How to buy a home: the complete guide

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Buying a home from start to finish

Ready to make your homebuying dreams a reality?  

Here’s what you may not know: The average home loan takes 51 days to close. 

That’s because purchasing a home is a complicated process involving numerous individuals and piles of paperwork. 

The good news is the homebuying process doesn’t have to be painful. Flyhomes put together this complete guide for you to follow through every step of your journey. And when you’re ready to begin, get in touch with our agents who are ready to usher you from homebuyer to home owner.

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This guide to buying a home breaks down each step in the process, including what to do before you look for a property, who can help, and roadblocks to avoid. 

How do I start to buy a house?

The first step in buying a home is to decide if you are ready to become a homeowner. 

Purchasing a home means committing to a 15 or 30-year mortgage in most cases and taking care of home maintenance, homeowners insurance, property taxes, and repairs. 

It’s an important decision that can impact your finances for years to come. Before you start daydreaming about your new perfect home, consider these factors. 

  • Do you have a stable income? Most lenders require at least two years of employment history. Plus, you want to make sure you can afford your mortgage. While you can’t predict the future, ensure your job is secure and you have a stable employment history before buying. 
  • Is your debt under control? Lenders look at your debt-to-income ratio to decide whether to offer a loan. A low debt-to-income ratio improves your chances of getting a mortgage and can result in lower interest rates.  
  • Do you plan to stay in the same area for at least five years? Some loans, such as first-time home buyer’s assistance programs , require you to live in the home as your primary residence for at least five years. Are you committed to staying in the same area? Staying in the same home helps build more equity. 
  • How is your credit score? A higher credit score gives you access to lower interest rates and improves your chances of securing a mortgage. If your credit score is low, consider taking steps to clean it up. 
  • Do you have a downpayment saved? Not all mortgages require a downpayment, but most do. Do you have enough saved to put down a down payment? Ideally, down payments are 5%-20% of the home’s total cost. 

Once you know you’re financially ready to make a purchase, you might wonder if it is a good time to buy a home in general. 

Is it a good time to buy a house?

When deciding if now is the right time to buy a home, there are several factors to consider, including market trends, inflation, interest rates, and housing costs. 

Market trends, such as whether the stock market is up or down, can impact other aspects of the economy like the unemployment rate and inflation. 

You might wonder how the stock market impacts buying a home. When the stock market is dropping or a recession is looming, mortgage providers may be slightly less willing to lend money. Plus, interest rates will likely increase.

All of these factors can make buying a home feel impossible.

A downturn in the stock market may also result in high interest rates. This affects your budget since higher interest rates mean a higher monthly payment. 

For example, a 30 year fixed rate home loan of $250,000 with an interest rate of 5% will cost $1,342 per month, while the same home with a 6% interest rate has a payment of $1,499. These payment amounts do not include homeowners insurance, property taxes or other escrow items.,   

Finally, high housing costs can impact whether you can afford a home, how much you’ll pay each month, and whether there is more or less inventory available for purchase. 

There is no right or wrong time to buy a home. Consider your personal situation, the overall economy, and the housing market when making your decision. 

white and brown concrete house
Photo by Dhruv Mehra on Unsplash

Home buying checklist

Buying a home can be overwhelming with a seemingly unending pile of paperwork, meetings, and phone calls.  

Staying organized is the key to a smooth homebuying process. To help you stay on track, we created a 11-step checklist that explains every step of the process. 

State and local laws may impact the process, but these ten steps are universal to all home buyers. 

Step 1: Set a budget

How much can you afford to spend on a home? To figure this out, set a budget and stick to it. 

You can use quick calculations to get a general idea of how much you can afford to spend. Start by taking your annual household income and multiplying it by 2.5. 

That is approximately the amount you can afford to spend on a home. 

Another rule of thumb is to ensure payments are no more than 30% of your monthly income. 

According to the first rule, if you earn $100,000 a year, you can afford to spend $250,000 ($100,000 x 2.5 = $250,000). Using the second rule, you can afford to spend $30,000 per year or $2,500 per month ($100,000 / 12 = $8,333 x .30 = $2,500). 

The problem is neither of these quick calculation methods considers interest rates or other expenses like child care, retirement savings, food, or gas. 

How to calculate your budget

  1. Add up all your required monthly expenses Include child care, pet costs, gas, food, etc… Also remember to add up any costs you are not willing to cut. If you can’t give up your TV streaming costs, add them. 
  2. Subtract expenses from your monthly salary  This will be how much reliable cash you’ll have to pay a mortgage, property taxes, and other fees associated with owning your home.
  3. Subtract the costs for nice-to-have items Set aside a bit for home repairs. Depending on your salary and location and your new home, this may be a few hundred dollars. 
  4. Use a mortgage rate calculator This will tell you the expected monthly payment for the mortgage loan amount you anticipate. 

Remember, you don’t have to spend the amount your lender approves you for. Spending less will give you breathing room in your budget. 

Also, if your mortgage is an adjustable rate mortgage (ARM), your monthly mortgage cost can change as interest rates go up or down. 

Make sure your budget allows for a potentially higher payment if you get an ARM. 

crop anonymous financier planning budget writing numbers in notebook
You homebuying budget is more than just a limit to how much you can spend. It’s a roadmap to understanding your monthly expenses and your down payment

Step 2: Secure financing

Now that you know how much you can afford to spend, it’s time to find a company to loan you the money for a mortgage. 

Finding the right mortgage lender can impact your closing time, interest rate, and even your ability to get a mortgage, so make sure to shop around. 

What to consider before you apply for a mortgage: 

  • Type of mortgage Not all lenders offer the same types of loans. If you’re using an FHA loan or first-time homebuyer program, you’ll need a lender that offers those loans. 
  • Interest rates Lenders use several factors to decide what interest rates they offer based on the loan program, on your credit score, credit history, income, debt-to income ratio, etc… Make sure to check the current rates with several lenders. 
  • Time to close Some lenders offer faster close times, which can be useful in a highly competitive real estate market. A fast close time can also make your offer more attractive to a seller, so consider if this is important. 
  • Document organization Securing a loan is a complex process. You’ll need to provide tax returns, W2s, paystubs, employment history,  salary information and verification of deposit or investment accounts. If you’re self-employed, it will be even more complicated.  Make sure your lender has a solid process to handle document collection. 

Once you submit a complete application to your lender, you’ll receive an initial disclosure package, including a Loan Estimate. This document provides estimated closing costs and other information about your mortgage loan such as interest rate,your Annual Percentage Rate (APR) and monthly payments. 

Step 3: Find a real estate agent

A real estate agent guides you through the process of buying a home. 

While the exact tasks vary by state, real estate agents are generally responsible for finding listings, taking you to see homes, explaining the purchasing process, submitting offers, and helping to finalize the purchase of your new property. 

Most home sales involve two real estate agents—one for the buyer and one for the seller. The two agents split a percentage of the house’s sale price, called a real estate agent commission. 

There’s a good chance you’ll spend quite a bit of time with your real estate agent, so choose someone who understands your needs and is happy to explain the process and answer questions. 

If your real estate agent constantly misses meetings, forgets to return calls, or suggests homes that do not fit your needs, they may not be the right agent for you. 

The right real estate agent should have a deep understanding of the city or neighborhood where you want to buy. They’ll understand the local market and be able to share tips about the type of home you want to buy and will work to find homes in your requested price range with the amenities you have identified to them. 

For example, if you’re buying an older home, you want a real estate agent who can spot warning signs of water damage or the general cost of replacing some of the outdated electrical work. 

These insights could save you from placing an offer on a home that may have issues down the road.  It’s important to get a home inspection to understand the condition of the home. 

Not sure where to find the right real estate agent? Flyhomes is your team of local expert agents with access to in-house researchers so they always have the most up-to-date insights available. .  

You can start talking to a real estate agent whenever you’d like, even if you haven’t secured financing yet. A good real estate agent will build a relationship with you over months and, sometimes, even years.  

two men in suit sitting on sofa
Your real estate agent should be an expert in your local area and ready to work with you from finding homes to closing

Step 4: Choose a neighborhood

Now it’s time to decide which neighborhood you want to live in. Consider including several communities in your search to expand the inventory of homes available for sale. 

When comparing neighborhoods, think about what features matter to you, such as: 

  • Safety 
  • Commute 
  • Walkability 
  • School ratings
  • Utility and cable companies 
  • Convenience to friends and family
  • Availability of parks and greenspace 
  • Closest grocer, pharmacy, other stores 
  • How well other homes are maintained 
  • Public services, such as trash pick up and snow removal

It’s easy to get caught up looking at features and prices when home shopping; however the community you choose to live in can have a larger impact on your quality of life. 

After all, you can always add a new deck or paint faded siding, but you can’t move your home to a better location. 

Step 5: Consider home features

Before starting your home search, decide which features matter to you and your family. Make a list and rank them by importance. 

For example, you might prefer a four bedroom home, but be interested in a three-bedroom with a den. 

On the other hand, a two-car garage may be non-negotiable. Maybe you prefer a new construction house over an older home? Think about what really matters to you and why those features are important. 

Here are a few other home features to consider: 

  • Number of bedrooms
  • Number of bathrooms 
  • Square footage
  • School district ranking 
  • Home condition 
  • Garage 
  • Pool 
  • Patio 
  • Walkability 
  • Flexible space 
  • Driveway 
  • Size of yard 
  • Tall ceilings 
  • Single level versus multiple stories 
  • Basement 
  • Bathroom on first floor 
  • Energy efficiency
  • Central AC 
  • Gas vs electric heat

Only you can decide if a house is the right fit. However, consider the type of home you’re purchasing and how long you plan to live there when considering features. Buyers looking for a starter home may be more willing to compromise than someone shopping for a forever home. 

If you plan to live in the home long-term, consider how your needs might change. For example, will you need a bedroom for additional children, a first-floor bedroom for aging in place, or a garage for that woodworking shop you’ve always wanted?

Remember that many features can be added. A lovely home below your price range might leave room in your budget to add a must-have feature like a backyard pool or a larger garage. 

Step 6: Send an offer

Once you find the right home, it is time to put in an offer. 

Your real estate agent will handle the paperwork and confirm all details with you before sending the offer to the seller’s real estate agent. 

Offer letters generally include:  

  • Address and description of the property 
  • The proposed sale price 
  • Terms of the sale 
  • The earnest money amount (A deposit the buyer puts down to show they’re committed to the deal.) 
  • Proposed close date 
  • When the buyer takes possession 
  • Contingencies that allow the sale to be canceled, such as if the property fails inspection 

An offer is often the first interaction sellers have with a buyer, so aim to make a good impression. Be clear and include details that make your offer stronger, such as a larger down payment or flexible close date.

In the past, some buyers included personal details about why they wanted the home. Due to legal concerns, this has gone out of style. Talk to your real estate agent before writing a letter to the seller. 

You and your agent will draft the offer, though your agent should do most of the heavy lifting and will likely have a template so they can work fast. Then your agent will send the offer off to the seller’s real estate agent. That’s when the waiting starts. 

In competitive markets, you may only have to wait a few hours for an answer. It’s rare to wait more than 48 hours, though.Your agent can tell you how quickly to expect a response. 

If your offer is accepted, you’ll receive a signed offer from the seller and move on to the home inspection. 

The seller may also decline your offer (which often means they’ve accepted another offer) or counter with different terms or a higher asking price. 

Your real estate agent will help you negotiate changes to the offer. 

woman sitting on floor and leaning on couch using laptop
Your home offer is the beginning of your negotiation with the seller and, if accepted, becomes the purchase agreement

Step 7: Home inspection

Congratulations, your offer has been accepted! There’s still one major hurdle to complete—the home inspection. 

The home inspection is a crucial step in the homebuying process.

During the inspection, a licensed professional tours the home looking for any issues with the structure of the home, plumbing, or wiring. They may also check for gas leaks, water or bug damage, and assess the age and condition of the roof and the foundation. 

A home inspection aims to ensure the house is in good shape. The inspector can also be a source of information about the home’s history and repairs you can expect in the coming years.

A great home inspector can save you thousands of dollars (and a headache) by ensuring the home is in good condition before you close. Your offer may even contain a contingency that says closing depends on the inspection findings—though in competitive markets, this may cause the seller to pass on your offer entirely. 

Even if you don’t intend to back out of the agreement, no matter the inspection findings, get one done so you can plan for repairs and get a sense of what you’re buying. 

Make sure to hire an experienced professional you trust. 

Ask in local social media groups for home inspection recommendations and read online reviews before making a decision. 

Your real estate agent may be able to recommend an inspector, but don’t be surprised if they can’t. Some real estate agents want to avoid even the appearance of a conflict of interests. 

In most cases, you can attend the home inspection. The inspector will perform their inspection and walk you through their findings. In a few days, you’ll receive an inspection report including details, recommendations, and images of the property. 

After reviewing the inspection report, you’ll decide whether to move forward with your offer, ask the seller for repairs, or reduce the asking price to account for taking care of repairs yourself. 

If the inspection uncovers major issues, you may have grounds to withdraw your offer and get your earnest money back, if that contingency was included in your offer. 

Step 8: The appraisal   

Your mortgage lender won’t underwrite your loan until they receive an independent appraisal. An appraisal is an estimate of the property’s current market value, typically performed by a third-party appraiser. 

An appraiser will determine the value of your home by considering its condition in conjunction with the value of similar homes in the neighborhood (comparable sales or comps). The appraiser looks at the square footage, lot size, number of bedrooms, location, etc.and compares your home to recent sales to determine the current market value of your proposed new home. 

The goal of the appraisal is to protect your lender by ensuring they won’t lend you more money than the home is worth and you will be assured of the home’s current market value. 

Generally, the mortgage lender orders the appraisal from a third party, and you will not be present for the appraisal, though you may have to pay for the cost of the appraisal. 

So what happens after the appraisal? 

If the appraisal comes back significantly lower than your offer, you’ll only be allowed to borrow a percentage of that amount. So if you offered higher than the appraised value of the home, you may be forced to pay the difference in cash. Talk to your realtor about what this means in your situation— if you’re allowed to pull out of the deal without losing your earnest money. 

If the property appraises close to your offer price or even higher than your offer price, nothing changes and you move to the next step. 

Step 9: Final Walkthrough

The final walkthrough is an opportunity for you to view the property one last time before officially closing. 

By now, you’ve seen the property several times. You toured it with your real estate agent and saw it during the inspection. 

After those visits, you may have asked the seller to make changes or repairs, such as fixing a leaky sink or installing a safety handrail on stairs. 

During the final walkthrough, you’ll verify everything is in the same condition as the last time you saw the property and ensure any repairs are completed to your satisfaction and the property has been maintained during this time. 

Bring the inspection report to the final walkthrough and compare the report to the current state of the property. Do the images match? Have your concerns been addressed? 

Review your signed purchase contract and ensure any appliances and other items that were to remain in the property mentioned are still present. 

Check for obvious signs of recent water damage, leaks, or mold. Ensure the yard and any additional buildings are also in good order. 

In most cases, the final walkthrough goes smoothly but if issues arise, your real estate agent will walk you through your options. 

For example, you might push the close date and ask for repairs to be completed or, in extreme cases, back out of the sale. 

Step 10: Closing 

Closing on a home is when the final paperwork is signed, the seller is paid, and you officially take possession of the property. 

The close date generally occurs four to six weeks after you submit your offer to the seller, though the timing varies by location, type of property, and individual contracts.

During the offer and negotiation stage, the buyer and the seller may negotiate on the close date. For example, a seller waiting for their new house to be built might ask for an extended close date. 

In rare cases, the close date may be pushed back. This can occur if your lender can’t complete underwriting in time or if you notice something during the final walk through. 

The exact closing process varies by state, but generally includes:

  • Meeting at a title agency or real estate agent’s office
  • Signing the final documents
  • Paying closing costs 

Your real estate agent or lender will tell you what documents you’ll need at closing, but expect to bring a cashier’s check or wiring details for closing costs, a photo ID, and proof of homeowners insurance. You and your spouse (if you have one) should plan to be at the closing in person, even if only one of you is on the mortgage – if one or both of you can’t for some reason (one of you will be out of the country, perhaps), you should tell your real estate agent and mortgage loan officer as soon as possible!

Once the mortgage closing papers are signed, it’s time to celebrate—you are officially a homeowner! 

Step 11: Move in

After closing, it is time to move into your new home. Welcome to homeownership! 

If you hire movers, schedule your move-in day a few days later in case closing gets pushed back. 

The wait might feel excruciating, but that extra time will be a lifesaver if the closing doesn’t proceed as expected. Consider hiring a cleaning company to do a deep clean, so your new home is sparkling clean to move in! 

What to do once you move in to your new home:

Call to get your utilities turned on 

Remember to call ahead for water, electric, gas, and cable or internet to be installed. This may take a few days, so call to schedule the appointments before closing if possible.

Make note of any upgrades you want to do as you move in 

It’s easier to spot things you want to change when the home still feels new. For example, as you unpack your food, do you find you need more space in the pantry? Move into your new home with a critical eye.

Make a home repair list

Your inspection report is a great place to start. You can use it as a roadmap to prioritize your future projects. 

Make a regular home maintenance list 

Most of your home’s appliances, systems, and structures will need some kind of maintenance at regular intervals. Things like your air conditioning, pipes, and smoke detectors need to be checked depending on their lifespan or seasonal changes. Use this home maintenance checklist we made for you.

Finally, if you come across paint cans when moving in, don’t toss them! They likely have the name and color code of paint in the home, making it easier to do touch ups down the line. 

woman in black shirt and black pants sitting on brown sofa chair
Moving in is your last step! Before you start, make sure you transfer utilities and prepare a regular maintenance list

Find everything you need to do before you make any big homebuying decisions

Buying a home is a big decision, but it’s also a dream come true for many homeowners. Protect your investment by doing your due diligence throughout the homebuying process.  

Flyhomes is your homebuying partner. We’re there for you with dedicated experts at each step, from local agents to researchers to tour specialists so you’re never alone and never get a busy signal. 

Mortgage loan products are offered by Flyhomes Mortgage, LLC

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