Complete Guide on How to Buy a House of Your Own

Buying a home is a big deal, and it can be like a roller coaster ride, with ups and downs, especially when the real estate market is uncertain.

How To Buy a House
How To Buy a House

But don’t worry, we’re here to help. We have a step-by-step plan for buying a house in 2023. We’ll talk about important things like figuring out if you’re ready to own a home, saving money for the first payment, and getting approval for a mortgage.

We’ll also explain how to find the right real estate agent, make offers on houses, and get to the finish line – closing day.

So, get ready for this journey, as we guide you with knowledge and advice to make the exciting but sometimes tricky process of buying a house easier to understand.

How to Buy a House

Buying a house as we said earlier can be like a roller coaster, but here, we have made it a little easier for you. Here are the steps to follow to buy a house:

Step 1: Make Sure You’re Ready to Buy a House

First things first: Before you dive into the home-buying process, there are some important things to consider.

  1. Be Debt-Free and Have an Emergency Fund: Imagine your emergency fund as a safety net. It’s like an insurance policy for unexpected expenses. When you own a house, you’re responsible for repairs. Having this fund means you won’t stress about fixing things like a leaky water heater right after you move in.
  2. Think About Your Life Stage: If you plan to move within a year, it may not be the best time to buy a house. Buying and selling homes can be costly, so it’s smart to plan on staying in one place for at least 5–7 years. For instance, it’s a good idea to wait a year after getting married before buying a house.

Before you’re ready to buy a house, make sure to tick off these seven things:

  1. You’re debt-free and have a fully funded emergency fund.
  2. You can comfortably handle monthly mortgage payments and home maintenance costs.
  3. You’ve saved up a good down payment.
  4. You can cover your closing costs.
  5. You have the money to cover moving expenses.
  6. You plan to stay in one place for a while.
  7. You’ve found a trustworthy real estate agent.

Step 2: Find Out What You Can Afford

So, you’re ready to buy a house, but first, let’s determine how much you can spend. Here’s a simple rule: Your monthly home payment should be no more than 25% of what you earn each month after taxes.

Staying within this limit leaves enough money in your budget for home upkeep, savings, retirement, and other financial goals.

Remember that this 25% includes your loan payments, property taxes, home insurance, private mortgage insurance (PMI), and homeowners’ association (HOA) fees. Use our mortgage calculator to see what home prices match your budget.

Now, you might come across something called the 28/36 rule. It suggests your house payment should be 28% of your monthly income and your total debt payments (including the mortgage) should not exceed 36% of your monthly income. However, this can lead to buying a home you can’t afford.

Once you’ve figured out how much you can spend on a home, stick to that amount. If you’re buying with someone else, make sure you both agree on the budget. You don’t want any financial surprises when saving for the down payment.

Step 3: Save for Your Down Payment

Let’s talk straight. Looking for a home is exciting, but saving up the money to buy one can feel less fun. But here’s the deal:

Don’t start house-hunting until you’ve got a solid down payment saved. Why? Because if you don’t, you might fall in love with a home way beyond your budget and try to convince yourself that your down payment is enough. Avoid this trap.

A small down payment can lead to regret when buying a house.

How Much to Save?

Like any goal, smart home buying requires planning and preparation. The most time-consuming part is saving for the down payment, closing costs, and moving expenses. Here’s a rough idea of what to save:

  • Down payment: Aim for at least 10%, but 20% is even better since it avoids PMI. PMI is an extra fee on your monthly mortgage for the lender’s protection, but it disappears when you have 20% equity in your home. If you’re a first-time buyer, 5-10% is enough, but it means paying PMI a bit longer.
  • Closing costs: Put aside about 3% of your home’s price for closing costs, covering property taxes, insurance, and various fees. The exact percentage might vary depending on where you’re buying.
  • Moving and other expenses: Moving costs depend on how much you’re moving and how far. Get quotes from local moving companies. If you plan to update your new home, budget for that too.

Ready to start saving? It’s not complicated. Set a savings plan and work toward your goals, and you’ll have that down payment sooner than you think. You’ve got this.

Step 4: Get Preapproved for a Mortgage

The best way to buy a home is by paying with cash, but if you need a mortgage, that’s okay too. Getting pre-approved is your first step to getting a home loan.

How to Get Preapproved?

A mortgage lender can prequalify you by having a simple conversation about your income, assets, and down payment. But it’s not the same as being preapproved.

To be preapproved, it takes a bit more effort. The lender will need to examine your pay stubs, tax returns, and bank statements to figure out the size of mortgage you can afford.

This step pays off when you start your home search because a preapproval letter shows that you’re a serious buyer, and sellers like serious buyers!

Which Mortgage Option Is Best?

Choosing the right mortgage is crucial to avoid turning your home into a financial burden. Here are some guidelines we recommend:

  • A fixed-rate conventional loan is a safe option because your interest rate stays the same throughout the loan, protecting you from rising rates. Avoid adjustable-rate mortgages as they can lead to much higher interest rates. Also, steer clear of FHA and VA loans due to their high fees.
  • Consider a 15-year term for your mortgage. Your monthly payment will be higher than a 30-year term, but you’ll pay off your mortgage in half the time and save a lot on interest. That’s a win.

Step 5: Find the Right Real Estate Agent

While you may start your home search online, you’ll need an expert to help you find and secure your dream home. A buyer’s agent can guide you through the home-buying process, and they might even find you a great home before it hits the market, giving you an advantage.

When it comes to making an offer, your agent will negotiate on your behalf so you don’t overpay

How Much Does a Buyer’s Agent Cost?

Good news! In most cases, the seller covers your real estate agent’s fees, so using a buyer’s agent usually costs you nothing. Why pass up professional help when it’s free?

Choosing the Best Buyer’s Agent

Don’t choose an agent just to be nice or because they’re a friend or family member. A home is a big purchase, so you need a pro. Interview a few agents and look for these qualities:

  • Experience helping home buyers like you.
  • Full-time real estate experience for several years.
  • A track record of closing homes each year.
  • Excellent communication skills.
  • A strong commitment to serving your needs.
  • Expertise in your local market.
  • A clear plan for guiding you through the next steps in the process.

Work with a top-notch agent who can answer your tough questions, be proactive, and have your best interests at heart.

A professional agent will guide you through the home-buying process effectively.

Step 6: Go House Hunting

Once you’re preapproved for a mortgage, the exciting part begins – searching for your dream home! Make a list of the must-have features for your home. If you’re buying with someone else, like a spouse, make separate lists and compare.

For example, you might want a bright kitchen with lots of counter space, while your partner desires a big backyard. Ensure you both agree on non-negotiables, like a good school district. Knowing your preferences helps guide your home search.

When you’re clear about your must-haves, share them with your real estate agent. They’ll help set realistic expectations and focus your search on homes and areas that fit your budget.

Keep the Future in Mind

While you might think you’re buying your forever home, consider resale value too. Life changes, like a new job or a growing family, can alter your idea of a forever home. To make a wise investment:

  • Don’t compromise on location or layout since you can’t change these things.
  • Don’t let small issues, like the color of a bathroom, deter you from a great home. These things are easy to change and can lead to a better deal.
  • Buy the least expensive home in the best neighborhood you can afford, giving your homeroom to appreciate.
  • Pay attention to trends in the area. Are property values rising or falling? Are businesses moving in or out? The community’s activity says a lot about home values.
  • Look into the quality of nearby school districts. Even if you don’t have kids, this can affect resale value since homes in areas with great schools usually sell for more money.

Expect house hunting to take time; it might take months to find the right home within your budget. Be patient and stick to your must-haves.

Step 7: Make an Offer on a House

Once you’ve found the perfect home, it’s time to make a formal offer. This means signing a purchase agreement with the seller.

What’s in Your Offer?

Your real estate agent will help you submit a strong offer. If you end up in a bidding war with other buyers, stay calm and put your best offer forward. Being preapproved and having flexibility on the closing date can make your offer more appealing.

Your purchase agreement will include details such as:

Buyer and seller information.

  • Property address.
  • Purchase price, lender details, and down payment.
  • Earnest money deposit (similar to a security deposit).
  • Items that stay with the home (like appliances or furniture).
  • Contingencies (more on this later), such as the home inspection, appraisal, and final mortgage approval.
  • Closing date.

Sometimes agreeing on terms is smooth, but it can also be challenging. Remember that both you and the seller want the same thing – they want to sell their house, and you want to buy it!

And keep in mind: It might be worth compromising on small details to move the process forward. A good real estate agent will give you advice on when to be flexible and when to stand firm.

Step 8: Get a Home Inspection and Appraisal

Now that you’re under contract (meaning the seller has accepted your offer but it’s not final yet), you’re on the way to owning your new home. Typically, it takes about 30 days to close on a house, during which you work through the contingencies in the contract.

Contingencies are conditions that must be met for the home purchase to proceed. They provide a safety net for you to back out of a sale without losing your earnest money if issues arise.

Home Inspection

You have the right to a professional home inspection before buying. It’s a crucial step to avoid surprises like structural issues or costly repairs. If the inspection reveals significant problems, you can ask the seller to fix them, reduce the price, or cancel the contract.

You might also consider other tests, such as termite inspections or radon tests, based on your agent’s advice and the home’s age and condition.


If you’re getting a home loan, your lender will require an appraisal to assess the property’s value. It ensures you don’t overpay. If the appraisal comes in lower than your offer, your real estate agent can guide your next steps.

Step 9: Finalize Your Mortgage

If you’re getting a mortgage, there’s another step before you can close on your home: getting final loan approval. This part requires some patience because your lender will be thoroughly checking your financial details. It could take more than a month to complete before your closing date.

Here’s a tip: Don’t open a new credit card, buy a bunch of furniture on credit, or change jobs once you’re under contract. These actions can affect your debt-to-income ratio and may reduce the amount of the loan you qualify for.

Taking on more debt or making financial changes is not a good idea because it could jeopardize your loan approval.

Step 10: Close on Your House

Congratulations! You’ve made it through the planning, saving, house hunting, and waiting. The final step is closing on your new home.

Before you officially own the house and get the keys, there’s one more task – paperwork. Get ready for some paperwork to review and sign.

You’ll likely need to pay for:

  • Closing costs.
  • Property taxes.
  • HOA fees (if applicable to your neighborhood).
  • Home insurance.

If you come across any confusing terms or conditions in the paperwork, don’t hesitate to ask questions. This is one of the most significant purchases you’ll make, and you should understand everything you’re signing.

Once you’ve signed all the paperwork, take a deep breath. You’re now a homeowner! Congratulations! The home-buying process might have had its challenges, but having a beautiful new home to call your own makes it all worth it.


What’s the difference between being prequalified and preapproved for a mortgage?

Prequalification is an initial assessment of your ability to qualify for a mortgage based on the information you provide. Preapproval involves a more in-depth review, including examining your financial documents, to determine the exact amount you can borrow.

How long does it take to close on a house?

It typically takes about 30 days to close on a house, but the timeline can vary based on various factors, such as the complexity of the transaction and the lender’s processes.



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