How To Buy A House In 2024: Step-By-Step

Table Of Content

• Income And Job History
• Conventional
• First-time homebuyers in California
• Complete Guide to Mortgages: What Type of Home Loan Is Best for You?
• Buying a house? Here’s an open secret: You don’t need to put 20% down
• Can You Buy A House Without A Down Payment?
• The Bottom Line: Know What’s Needed To Buy A House Before Getting Started

When shopping for a mortgage, it’s important to seek out the best deal possible to help reduce your upfront and ongoing monthly costs. CNET staff -- not advertisers, partners or business interests -- determine how we review the products and services we cover. It’s also important to know if you’re in a buyer’s market or a seller’s market because this can significantly influence whether it’s the right time to buy.

Income And Job History

Basically, you need to prove that you have a steady income, a habit of paying your bills, a reasonable amount of debt, and some cash in the bank. You may also need to have cash reserves to help cover your mortgage in case of emergencies. These reserves are typically equal to at least 2 months’ worth of mortgage payments. Depending on the type of loan you’re applying for and your qualifications, your lender may require more months of payments.

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Conventional

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First-time homebuyers in California

However, know that you can still get a house with a low down payment. For example, conventional mortgages require a minimum of 3 percent down, FHA loans require 3.5 percent down and VA and USDA loans have no down payment requirements. One way to determine how much house you can afford is to figure out your debt-to-income (DTI) ratio. The DTI ratio is calculated by summing up all of your monthly debt payments and dividing that figure by your gross monthly income.

Now that you have a better understanding of the home buying process, let’s take a look at a few frequently asked questions about home buying. When you receive your inspection results, review each item line by line and look for major issues. If a home has a serious health hazard (like lead paint or mold), ask the seller to correct the problem before you close. If you can’t reach an agreement, you may want to move on and consider other properties. Read over your inspection results with your agent and ask whether they noticed any major red flags. Let’s look at some major expenses related to a home purchase and how much you should save for them.

Complete Guide to Mortgages: What Type of Home Loan Is Best for You?

You’ll find competitive rates and access to a host of SoFi perks. Plus, first-time homebuyers who qualify can put as little as 3% down. The vast majority of buyers use the services of a real estate agent or broker, according to the National Association of Realtors® (NAR). This is the most common type of home mortgage loan and typically has a minimum down payment requirement of 3%. Mortgage lenders usually like to see a DTI ratio of 36% or less for conventional loans. There is some flexibility out there, but it may require a bit of shopping around if you have a relatively high DTI.

When you’re shopping for a home, you’ll be making many decisions, from the price of the house you can afford to the neighborhood you want to live in. Another important decision is the type and length of your mortgage. The requirements for loan approval vary based on the lender, your loan program and other variables. Before you start the journey to finding your dream home, it’s important to know the essentials you’ll need to buy a house. Purchasing a home is one of the biggest financial investments you’ll make in life, so it’s wise to be as prepared as possible before jumping in.

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There’s typically no minimum income requirement, but you can earn too much money for some first-time home buyer programs. The good news is, requirements to buy a house are more lenient than many first-time home buyers expect. Lenders can often be flexible when it comes to things like credit and down payment.

You’ll be able to use this letter when making an offer on a house to show the seller that you’re serious about making the purchase and that you will have the funds to do so. The first thing you’ll do when you apply for preapproval is answer a series of questions about yourself, your income, your assets and the home you want to buy. You'll then give your lender permission to look at your credit report. A higher credit score can give you access to more lender options and lower interest rates.

Lenders look at this ratio to determine how you manage your existing debts. The lower your credit utilization ratio is, the more reliable you appear as a borrower. When one agent represents both the buyer and seller, it’s called dual agency. Dual agency results in worse service for both buyer and seller and tends to favor the seller, so avoid this at all costs. In the United States, a home buyer’s real estate agent is paid for by the seller. Because you aren’t the one footing the bill, you should get the best agent you can find.

The credit score you’ll need to buy a house depends on the type of mortgage you’re applying for. However, the general rule of thumb is the higher your credit score, the lower the mortgage rate you’ll qualify for. Some lenders allow higher ratios, though, if you have “compensating factors.” These include an excellent credit score, a large down payment, or high cash reserves. Ideally, the mortgage payment on your new home shouldn’t exceed 28% to 31% of your gross monthly income. You don’t necessarily have to get your mortgage through the same company that offers you a preapproval. In fact, you will want to compare multiple lenders to determine who can give you the best rate.

If you’re on payroll, you’ll likely need to provide only recent pay stubs and W-2s. If you’re self-employed or receiving passive income like social security or pensions, you’ll need to submit your tax returns and other documents. The first step is determining what are the requirements to buy a house. Below, we’ll dive into the factors lenders and homeowners alike should consider. Every state provides a Housing Finance Agency (HFA) to help low- and middle-income borrowers find affordable housing.