How to Buy a House in 2025: A 12-Step Guide to Homebuying

Buying a home isn’t overwhelming if you understand the process; it just takes proper planning. You’ll need to get your finances in order, secure a mortgage preapproval and find the right home. After you make an offer, you’ll negotiate the deal and navigate essential parts of the buying process – including the home inspection and appraisal – before you get to the closing table. 

In this guide, we’ll explain the 12 steps to buy a house, giving you the knowledge to find, finance and purchase your next home.

The first step in the homebuying process is determining how much of your income can go toward housing costs. You can use the 28/36 rule as a guide, which suggests that you should spend no more than 28% of your gross income on housing and no more than 36% on total debt. 

This rule measures your debt-to-income (DTI) ratio, which mortgage lenders use to evaluate your risk as a loan candidate. A DTI ratio of 36% or less will help you qualify for the best mortgage rates. Still, some lenders will offer loans to buyers with a ratio as high as 45% or 50%.

Lenders also use your credit score to help determine the mortgage that you will qualify for, including the interest rate and loan terms. A lower score will mean a more expensive mortgage, while a strong credit rating will result in a better interest rate and lower costs. 

Check your credit to ensure that you meet the requirements to secure a mortgage. Most conventional home loans require a credit score of at least 620, but FHA loans can help buyers with credit scores as low as 500.   

After you’ve determined how much of your income can go toward monthly costs, you will need to save for a down payment. A 20% down payment will help you qualify for a better interest rate and eliminate the need to pay mortgage insurance, but many homebuyers put down less. Some loans allow buyers to pay as little as 3%, and if you qualify, there are government-backed loans – such as VA and USDA loans – that do not require a down payment. 

You’ll also pay closing costs, which are the expenses paid when you finalize a home sale, including taxes, mortgage fees and title fees. You can expect your closing costs to be between 2% and 6% of the total loan amount. 

While buying a home without an agent is possible, the National Association of Realtors (NAR) reports that 89% of buyers enlist an expert's help. 

“Experienced agents protect the interests of clients by managing expectations and pointing out advantages in all types of sales,” says Dwayne Moyers, a real estate agent with Weichert Realtors in Alexandria, Virginia. “They know the nuances of every different financing type and can recommend great lenders, contractors, home inspectors and appraisers.”

Speak with at least three agents before making a decision, and be sure to pick an agent who is familiar with the area where you plan to buy. “An agent that knows the local market will be able to find homes that haven’t even gone up for sale yet because of their connections,” says Suzanne Ager, an agent with Corcoran McEnearney in Leesburg, Virginia. 

In fast-moving markets, finding an agent before you start the home search is wise. “If you wait to contact a realtor until after you find a home, it’s usually too late,” Ager says.

A mortgage preapproval involves a review of your assets, credit history, debts and income, helping a lender estimate how much you can borrow. When you get preapproved, a lender is preparing to offer you a loan unless something major changes with your financial standing. A preapproval letter also makes you a more competitive buyer since it shows the seller that you can secure a mortgage. 

Most preapprovals are valid for up to 90 days. When you get preapproved, the lender performs a “hard inquiry” into your credit, which will show up on your credit report. If you get multiple preapprovals around the same time, it will only count as one hard inquiry, so it’s wise to seek a preapproval from multiple lenders to compare rates.

• Tax returns: Lenders usually want to see tax returns from the last two years.
• Pay stubs: Prepare proof of all sources of income from the last 30 days.
• A valid ID: Provide a government-issued identification, such as a driver’s license or passport.
• Bank statements: To check your savings, lenders will want your bank statements, including any investment accounts.

The home search is often the most exciting part of the process, but sometimes, it can be hard to find a home with all the features you want while sticking to your budget. Come up with a list of what you need, what would be nice, and bonus features that you’d love:

• Must-haves: These are essential features that you cannot compromise on. Examples could include the home’s location, number of bedrooms and your price range.
• Nice-to-haves: The features that you’d like but can live without. Maybe you’d like your home to have a fully finished basement or large walk-in closets but could live without them if everything else about a property seemed right.
• Bonus features: These might be luxury or convenience features you’d enjoy, but they’re far from essential. Maybe you’d love to have heated floors, a detached garage, or high-end appliances, but don’t expect to find them within your budget.

A list like this will help your agent find a property that meets all your requirements and hopefully has a few pleasant surprises.

Homes.com has all the tools you need to find your future home. You can learn what it’s like to live in places across the country with detailed neighborhood guides. Or, browse based on criteria like highly rated schools and the safest neighborhoods. 

After discovering a home that might be right for you, you can find detailed information about the property and connect directly with the listing agent. Every home listing also comes with a mortgage calculator to make it easy to check if the home is within your budget. 

Open houses and showings are your chance to inspect everything you can’t see in online listing photos, including the neighborhood. “You want to look at the big-ticket items — the foundation, the roof, the HVAC, and any signs of water damage,” says Frank Armstrong, an agent with Colony Realty in Winchester, Virginia. “No home is going to be perfect, but these issues might be a sign of future expenditures down the line.” 

If you’ve found a house you like, the next step is putting in an offer. Depending on whether you’re in a buyer’s market or a seller’s market, you might choose to submit an offer that is above or below a home’s asking price. As you and your agent prepare your offer, use a Home Valuation Report to help determine the property’s current market value. 

If the home is in a competitive market, there are steps you can take to help secure the winning bid. “In a seller’s market, making your offer stand out is crucial,” says Chelle Gassan, vice president of The Girls Real Estate in Arlington, Virginia. “Waiving contingencies or increasing your earnest money can be strategies to make your offer competitive.”

As you and your agent put together an offer, consider these strategies to make it more attractive:

• Adjust the closing date: If the seller needs to close within a specific timeframe, you can submit an offer to finalize the deal at their preferred date. 
• Waive contingencies: Waiving specific contingencies, such as those for the inspection or appraisal, may make your offer more attractive. However, it’s important to understand that doing so could put your earnest money at risk if you walk away from the deal. Speak with your real estate agent to ensure that you know the potential downsides. 
• Add an escalation clause: An escalation clause allows you to increase your bid when a seller receives competing offers for a higher purchase price.
• Make a substantial earnest money deposit: Your earnest money deposit shows the seller that you are committed to buying their home, and a larger deposit could make your offer more attractive to the seller. 
• Be competitive: You might secure the deal by offering above the asking price, but it’s important to stay within budget. Consider how sales are trending in the local market, check the property value with a Home Valuation Report and ask your agent for a comparative market analysis to ensure that the offer you submit works for you and the seller. 

If a seller counters your offer, they might negotiate changes like a different closing date, a change to the contingencies or a higher sale price. You can agree to the seller’s terms, counteroffer again or walk away from the deal. You have not entered into a contract with the seller yet, so you can still back out without losing your earnest money. 

“You’ve got to be open-minded that your first offer might not be accepted as-is,” Armstrong says. “You might not be able to get the price you want or cover every little thing in your home inspection contingency.”

If your offer is accepted, you’ll enter the closing period, which is usually one to two months of finalizing every aspect of the sale. Typically, it starts with the home inspection. “Get an inspection done as soon as possible after the contract is signed,” Armstrong says. “You want to find out really quickly if the home is okay.”

A general inspector will check a home’s interior and exterior, including the roof, attic, electrical panels, appliances, fireplaces, HVAC system and more. In some cases, they might recommend a specialized inspection to check for lead paint, mold or pests. 

“The home inspection report will come back with a million different little things,” Armstrong says. “It’s the job of a good agent to know what’s a major problem and what’s an easy fix.”

If your home inspection uncovers issues, you can renegotiate to lower the home price, ask the seller to fix the problem, or get a seller credit to cover the cost of repairs. You might also decide to walk away if there are significant health hazards or damage to the home’s structural integrity. 

Including a home inspection contingency in your purchase agreement protects you as you negotiate, since the seller may agree to your terms, renegotiate or refuse to address the repairs. If you decide to waive the inspection clause, you won’t be able to negotiate for repairs and could forfeit your earnest money deposit if you walk away from the deal.

Now that your offer has been accepted, it’s time to get an official mortgage approval that applies to the home you plan to buy. A lender will thoroughly examine all your financial information before providing the loan in a process called underwriting.

Maintaining a stable financial profile during this time is key. Avoid switching jobs if you can, and take steps to maintain your credit profile and account balances. You should steer clear of major purchases, avoid running up credit card debt and hold off on opening new lines of credit until after closing. 

Communication is essential during the underwriting process, and you should respond quickly to any questions or requests. Your lender may request additional documents to verify your finances, including pay stubs, bank statements and tax returns.

A lender will not provide a mortgage for more than a home’s appraised value, which is why a home appraisal is ordered whenever you finance a property. A professional appraiser will typically come out to see the home and assess the property's value based on its condition and comparable homes that have sold nearby. 

A competitive real estate market can sometimes drive a home’s price above its appraised value. If your home appraisal comes back at less than the agreed-upon sale price, you must renegotiate with the seller or be prepared to make up the difference in cash. You can address this “appraisal gap” in a few different ways: 

• Request an appraisal review or a second appraisal if you believe it was incorrect. 
• Renegotiate the sale price with the seller. 
• Pay the difference by adding it to your down payment. 
• Back out of the deal. 

If you waive the appraisal contingency in your contract, you will have to choose between paying the difference upfront or backing out and potentially losing your earnest money deposit. “An appraisal contingency is one of the last things I want a buyer to waive because appraisals can be a surprise,” Moyers says.

Before you close on the home, you will do a final walk-through with your agent to ensure the house is in the condition you expect. “It’s important to verify that repairs have been completed, no new damage occurred during move out, all the appliances are working, and all items included in the sale are still present,” Gassan says.

If you see an issue or the seller has not addressed required repairs, you can delay closing until these concerns are resolved or request a seller credit. “The most common issue is that the seller forgot to take something with them or took something they shouldn’t have,” Armstrong says.

Your home closing is when the official paperwork is signed, the funds are transferred, and the keys to your new home are given to you. 

Your lender will send you a closing disclosure three days before the designated closing day. This disclosure will outline the official terms of your loan and the costs you can expect to pay at closing. Make sure to review this carefully with your agent. On the day of closing, you’ll sign several legal documents, update the house deed to your name and make your down payment.

Closing costs generally amount to 2% to 6% of the total loan amount. The most common expenses include home appraisal and inspection fees, title fees, mortgage lender fees and mortgage insurance. You will also pay for your first month of homeownership, including property taxes, home insurance and HOA fees.

After the keys are yours, so is the home. With every mortgage payment and renovation, your house will continue to build equity, making it one of the smartest ways to invest your money.

Before you move in, you’ll want to set up utilities, change the locks and deep clean the home. Hiring movers can make the transition easier, especially if you are relocating from far away. Then, it’s time to enjoy your new space. Of course, hidden expenses might pop up over time, so it’s wise to save for unexpected costs that might come along with homeownership.