How to Buy Your First Home: A Step-by-Step Guide

The median US home price is now over $400,000. Buying your first home can feel overwhelming, but the process is straightforward when broken into clear steps. Here's exactly what to do, in order.

Step 1: Check Your Credit and Finances

• Check your credit score — you need 620+ for most loans, 740+ for the best rates
• Calculate your debt-to-income ratio — most lenders want it under 43%
• Save for a down payment: 20% avoids PMI, but FHA loans allow 3.5% down
• Build an emergency fund that covers 3-6 months of expenses PLUS the purchase

Step 2: Get Pre-Approved for a Mortgage

Pre-approval shows sellers you're serious and tells you exactly how much you can borrow. Get pre-approved by at least 2-3 lenders to compare rates. Even a 0.5% difference in rate saves tens of thousands over 30 years.

Step 3: Find a Real Estate Agent

As a buyer, the agent's commission is paid by the seller (though this is changing). A good buyer's agent knows the local market, negotiates on your behalf, and guides you through the paperwork. Ask for referrals from people who recently bought in your target area.

Step 4: Search and Make an Offer

• Search on Zillow, Redfin, and Realtor.com
• Visit homes in person — photos can be misleading
• When you find one, move fast in hot markets
• Your agent will help you write a competitive offer
• Include contingencies: inspection, financing, and appraisal

Step 5: Due Diligence and Closing

1. 1Home inspection: Hire an independent inspector ($300–500). Know what you're buying.
2. 2Appraisal: Your lender orders this to confirm the home is worth the purchase price.
3. 3Final walkthrough: Day before closing, confirm everything is as agreed.
4. 4Closing: Sign ~100 pages of documents, pay closing costs (2-5% of purchase price), get keys.