# How to Buy a Home: 10 Essential Steps for 2026 By Opendoor Editorial Team | 2020-02-01 > From finding a lender to making an offer, our partner agents answer key questions. ## Key Takeaways # How to Buy a Home: 10 Essential Steps for 2026 Buying a home involves a lot of moving pieces — finances, paperwork, negotiations, and timing that all have to come together. It's one of the biggest purchases most people ever make, and the process can feel overwhelming if you don't know what to expect. This guide walks you through each step, from checking your financial readiness to picking up the keys on closing day. [See Homes Near You](#) ## Understanding the home buying process Buying a home starts with assessing your finances, then getting preapproved for a mortgage, finding a property, making an offer, completing inspections, and finally closing the deal. Most buyers spend somewhere between 5 and 12 months from first research to getting the keys. The timeline varies depending on your local market, your loan type, and how quickly you find a place that feels right. Before jumping into the steps, here are a few terms you'll see throughout the process: - **Preapproval:** A lender reviews your finances and commits to lending you a specific amount, giving you a clear budget - **Closing:** The final meeting where you sign paperwork, pay your costs, and officially become the homeowner - **Contingencies:** Conditions in your offer that let you back out if something goes wrong, like a failed inspection - **Earnest money:** A deposit you put down when making an offer to show the seller you're serious ## Step 1. Check your financial readiness to buy a house Your financial picture shapes everything that comes next. It determines how much you can borrow, what interest rate you'll pay, and which loan programs are available to you. ### Review your credit score and credit history Lenders look at your credit score to understand how you've handled debt in the past. A score of 620 or higher typically qualifies you for conventional loans, while FHA loans may accept scores as low as 580. Higher scores generally mean better interest rates. You can pull a free credit report from each of the three major bureaus once a year at AnnualCreditReport.com. Look for errors or accounts you don't recognize, and dispute anything that looks wrong before you apply. ### Calculate your debt-to-income ratio Your debt-to-income ratio, or DTI, compares your monthly debt payments to your gross monthly income. Lenders use this number to gauge whether you can handle a mortgage payment on top of your existing obligations. To find yours, add up all your monthly debt payments, including car loans, student loans, and credit cards. Then divide that total by your gross monthly income. Most lenders prefer a DTI of 43% or less. ### Confirm your employment and income stability Lenders typically want to see two years of steady employment. If you've recently switched jobs or careers, be ready to explain the change and show that your income is stable. You'll provide W-2s, tax returns, and recent pay stubs to verify your income. Self-employed buyers often face additional paperwork, including profit-and-loss statements. ## Step 2. Determine how much home you can afford Knowing [your budget](https://www.opendoor.com/articles/how-much-house-can-I-afford-guide) before you start looking prevents the disappointment of falling for a home that's out of reach. ### Apply the 28/36 rule to your budget The 28/36 rule offers a simple framework for affordability. It suggests keeping your housing costs, including mortgage, taxes, and insurance, at or below 28% of your gross monthly income. Your total debt payments, housing included, ideally stay under 36%. This isn't a hard rule, but it's a useful starting point for thinking about what you can comfortably manage month to month. ### Account for hidden costs of homeownership Your mortgage payment is only part of what you'll spend. Property taxes, homeowners insurance, and [maintenance costs](https://www.opendoor.com/articles/how-much-does-it-cost-to-buy-a-house) add up quickly. If you're buying in a community with a homeowners association, you'll have monthly or annual dues on top of that. A good rule of thumb is to budget roughly 1% of your home's value each year for repairs and upkeep — [42% of homeowners with regrets](https://www.bankrate.com/mortgages/home-affordability-report/) cite maintenance and hidden costs as their top concern. Roofs wear out, HVAC systems break down, and appliances eventually fail. ### Align your home purchase with long-term goals How long do you plan to stay? If you might relocate in two or three years, buying may not make financial sense once you factor in transaction costs. Think about career changes, family growth, and lifestyle shifts before committing. ## Step 3. Save for your down payment and closing costs The cash you bring to the table affects your loan options, your monthly payment, and whether you'll pay private mortgage insurance. ### Down payment requirements by loan type Different loan programs have different down payment minimums: | **Loan type** | **Down payment** | **Best for** | | Conventional | As low as 3% | Buyers with solid credit | | FHA | 3.5% minimum | First-time buyers or lower credit scores | | VA | 0% | Eligible veterans and service members | | USDA | 0% | Buyers in eligible rural areas | [Putting down 20% or more](https://www.opendoor.com/articles/down-payment-amount) on a conventional loan eliminates the requirement for private mortgage insurance, which can save you hundreds each month. In practice, first-time buyers put down [a median of 9%](https://www.bankrate.com/mortgages/down-payment-for-first-time-homebuyers/). ### Closing costs you can expect Closing costs typically run between 2% and 5% of your loan amount. This money covers loan processing, title insurance, appraisal fees, and other services. You'll receive a detailed breakdown before closing day, so there won't be surprises. ### Down payment assistance programs to explore Many states and local governments offer grants or low-interest loans to help first-time buyers cover down payments — there are [over 2,200 programs available](https://www.bankrate.com/mortgages/age-first-time-homebuyers-shatters-a-record-again/) nationally. Eligibility requirements and income limits vary, so it's worth researching what's available in your area. ## Step 4. Choose the right mortgage for your situation Different loan types work better for different financial situations. Understanding your options helps you pick the one that fits. ### Fixed-rate mortgages With a fixed-rate loan, your interest rate stays the same for the entire loan term, usually 15 or 30 years. Your monthly payment remains predictable, which makes budgeting straightforward. ### Adjustable-rate mortgages Adjustable-rate mortgages, or ARMs, start with a lower fixed rate for an initial period, then adjust periodically based on market conditions. ARMs can make sense if you plan to sell or refinance before the rate adjusts. ### FHA, VA, and USDA loans Government-backed loans offer more flexible qualification requirements. FHA loans work well for buyers with lower credit scores. VA loans provide exceptional benefits for eligible service members, including no down payment. USDA loans serve buyers in qualifying rural areas, also with no down payment required. ## Step 5. Get preapproved for a mortgage [Preapproval](https://www.opendoor.com/articles/mortgage-preapproval) gives you a clear picture of your borrowing power. It also signals to sellers that you're a serious, qualified buyer. ### Documents you typically provide for mortgage preapproval Lenders generally request recent pay stubs, tax returns from the past two years, bank statements, proof of other assets, and government-issued ID. Having this paperwork ready speeds up the process. ### Prequalification vs. preapproval Prequalification is a rough estimate based on information you provide. Preapproval involves actual verification of your income, assets, and credit. Sellers take preapproval letters far more seriously because they carry real weight. ## Step 6. Find the right home for your needs With preapproval in hand, you're ready to start your search. ### Define your must-haves and nice-to-haves Separating non-negotiables from preferences keeps you focused. Maybe you absolutely require three bedrooms, but an updated kitchen would simply be a bonus. Knowing the difference saves time. ### Research neighborhoods, schools, and commutes The home itself is only part of the equation. Drive through neighborhoods at different times of day. Check school ratings if that matters to you. Time your commute during rush hour to see what you're really signing up for. ### Attend open houses and schedule private showings Nothing replaces seeing a property in person. Look for layout flow, natural light, and signs of deferred maintenance. Opendoor-owned homes offer self-guided tours, letting you explore on your own schedule without coordinating with an agent. ## Step 7. Make an offer on a house When you find the right home, your agent helps you put together a competitive offer. ### Components of a strong purchase offer Your offer includes the purchase price, proposed closing date, contingencies, and any requests for repairs or included items. In competitive markets, a clean offer with fewer contingencies can stand out. ### Earnest money deposits explained [Earnest money](https://www.opendoor.com/articles/earnest-money), typically 1% to 3% of the purchase price, shows the seller you're committed. This deposit goes into escrow and applies toward your down payment or closing costs if the sale goes through. ### Common contingencies to include Most buyers include three key contingencies: - **Inspection contingency:** Lets you negotiate or walk away if major problems surface - **Appraisal contingency:** Protects you if the home appraises below your offer price - **Financing contingency:** Allows you to exit if your mortgage falls through ## Step 8. Schedule the home inspection and appraisal Both steps protect your investment and satisfy your lender's requirements. ### What home inspectors evaluate A [professional inspector](https://www.opendoor.com/articles/seven-home-inspection-deal-breakers) examines the structure, roof, plumbing, electrical systems, HVAC, and more. The inspection typically takes two to four hours, and you'll receive a detailed report afterward highlighting any concerns. ### How the appraisal process works Your lender orders an appraisal to confirm the home's market value supports the loan amount. An independent [appraiser visits the property](https://www.opendoor.com/articles/home-appraisal-process) and compares it to recent sales of similar homes nearby. ### What to do if problems are discovered If the inspection reveals issues or the appraisal comes in low, you have options. You can renegotiate the price, request repairs, ask for seller credits, or walk away if you included the right contingencies. ## Step 9. Negotiate repairs and complete your final walk-through The finish line is close, but a few important steps remain. ### Requesting repairs or seller credits Based on inspection findings, you can ask the seller to fix problems or provide a credit at closing to cover repair costs. In competitive markets, flexibility often helps keep the deal moving forward. ### Final walk-through checklist A day or two before closing, you'll walk through the property one last time. Check that all agreed-upon repairs are complete, no new damage has occurred, appliances work properly, the seller's belongings are gone, and keys and remotes are ready for handoff. ## Step 10. Close on your new home Closing day is when everything becomes official. ### Review your closing disclosure carefully You'll receive [this document](https://www.opendoor.com/articles/how-to-read-a-closing-disclosure-what-to-look-for) at least three business days before closing. It details your final loan terms, monthly payment, and all closing costs. Compare it to your original loan estimate and ask about any differences. ### What to bring on closing day Bring government-issued photo ID, a cashier's check or wire transfer confirmation for closing costs, proof of homeowners insurance, and any documents your lender or title company requested. ### Post-closing steps for new homeowners After signing, transfer utilities into your name, change the locks, and file for a homestead exemption if your state offers one. Keep your closing documents somewhere safe because you'll reference them for years. ## How long does the home buying process take Most buyers spend 5 to 12 months from initial planning to closing day. The timeline depends on how quickly you find a home, your loan type, and local market conditions. Cash purchases or working with companies that streamline the process can shorten this window significantly. ## Tips for first-time homebuyers ### Build an emergency fund before you buy Unexpected repairs happen. Having reserves beyond your down payment and closing costs, ideally three to six months of housing expenses, provides a safety net when something breaks. ### Get preapproved before you start shopping Preapproval clarifies your budget and prevents you from touring homes you can't afford. It also strengthens your position when you're ready to make an offer. ### Think about your five-year plan Buying makes the most financial sense when you plan to stay put for several years. Transaction costs and market fluctuations can eat into your equity if you sell too soon. ## Move forward on your terms Buying a home is one of life's biggest milestones. Whether you're purchasing your first home or your fifth, having a clear roadmap makes the process feel manageable. If you're also selling a current home, coordinating both transactions can add complexity. Opendoor offers flexible options, including cash offers and the ability to buy and sell in one simple transaction. [Get a free cash offer](https://www.opendoor.com/address-entry) and see how simple moving can be. [See Homes Near You](#) ## FAQs about how to buy a home ### What salary do you need to afford a $400,000 house? Affordability depends on more than salary alone. Your debt-to-income ratio, down payment amount, interest rate, and local property taxes all factor in. A mortgage calculator or conversation with a lender can give you a personalized estimate based on your complete financial picture. ### What is the 30/30/3 rule for buying a home? This budgeting guideline suggests spending no more than 30% of your gross income on housing, saving at least 30% for a down payment, and buying a home priced at no more than three times your annual income. It's a conservative framework that helps prevent overextending. ### Can you buy a house while selling your current home at the same time? Yes, though it can be complex with traditional methods. Timing two transactions, managing contingent offers, and potentially carrying two mortgages creates stress. Opendoor's trade-in program simplifies this by letting you buy and sell in one coordinated transaction. ### How much money is wise to have saved after buying a house? Financial experts often recommend keeping an emergency fund covering three to six months of housing costs after closing. This cushion helps you handle unexpected repairs, job changes, or other surprises without financial strain. ### Is it better to buy a house with cash or finance with a mortgage? Both approaches have advantages. Cash offers can be more competitive and eliminate interest payments. Financing preserves your liquidity and may offer tax benefits. The right choice depends on your financial situation and goals. ## Explore Opendoor guides to neighborhoods in your area | **City** | **Neighborhoods** | | **Raleigh** | [Brier Creek](https://www.opendoor.com/neighborhood-guide/brier-creek-raleigh), [Cameron Village](https://www.opendoor.com/neighborhood-guide/cameron-village-raleigh), Downtown Raleigh, [Five Points](https://www.opendoor.com/neighborhood-guide/five-points-raleigh), Glenwood South, Hayes Barton, Mordecai, [North Hills](https://www.opendoor.com/neighborhood-guide/north-hills-raleigh), Oakwood | | **Charlotte** | [Ballantyne](https://www.opendoor.com/neighborhood-guide/ballantyne-charlotte), [Dilworth](https://www.opendoor.com/neighborhood-guide/dilworth-charlotte), [Elizabeth](https://www.opendoor.com/neighborhood-guide/elizabeth-charlotte), [Myers Park](https://www.opendoor.com/neighborhood-guide/myers-park-charlotte), [NoDa](https://www.opendoor.com/neighborhood-guide/noda-charlotte), [Plaza Midwood](https://www.opendoor.com/neighborhood-guide/plaza-midwood-charlotte), [South End](https://www.opendoor.com/neighborhood-guide/south-end-charlotte), SouthPark, Uptown Charlotte, Cotswold, Fourth Ward, Chantilly | | **Plano** | East Plano, [West Plano](https://www.opendoor.com/neighborhood-guide/west-plano-plano), Central Plano, [Willow Bend](https://www.opendoor.com/neighborhood-guide/willow-bend-plano), [Legacy West](https://www.opendoor.com/neighborhood-guide/legacy-west-plano), Old Town Plano, Park Forest, Parkway Village, Preston Meadow, Windridge | | **Dallas** | Uptown Dallas, [Deep Ellum](https://www.opendoor.com/neighborhood-guide/deep-ellum-dallas), [Highland Park](https://www.opendoor.com/neighborhood-guide/highland-park-dallas), [Oak Lawn](https://www.opendoor.com/neighborhood-guide/oak-lawn-dallas), [Lakewood](https://www.opendoor.com/neighborhood-guide/lakewood-dallas), [Bishop Arts District](https://www.opendoor.com/neighborhood-guide/bishop-arts-district-dallas), White Rock Lake, [Preston Hollow](https://www.opendoor.com/neighborhood-guide/preston-hollow-dallas), [Lower Greenville](https://www.opendoor.com/neighborhood-guide/lower-greenville-dallas), [Knox Henderson](https://www.opendoor.com/neighborhood-guide/knox-henderson-dallas) | | **Fort Worth** | Downtown Fort Worth, Near Southside, Magnolia Avenue, [Fairmount](https://www.opendoor.com/neighborhood-guide/fairmount-fort-worth), Ryan Place, Sundance Square, West 7th, Mistletoe Heights, Berkeley, [Ridglea Hills](https://www.opendoor.com/neighborhood-guide/ridglea-hills-fort-worth) | | **Phoenix** | [Arcadia](https://www.opendoor.com/neighborhood-guide/arcadia-phoenix), Central Phoenix, Biltmore | | **Mesa** | Downtown Mesa | | **Scottsdale** | [Old Town Scottsdale](https://www.opendoor.com/neighborhood-guide/old-town-scottsdale-scottsdale) | | **Los Angeles** | [Silver Lake](https://www.opendoor.com/neighborhood-guide/silver-lake-los-angeles), Echo Park, Highland Park | | **Oakland** | Rockridge, Temescal | | **Seattle** | [Capitol Hill](https://www.opendoor.com/neighborhood-guide/capitol-hill-seattle) | ## Find homes for sale across the U.S. | **States with homes for sale** | | [Arizona](https://www.opendoor.com/homes/state/arizona), [California](https://www.opendoor.com/homes/state/california), [Colorado](https://www.opendoor.com/homes/state/colorado), [Florida](https://www.opendoor.com/homes/state/florida), [Georgia](https://www.opendoor.com/homes/state/georgia), [Massachusetts](https://www.opendoor.com/homes/state/massachusetts), [Michigan](https://www.opendoor.com/homes/state/michigan), [Minnesota](https://www.opendoor.com/homes/state/minnesota), [Missouri](https://www.opendoor.com/homes/state/missouri), [Nevada](https://www.opendoor.com/homes/state/nevada), [New Mexico](https://www.opendoor.com/homes/state/new-mexico), [New York](https://www.opendoor.com/homes/state/new-york), [North Carolina](https://www.opendoor.com/homes/state/north-carolina), [Ohio](https://www.opendoor.com/homes/state/ohio), [Oklahoma](https://www.opendoor.com/homes/state/oklahoma), [Oregon](https://www.opendoor.com/homes/state/oregon), [South Carolina](https://www.opendoor.com/homes/state/south-carolina), [Tennessee](https://www.opendoor.com/homes/state/tennessee), [Texas](https://www.opendoor.com/homes/state/texas), [Utah](https://www.opendoor.com/homes/state/utah), [Virginia](https://www.opendoor.com/homes/state/virginia) | **Read More** --- *Originally published at [https://www.opendoor.com/articles/top-agents-answer-top-questions-about-buying-a-home](https://www.opendoor.com/articles/top-agents-answer-top-questions-about-buying-a-home)*