Buying your first home is the largest financial decision most people ever make. Here's every step — from saving your first dollar to getting your keys — in plain English.

Step 1: Figure out what you can afford

Before you look at a single listing, know your number. The 28% rule: your total housing payment shouldn't exceed 28% of gross monthly income. If you earn $7,000/month, target a payment under $1,960.

Use the MorgCalc affordability calculator →

Step 2: Save for your down payment + closing costs

You'll need two buckets of cash:

  • Down payment: 3–20% of the purchase price. FHA loans allow 3.5% with a 580+ credit score. Conventional loans start at 3% but require PMI under 20%.
  • Closing costs: 2–5% of the loan amount. Often $6,000–$15,000 on a median home. Many first-time buyer programs help with this.
  • Cash reserve: Lenders like to see 2–3 months of payments in savings after closing. Also — things break. Have a buffer.
First-time buyer programs: Most states offer down payment assistance grants or low-interest second mortgages. Search "[your state] first-time homebuyer program" — these often go unused because buyers don't know they exist.

Step 3: Check and improve your credit

Pull your free credit report at annualcreditreport.com. Dispute any errors. Pay down credit card balances below 30% of your limit. Don't open new accounts for at least 6 months before applying.

Target: 740+ for the best rates. 620 is the conventional minimum. See our full credit score guide →

Step 4: Get pre-approved (not just pre-qualified)

Pre-qualification is a rough estimate based on self-reported income. Pre-approval involves a hard credit pull and verification of income, assets, and employment — it's a real commitment from the lender.

Sellers take pre-approved offers more seriously. In competitive markets, you often can't even tour homes without one.

Shop at least 3 lenders. Rates vary by 0.25–0.5% between lenders on identical borrowers — that's thousands of dollars over the loan term.

Step 5: Find a buyer's agent

A buyer's agent represents your interests and is typically paid by the seller (though this is changing — clarify compensation upfront). Interview 2–3 agents. Look for someone who knows your target neighborhoods and has recent transaction experience.

As of 2024, you'll sign a buyer's representation agreement before touring homes — required by the NAR settlement. Read it before signing.

Step 6: Shop for homes

Set realistic criteria: needs vs. wants. Location is the one thing you can't change. Everything else — layout, finishes, size — can be modified.

  • Stay within your pre-approved amount (leave room for repairs)
  • Attend open houses even in neighborhoods that feel out of reach — pricing surprises happen
  • Look at 10–20 homes before making an offer; you'll develop a feel for value

Step 7: Make an offer

Your agent will help with comps (recent sales) to set a price. Key offer terms beyond price:

  • Earnest money: 1–3% of purchase price, shows you're serious
  • Contingencies: Inspection, financing, and appraisal contingencies protect you — don't waive them lightly
  • Closing timeline: 30–45 days is standard; sellers sometimes prefer a faster close

Step 8: Inspection and appraisal

Home inspection (~$300–$500): A licensed inspector checks the structure, systems (HVAC, plumbing, electrical), and roof. This is not optional. Use findings to negotiate repairs or a price reduction.

Appraisal (~$400–$600, lender-ordered): The lender verifies the home is worth what you're paying. If the appraisal comes in low, you can renegotiate, make up the difference in cash, or walk away (if you have an appraisal contingency).

Step 9: Underwriting

The lender's underwriter reviews your full file — income docs, tax returns, bank statements, employment verification. Respond quickly to any requests. Do not change jobs, make large deposits, or open new credit during this period.

Step 10: Closing day

You'll receive a Closing Disclosure 3 days before closing — review it carefully against your Loan Estimate. At closing:

  • Bring a cashier's check or wire funds for closing costs + remaining down payment
  • Bring government-issued photo ID
  • Sign approximately 100 pages of documents (mostly boilerplate)
  • Get your keys

After closing: the first 30 days

  • Change locks immediately
  • Set up homeowners insurance if you haven't already
  • Make a list of everything that needs attention (don't try to fix it all at once)
  • Keep all closing documents in a safe place — you'll need them at tax time

Ready to run your numbers?

Calculate your monthly payment → or find out how much house you can afford →