The 8 steps of buying your first home, what credit score and down payment you actually need, mortgage types explained plainly, closing costs broken down, and the calculators that make the numbers real.
Step 1 — Know how much house you can actually afford
Before you fall in love with a home, know your number. Lenders use the 28/36 rule: your monthly housing costs should stay under 28% of your gross monthly income, and total debts under 36%. This is the same standard most conventional lenders apply when reviewing your application.
Your real number depends on your income, existing debts, down payment, and the current interest rate — not a rough multiple of your salary. Use the House Affordability Calculator to get your specific price range before you start shopping.
Step 2 — Check and strengthen your credit score
Your credit score determines both whether you qualify for a mortgage and what interest rate you'll pay. Here's what the tiers mean in practice:
Credit score impact on mortgage rate and monthly payment
| Credit score | Typical rate | Monthly payment* | Total interest* |
|---|---|---|---|
| 760+ | 6.5% | $1,896 | $382,560 |
| 720–759 | 6.75% | $1,946 | $400,560 |
| 680–719 | 7.25% | $2,048 | $437,280 |
| 640–679 | 7.75% | $2,152 | $474,720 |
| 620–639 | 8.25% | $2,259 | $513,240 |
*Based on $300,000 30-year loan. Rates are illustrative.
The difference between a 760 and a 640 credit score on a $300,000 loan is over $90,000 in total interest and $256 more per month. If your score needs work, spending 6–12 months improving it before buying can pay off dramatically. Use the Mortgage Calculator to see how different rates affect your payment on any home price.
Step 3 — Decide on your down payment
You don't need 20% down. Here's what's actually required by loan type:
Minimum down payment by loan type
| Loan type | Min. down payment | Credit score min. | PMI required? |
|---|---|---|---|
| Conventional | 3% | 620 | Yes, until 20% equity |
| FHA | 3.5% | 580 | Yes, for life of loan* |
| VA (veterans) | 0% | No minimum | No |
| USDA (rural) | 0% | 640 recommended | No (guarantee fee) |
*FHA loans originated after June 2013 with less than 10% down require MIP for the life of the loan. Refinancing to conventional once you reach 20% equity removes it.
For a full breakdown of the trade-offs between down payment amounts, see the How Much to Put Down on a House guide.
Step 4 — Get pre-approved, not just pre-qualified
Pre-qualification is an informal estimate. Pre-approval is a formal review of your credit, income, and assets that results in a conditional commitment letter from a lender. In competitive markets, offers without pre-approval letters are often ignored entirely. Get pre-approved before you start seriously touring homes — it also tells you exactly what budget to work within.
Step 5 — Understand what your mortgage payment actually includes
Your monthly mortgage payment is typically made up of four components, often abbreviated as PITI:
What makes up a mortgage payment — example on $350,000 home
| Component | What it is | Typical amount |
|---|---|---|
| Principal | Reduces your loan balance | ~$400–600/mo early on |
| Interest | Cost of borrowing | ~$1,400–1,800/mo early on |
| Property tax | Local tax, varies by area | ~$300–600/mo |
| Insurance | Homeowners insurance | ~$100–200/mo |
| PMI (if applicable) | Required under 20% down | ~$100–300/mo |
The Mortgage Calculator breaks all of this down for any home price, down payment, rate, and term — including the full year-by-year amortization schedule.
Step 6 — Budget for closing costs
Closing costs are one of the most common surprises for first-time buyers. They typically run 2% to 5% of the loan amount and are due at closing, on top of your down payment.
Typical closing costs on a $350,000 loan
| Cost item | Typical range |
|---|---|
| Loan origination fee | $1,000 – $3,500 |
| Appraisal | $400 – $700 |
| Title insurance | $1,000 – $2,500 |
| Attorney / settlement fees | $500 – $1,500 |
| Prepaid taxes & insurance | $2,000 – $5,000 |
| Total estimate | $7,000 – $17,500 |
Some lenders offer "no-closing-cost" mortgages where costs are rolled into the loan or offset with a slightly higher rate. This reduces upfront cash needed but increases your long-term cost. Ask your lender for a Loan Estimate document — they're required to provide one within 3 business days of application, and it itemizes every cost exactly.
Step 7 — Make an offer and navigate inspection
Once you find a home, your agent will help you submit an offer including your price, contingencies (financing, inspection, appraisal), and closing timeline. If accepted, you'll typically have 7–14 days to complete a home inspection. The inspector checks the structure, systems, and condition of the home — this is not optional and is one of the most important steps in the process. Issues found in inspection can be negotiated as repairs, credits, or price reductions.
Step 8 — Close and get your keys
Closing typically takes 30–45 days from an accepted offer. You'll sign a significant amount of paperwork, pay your down payment and closing costs, and receive the keys. Do a final walkthrough within 24 hours of closing to confirm the home's condition matches what was agreed.
Run your numbers before you start shopping
Know your price range, monthly payment, and down payment impact before you fall in love with a home.
Affordability Calculator → Mortgage Calculator →Your complete first-time buyer toolkit
Every calculator and guide you need in one place:
House Affordability Calculator
Find your realistic price range based on income, debts, and down payment
Mortgage Calculator
Monthly payment, total interest, and full amortization schedule
How Much to Put Down?
3% vs 10% vs 20% — the real PMI and payment trade-offs
Refinance Calculator
See if refinancing makes sense once you're a homeowner
Ready to see what you qualify for?
Get personalized mortgage rate quotes from multiple lenders — free, no commitment, no credit impact to check.
Compare Mortgage Rates →Common questions
What credit score do I need to buy a house?
Most conventional loans require 620 minimum. FHA loans allow as low as 580 with 3.5% down. For the best rates, 740 or higher is ideal — the difference between a 640 and 760 score can mean $90,000+ more in total interest on a $300,000 loan.
How much do I need for a down payment as a first-time buyer?
As little as 3% on a conventional loan or 3.5% on FHA. You don't need 20% — but less than 20% requires PMI. See the down payment guide for the full trade-off analysis.
How long does the homebuying process take?
Typically 3 to 6 months from starting your search to closing. Pre-approval takes 1–3 days. Once under contract, closing takes 30–45 days.
What is the difference between pre-qualification and pre-approval?
Pre-qualification is informal and based on self-reported numbers. Pre-approval is a formal lender review of your credit, income, and assets. Sellers take pre-approval letters seriously — pre-qualification alone is often not enough in competitive markets.
What are closing costs and how much are they?
Fees paid at closing, typically 2–5% of the loan amount — on a $350,000 loan, that's $7,000 to $17,500. They include lender fees, title insurance, appraisal, and prepaid items like insurance and taxes.