easiest way to make moving day less stressful is to have everything completely packed beforehand, with every box labeled,” said Christian Pfeiffer, professional organizer at Valley Organizing in Phoenix, Arizona.

Once you close and the keys are in your hand, you can choose to move in whenever it works for your life. Buyers who are undertaking some renovations themselves might push off the move-in date. Many homeowners choose to do major renovations like kitchens or refinishing the floors because it’s easier to have work taken care of when the home is not being used. If you are ready to move into the home as it is, then schedule movers after the closing. You may save money by moving on a weekday.

Aside from moving logistics, you will need to coordinate starting your new homeowner responsibilities, including setting up water, electricity, internet, garbage, recycling and other services.

When unpacking, focus on function. You won’t be able to get to everything in one day, so concentrate on what you need.

“I think the kitchen and master bedroom are the most important for daily life. My suggestion is to start with bedding, toiletries and kitchen basics,” Pfeiffer said.

Once you’ve unpacked, take some time to settle into the neighborhood. Introduce yourself to the neighbors and walk around your new community.

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This story was updated Dec. 11