Buying a home
Buying a home
Financing comes first. Here is what you need in cash, how the process runs from letter to keys, and the things that catch first-time buyers out.
- No credit check
- No documents
- Free
The offer path
- Budget
- Pre-approval
- Find
- Offer
- Close
What you will need
Cash needed
The deposit is not the whole picture
Closing costs and the Loan Estimate explained by the CFPB.
Buying a home runs on a fixed order. Get your financing sorted, find the house, make an offer, then close. Skip the first step and the rest cannot start.
This page covers what you need in cash, what happens at each stage, and what catches first-time buyers out.
What you actually need in cash
On a $400,000 home with 5 percent down
Closing costs usually run 2 to 5 percent of the price. Reserves are what remains afterwards.
The cash
What you actually need saved
Your down payment is not the whole number. Move the sliders to see the rest.
Plus reserves your lender wants to see left over.
An estimate. Reserves are approximated from a rough monthly payment and vary by program and lender. Down payments below 20 percent usually mean mortgage insurance. Compare programs →
The order
How buying actually goes
Get pre-approved
You find out your number, and you get a letter agents take seriously. Many will not show homes without one. What is inside the letter.
Find the house
Your letter lasts 60 to 90 days. If your search runs longer it gets reissued with fresh data rather than starting over.
Make the offer
Your agent submits the offer with your letter attached and your earnest money. The listing agent often calls to check the letter is real.
Inspection and appraisal
You inspect the house. The lender values it separately. A low appraisal is the most common reason a deal stalls.
Underwriting
A loan officer takes over. Documents are collected now, even though none were needed for your letter. Do not buy a car or change jobs.
Sign and get the keys
Closing costs are paid, the loan funds, and the deed transfers. Most closings run 30 to 45 days from an accepted offer.
First time buying
What catches people out
You do not need 20 percent
Some conventional programs start at 3 percent. FHA needs 3.5. VA and USDA allow zero for eligible buyers. The 20 percent rule is about avoiding mortgage insurance, not about qualifying.
Closing costs are separate
Two to five percent of the price, on top of your down payment. Sellers sometimes contribute, and it is worth asking for that in your offer.
Your letter is a ceiling, not a target
If it says $485,000 and you are offering $430,000, ask for it to be reissued at your offer price. Otherwise the seller sees your remaining room.
Do not open new credit
Your credit and employment are re-checked days before closing. A new car loan at the wrong moment can unwind the whole thing.
Gift money needs a letter
Family help toward a down payment is allowed on most programs, but it needs documenting as a gift rather than a loan.
Contingencies protect your deposit
Financing, appraisal and inspection contingencies are what let you walk away and keep your earnest money if something goes wrong.
Get your number before you look
Verified income and assets, in about 90 seconds.
Start my pre-approvalNo credit check · No documents · Free
Questions
Common questions
How much cash do I need to buy a house?
Three things: your down payment, closing costs of roughly 2 to 5 percent of the price, and some savings left over afterwards. Lenders call that last part reserves and they check for it.
What are closing costs?
Lender fees, title and escrow charges, and prepaid property taxes and homeowners insurance. They usually run 2 to 5 percent of the purchase price and are paid at closing, on top of your down payment.
Do I need 20 percent down to buy a home?
No. Some conventional programs start at 3 percent, FHA needs 3.5 percent, and VA and USDA allow zero for eligible buyers. Below 20 percent means mortgage insurance on most programs.
What is earnest money?
A deposit you put down when your offer is accepted, held in escrow and credited toward your costs at closing. It signals you are serious. Contingencies in your contract protect it if the deal falls through.
How long does it take to buy a house?
Getting your pre-approval takes about 90 seconds. Finding a home takes as long as it takes. Once an offer is accepted, closing usually runs 30 to 45 days.
Should I get pre-approved before looking at houses?
Yes. Many agents will not show homes without one, and you cannot act on a house you like without it. Since there is no credit check with Preqly, there is no reason to wait.
Keep reading
Related guides
Independent sources
- Consumer Financial Protection Bureau — closing costs and the Loan Estimate
Start with your number
You cannot act on a house you like without a letter.
90 seconds · No credit check