Steps In Buying A House And Getting Qualified For Mortgage

If you’ve been dreaming of owning a home, learning the exact steps in buying a house is the key to turning your dream home into reality.

Buying a home is one of the biggest financial decisions you’ll ever make, and knowing the right steps in buying a house can save you time, money, and stress. Buying your first home or moving to a bigger one can be stressful. Having a clear plan can help make the process easier. This guide will walk you through each the steps in buying a house—from getting pre-approved to closing—so you can move forward with confidence and become a homeowner in 2026.

Key Takeaways

• Buying a home is exciting, but it needs planning.
• The main steps in buying a house include: getting pre-approved, hiring an agent, house hunting, making an offer, inspections, mortgage approval, and closing.
• Being prepared financially and emotionally reduces stress and increases your chances of a smooth closing.
• Gustan Cho Associates specializes in helping buyers get approved—even if other lenders have denied them.

Step 1: Decide If You’re Ready to Buy a House

Before diving into the steps in buying a house, ask yourself if you are ready for the responsibility of homeownership. Home ownership comes with stability and wealth-building opportunities, but it also includes financial and maintenance obligations.

Questions to consider:

• Am I ready to live in one place for the next 3–5 years?
• Can I handle repairs and maintenance without relying on a landlord?
• Do I have money saved for down payment, closing costs, and reserves?
• Can I comfortably afford the monthly mortgage, taxes, and insurance?

Homeownership is rewarding, but it requires commitment.

Step 2: Review Your Finances and Mortgage Readiness

Before you start house hunting, it helps to do a quick “money checkup.” Lenders primarily consider four key factors: credit, income, monthly debt, and savings. Here’s what each one means and how to improve it fast.

1) Credit Score

What it is:

Your credit score is a number that shows how you’ve handled credit (credit cards, car loans, student loans, etc.).

Why it matters:

A higher score usually means easier approval and better interest rates. A lower score can still work, but you may have fewer loan options or higher costs.

Quick target ranges (general):

• 500–579: Possible with FHA, but typically requires a 10% down payment (and not every lender offers this option).
• 580–619: FHA is common (often 3.5% down).
• 620+: Offers more options, such as Conventional (and sometimes better pricing).
• 700+: Often qualifies for the best rate options.

What to do next:

• Pay everything on time (even one late payment hurts).
• Keep credit card balances low (under 30% is a good goal).
• Don’t open new accounts right before applying.
• If your score is close, ask about a rapid rescore strategy.

2) Debt-to-Income Ratio (DTI)

What it is:

DTI is how much of your monthly income goes toward monthly debts—like car payments, student loans, credit cards, and the new mortgage payment.

Why it matters:

DTI tells the lender if your payment will be comfortable or if you’re stretched too thin.

Quick target ranges (easy guide):

• Under 36%: Strong — easiest approvals.
• 37%–45%: Still good for many loans.
• 46%–56%: Possible, but it depends on credit, savings, and the loan program.
• Over 56%: Usually tough, but not always impossible with compensating factors or specific programs.

What to do next:

• Pay down or pay off small debts (credit cards are the biggest win).
• Avoid taking on new payments (new car, new credit card).
• If student loans are high, ask how your program calculates them.
• Consider adjusting your price range to keep the payment comfortable.

3) Income and Job History

What it is:

This is your ability to repay the loan. Lenders verify your job, income type (W-2, self-employed, or commission), and its stability.

Why it matters:

Stable, verifiable income makes approvals smoother and helps you qualify for more homes.

Quick target ranges (what lenders like to see):

• 2 years of steady work history is ideal (but not always required).
• Consistent or increasing income helps.
• Self-employed/commission borrowers may need extra documentation.

What to do next:

• Avoid switching jobs during the mortgage process if possible.
• Gather proof of income early (pay stubs/W2s or business docs).
• Self-employed? Ask about bank statements or other Non-QM options if tax returns don’t reflect your real income.

4) Savings (Down Payment + Closing Costs + Reserves)

What it is:

Savings is the money you’ll use for your down payment, closing costs, and extra funds left over after closing.

Why it matters:

More savings can mean a stronger approval and less stress if unexpected expenses arise (such as repairs or moving costs).

Quick target ranges (rule of thumb):

• Down payment:
  • FHA can be as low as 3.5% down (with qualifying credit).
  • Conventional can be as low as 3% down for some borrowers.
  • VA/USDA may offer 0% down for eligible borrowers.
• Reserves: Aim for 1–2 months of the new mortgage payment left in the bank after closing (more is better).

What to do next:

• Keep your funds “easy to document” (avoid cash deposits if possible).
• If you’re using gift funds, ask for the gift letter rules early.
• Don’t move money around between accounts right before closing unless your lender says it’s okay.

5) Pick the Right Loan Program

What it is:

Loan programs are different “types” of mortgages—FHA, VA, USDA, Conventional, Jumbo, and Non-QM.

Why it matters:

The right program can mean lower down payment, easier approval, and sometimes a better rate.

Quick target ranges (simple fit guide):

• FHA: Great for lower credit scores and higher DTIs.
• VA: Best option for eligible veterans—often 0% down and flexible guidelines.
• USDA: Rural areas + income limits, often 0% down.
• Conventional: Strong credit and stable income, often better long-term costs.
• Non-QM: Great for self-employed, bank statement income, recent credit events, or unique situations.

What to do next:

Tell your lender your full picture (credit, down payment, income type), and ask:

• “Which program gives me the easiest approval?”
• “Which one gives me the lowest payment?”
• “What’s the fastest path to close?”

Tip: If you’ve had credit issues or got denied elsewhere, Gustan Cho Associates has no lender overlays, which means we focus on the actual program guidelines—not extra rules that many banks add on top. And we can guide you through the steps in buying a house no problem.

Step 3: Get Pre-Approved for a Mortgage

Getting pre-approved is one of the important steps in buying a house. It shows sellers you’re really interested in buying and helps you get a grip on your budget.

Documents needed for pre-approval:

• Pay stubs (last 30 days)
• W2s and tax returns (last 2 years)
• Bank statements (last 60 days)
• ID and Social Security card
• Proof of additional income (child support, pensions, bonuses, etc.)

Why it matters: A solid pre-approval prevents last-minute loan denials and ensures you’re shopping within your price range.

Step 4: Hire a Real Estate Agent

Picking the right real estate agent is super important in the steps in buying a house. A good agent will help you explore neighborhoods, negotiate deals, and look out for your best interests.

What to look for:

• Local knowledge of your target area.
• Strong reviews and referrals.
• Experience with first-time buyers, if it’s your first home.

At Gustan Cho Associates, we work with trusted real estate partners nationwide to connect you with agents who truly care.

Step 5: Start House Hunting

Now comes the exciting part—searching for your dream home!

Tips for this step in buying a house:

• Use MLS listings, Zillow, and open houses to compare options.
• Visit homes in person—pictures online can be misleading.
• Consider location, schools, commute, and neighborhood safety.
• Don’t rush—compare multiple homes before making a decision.

Step 6: Make Your Offer and Sign a Contract

Making an offer is one of the most strategic steps in buying a house.

Best practices:

• Don’t “lowball” too much—it may get rejected outright.
• Ask for seller concessions to help cover closing costs.
• Include contingencies: appraisal, home inspection, and financing.
• In attorney states, have your lawyer review the purchase contract.

Once accepted, your signed purchase agreement is sent to your lender for moving forward.

Step 7: Order a Home Inspection and Insurance

A home inspection is not required by lenders, but it’s one of the smartest steps in buying a house. It protects you from unexpected repair costs.

• Inspection Cost: Typically, a home inspection is priced between $200 and $500, depending on the size and location of the home. This inspection is important because it helps buyers find any problems before they buy the home and ensures that buyers know the property’s condition.
• Homeowners Insurance: Mortgage lenders need homeowners insurance to safeguard both the borrower and the lender. Buyers must show proof of insurance before closing on the property. This insurance helps cover possible damages and liabilities that come with owning a home.
• Always shop around and compare quotes.

Step 8: Go Through Mortgage Underwriting

This step in buying a house can feel overwhelming. The lender’s underwriter reviews your file in detail to ensure you qualify.

What happens:

1. The loan processor collects updated documents.
2. Underwriter reviews your income, assets, credit, and contract.
3. Conditional loan approval is issued.
4. You submit any additional documents requested.
5. Final approval is granted once all conditions are met.

At Gustan Cho Associates, our streamlined process helps reduce delays and stress.

Step 9: Closing Day – Get the Keys to Your Home

Closing is the final and most rewarding of the steps in buying a house.

• The lender wires the money over to the title company.
• You sign the final documents.
• The seller gets paid, and you get your keys!

Congratulations! You’re officially a homeowner.

Comparison Table – Renting vs Buying

Factor	Renting	Buying a Home
Monthly Cost	Rent only	Mortgage + taxes + insurance
Flexibility	Easy to move	Commitment for 3–5 years+
Maintenance	Landlord responsibility	Homeowner responsibility
Building Wealth	No equity	Builds equity over time
Tax Benefits	None	Mortgage interest deductions

How One Family Completed the Steps in Buying a House

Meet John and Carla, a young couple in Florida who thought homeownership was out of reach. They had steady jobs but less-than-perfect credit and only a small down payment saved. After being turned down by two banks, they reached out to Gustan Cho Associates.

Challenge:

• Credit scores in the low 580s.
• Limited savings for down payment and reserves.
• Needed guidance on the steps in buying a house from start to finish.

Solution:

• Our loan officer reviewed their credit and explained how an FHA loan could work with their profile.
• We issued a solid pre-approval after verifying income, credit, and bank statements.
• Connected them with a local real estate agent who guided them through house hunting.
• When they found a home, we helped structure the offer with seller concessions to reduce closing costs.
• Our processing and underwriting team worked closely with John and Carla, ensuring conditions were met quickly.

Outcome:

John and Carla achieved a significant milestone within just 40 days when they received their clear-to-close notification. They successfully closed on their first home with a down payment of only 3.5%. Today, they take pride in being homeowners, focusing on building equity rather than continuing to pay rent.

John and Carla’s story shows that even with challenges, following the steps in buying a house with the right lender makes homeownership possible.

Why Trust Gustan Cho Associates?

• Licensed in 50 states, including DC, Puerto Rico, and the U.S. Virgin Islands.
• Known for no lender overlays—we approve loans that banks often deny.
• Experts in FHA, VA, USDA, Jumbo, Conventional, and Non-QM loans.
• Thousands of successful closings with happy homeowners.
• Featured in major real estate and mortgage news platforms.

Frequently Asked Questions About the Steps in Buying a House:

What are the Basic Steps to Buying a House?

Most buyers follow the same path: check your finances → get pre-approved → find an agent → shop for homes → make an offer → inspection/appraisal → finalize your loan → close and get the keys.

What is the First Step in Buying a House?

The first step is making sure you’re financially ready—review your credit, debts, income, and savings, then talk to a lender about a real pre-approval so you know your actual budget.

What Credit Score do I Need to Buy a House?

It depends on the loan type. FHA is often the most flexible option: a credit score of 580 or higher may qualify for a 3.5% down payment, and a score of 500–579 may qualify with a 10% down payment (lender rules can be stricter).

How Much Money do I Need to Buy a House?

You’ll usually need money for a down payment, closing costs, and some savings left over. Depending on eligibility, down payment options can range from 0% down (VA/USDA for those who qualify) to low-down-payment options, such as FHA (as low as 3.5%).

What Distinguishes Pre-Qualification from Pre-Approval?

Pre-qualification is a rough estimate based on the information you provide to a lender. Pre-approval is stronger because the lender actually reviews documents and runs your credit, so sellers take your offer more seriously.

How Long Does it Take to Buy a House After Making an Offer?

From contract to closing, many purchases take around 30–45 days, but the timeframe can be shorter or longer, depending on factors such as appraisal, underwriting, and the speed at which documents are provided.

How Much are Closing Costs, and Who Pays Them?

Closing costs are the fees required to complete the purchase and secure the loan. They typically account for a few percent of the home’s price. Both buyers and sellers can have closing costs, and many of these costs can be negotiated.

What are Seller Concessions, and How do They Help Buyers?

Seller concessions happen when the seller agrees to pay some of the buyer’s costs. This can lower the amount of cash you need to bring to closing. Buyers often request these concessions to help with closing costs or to address issues discovered during an inspection.

Do I Really Need a Home Inspection?

A lender may not require it, but buyers usually do it to avoid expensive surprises. An inspection helps you spot problems early, allowing you to negotiate repairs, credits, or walk away if the issues are serious.

What Happens During Mortgage Underwriting?

Underwriting is the lender’s final “double-check” of your income, assets, credit, and the home details before issuing the clear-to-close. It is also one of the most important steps in buying a house. The best way to keep the process smooth is to avoid incurring new debt, making job changes, and receiving large unexplained bank deposits until after closing.

This article about “Steps In Buying A House And Getting Qualified For Mortgage” was updated on January 2nd, 2026.