Getting started
What's the first step? Get a real pre-approval. Everything downstream — your price range, your neighborhoods, your negotiating position — depends on it.
Pre-qualification versus pre-approval? A pre-qualification is an estimate based on what you told someone. A pre-approval means credit was pulled and documents were reviewed. Only the second one carries weight with sellers.
Do I need a real estate agent? You need representation, and buyer agent compensation is now negotiated directly. Ask exactly what you're paying and what you're getting, in writing, before you tour.
Credit
What score do I need? FHA (Federal Housing Administration loan — a government-backed loan built for buyers with lower credit scores or smaller down payments) can go to 580 with 3.5% down. Most conventional programs start at 620. Better pricing generally begins around 680 and improves through 740.
Does checking my credit hurt it? No. Your own check is a soft pull, and multiple mortgage inquiries within 45 days count as one.
Can I buy with collections or a past bankruptcy? Frequently yes. Chapter 7 typically requires a waiting period after discharge; collections are handled differently by program. It's a question of when, not whether.
Down payment and cash
Do I need 20% down? No. Three percent conventional, 3.5% FHA, and zero down for VA (Department of Veterans Affairs loan — a loan for eligible veterans, active-duty service members, and some surviving spouses, usually with no down payment) and USDA (U.S. Department of Agriculture loan — a no-down-payment loan for homes in eligible rural and small-town areas, with income limits) if eligible. Twenty percent only avoids PMI (private mortgage insurance — an extra monthly fee on conventional loans when you put down less than 20%; it protects the lender, not you, and can usually be removed later).
Can the money be a gift? Yes on most programs, with a signed gift letter and documented transfer.
What are closing costs? Two to five percent of the purchase price, covering lender fees, title, appraisal, recording, and prepaid taxes and insurance. Seller and lender credits can offset them.
How much should I keep in reserve? Ideally one to two months of the full payment after closing, and more if your systems are older.
Loan programs
FHA or conventional? With a lower score and minimal down payment, FHA usually wins. With a 700-plus score, conventional with low-down-payment PMI usually wins because the insurance can be removed later.
Is a 15-year loan better? It costs less in total interest but raises the payment substantially. For most first-time buyers, a 30-year with optional extra payments is the more flexible choice.
Should I buy points? Only if you'll hold the loan past the break-even point. Ask your lender for that month count before you decide.
Process and timing
How long does it take? Three to five months typically, with 30 to 45 days from accepted offer to keys.
How long is a pre-approval valid? Usually 60 to 90 days.
Can I back out? Yes, within the protections of your contingencies. Outside them, your earnest money is at risk.
What is 'clear to close'? Underwriting has signed off and you're cleared to sign. You'll receive your Closing Disclosure at least three business days before that signing.
Costs and ownership
Why is my payment more than the mortgage calculator said? Taxes, insurance, PMI, and HOA (homeowners association — a neighborhood or condo group that charges a monthly or yearly fee and sets community rules; lenders count that fee in your payment). Those four routinely add 30% to 50% on top of principal and interest.
When does PMI go away? On conventional, at 80% LTV (loan-to-value — how much you are borrowing compared to what the home is worth — put 10% down and your loan-to-value is 90%) on request and 78% automatically. On FHA with less than 10% down, it typically stays for the life of the loan.
How much should I budget for maintenance? One to two percent of the home's value per year.
Will owning lower my taxes? Only if you itemize past the standard deduction, or hold a credit like an MCC.
Frequently asked questions
What's the minimum I need to start?
A stable income you can document, a credit score around 580 to 620 depending on program, and 3% to 3.5% down plus closing costs — often reducible with gift funds or assistance.
Should I wait for rates to drop?
Nobody can time it. The better question is whether the payment works today at a price you can carry; you can refinance a rate, but you can't refinance a purchase price.
Is it better to keep renting?
It depends on how long you'll stay, local rent versus payment, and your appreciation assumptions. Under three years, renting frequently wins on math alone.
What's the fastest way to know if I'm ready?
Run a readiness check. It takes about a minute, requires no credit pull, and tells you which of credit, cash, or debt-to-income is actually your gap.
Run your numbers
Take what you just learned and apply it to your file.