A Step-by-Step Guide for 2026
Updated: 08.14.2026
Buying your first home is exciting, complicated, and expensive, often all at the same time. Between credit scores, pre-approvals, down payments, inspections, and closing costs, it’s easy to feel like everything is happening at once. One thing worth confirming before any of the steps below: this guide assumes buying is already the right call for your situation. If you haven’t run that math yet, the rent vs. buy calculator and Renting vs. Buying a Home are worth working through first, everything from here on assumes you’re past that question.
Short version: get your finances in order first, credit score, DTI, down payment plan, before you look at a single listing. Get pre-approved before you shop. And know upfront that buyer’s agent compensation changed in 2024, you’re now contractually on the hook for your own agent’s fee by default, though sellers still cover it as a negotiated concession in most transactions.
It doesn’t have to be overwhelming. Here’s the process broken into clear steps so you know exactly what to do and when.
Step 1: Get Your Finances in Order First
Before you look at a single listing, know where you stand financially.
Credit score. The minimum credit score to qualify for a conventional mortgage has historically been 620. FHA loans are available with scores as low as 580 with 3.5% down, or even 500 with 10% down. The higher your score, the better your interest rate, and over a 30-year mortgage, a half-point rate difference adds up to tens of thousands of dollars. Check your score through Credit Karma and give yourself 6-12 months to improve it if needed.
Debt-to-income ratio (DTI). Lenders look at how much of your monthly income goes toward debt payments. The 28/36 rule is a useful guideline: housing costs shouldn’t exceed 28% of your gross monthly income, and total debt payments shouldn’t exceed 36%. Run your own numbers through the house affordability calculator to see both that conservative figure and the looser number a lender might actually approve, side by side.
Down payment. It’s a common misconception that you need to put 20% down. With a conventional loan you can put as little as 3% down. FHA loans require a minimum of 3.5% for qualified borrowers. If you want to avoid paying for private mortgage insurance (PMI), you’d need to put down 20%. If you’re an eligible veteran or active-duty service member, a VA loan skips this trade-off entirely, zero down and no PMI at any down payment level. See VA Loan Benefits for who qualifies and what it can’t do.
Closing costs. Budget 2-5% of the purchase price for closing costs on top of your down payment, this covers loan origination fees, title insurance, escrow fees, and similar costs, and it catches a lot of first-time buyers off guard when they’ve only budgeted for the down payment itself.
Step 2: Get Pre-Approved Before You Shop
Pre-approval is not optional. In most markets, sellers won’t take your offer seriously without a pre-approval letter.
To get pre-approved, gather your most recent 30 days of pay stubs and two months of bank or asset statements, then complete a loan application outlining your income, assets, debts, and two-year employment and residence history. Your lender will review this information, pull your credit, and determine the loan amount you may qualify for.
Shop around with at least three lenders or a mortgage broker to increase your chances of getting a low interest rate, doing this within a couple of weeks keeps multiple credit pulls from counting against you separately. Rates vary more between lenders than most people realize, a few hours of comparison shopping can save thousands. If you’re self-employed or work 1099, mortgage preapproval covers the extra documentation and timing that a standard pay-stub-and-W-2 checklist skips entirely. Once you have a rate in hand, the mortgage calculator shows you exactly what that rate means for your real monthly payment, including when PMI drops off.
See our full mortgage guide: How Mortgages Actually Work.
Step 3: Define What You Actually Need
Before you start touring homes, be honest about your priorities. Separate needs from wants.
Needs: number of bedrooms, commute distance, school district if applicable, parking, accessibility requirements.
Wants: granite countertops, open floor plan, finished basement, proximity to coffee shops.
Consider proximity to schools, work, and recreational activities, as well as the area’s overall ambiance. A great house in the wrong location is rarely a good purchase. The location is permanent, everything else can be changed.
Use Zillow, Redfin, Realtor.com, and Trulia to research neighborhoods, recent sale prices, and what your budget actually buys in your target area. Spend time on this before committing to a real estate agent, you’ll have much better conversations when you know the market.
Step 4: Find a Real Estate Agent
This is the part that’s genuinely changed the most since 2024, worth reading carefully even if you’ve bought a home before.
A buyer’s agent represents your interests during the search and negotiation. Following a major 2024 legal settlement involving the National Association of Realtors, the way buyer’s agents get paid changed structurally. You’re now contractually responsible for your own agent’s fee by default, and before you can even tour a home with an agent, you’ll be asked to sign a written buyer-broker agreement spelling out that fee and who’s expected to pay it. That’s a new, mandatory step that didn’t exist a few years ago.
Here’s the practical reality, though: in most transactions, roughly 75-80% nationally, sellers still voluntarily offer to cover the buyer’s agent fee as a negotiated concession, so it’s often not actually coming out of your pocket directly. But it’s no longer automatic or guaranteed the way it used to be, it’s something you now negotiate explicitly rather than something baked invisibly into the deal. Read the buyer-broker agreement carefully before signing, understand exactly what the fee is, who’s expected to pay it, and how long the agreement locks you in.
What to look for in an agent: local market expertise, responsiveness, and experience with first-time buyers. Ask for references. Interview two or three before committing.
The national average total real estate commission runs around 5.7% of the sale price in 2026, split roughly 2.9% to the listing agent and 2.8% to the buyer’s agent, though every number here is negotiable and varies by market.
Step 5: Make an Offer
When you find the right home, your agent will help you craft an offer. The offer includes:
Purchase price. Earnest money deposit (typically 1-3% of the purchase price, held in escrow). Contingencies, home inspection, financing, appraisal. Proposed closing date.
After you locate your ideal home, formally express your interest by having your agent put in an offer. This should detail the price you’re willing to pay, any contingencies, and a proposed closing timeline.
Contingencies protect you. The inspection contingency lets you back out or negotiate repairs if the inspection reveals problems. The financing contingency protects your earnest money if your loan falls through. Don’t waive them lightly, especially in a competitive market where pressure to skip contingencies can be real.
Step 6: Inspection, Appraisal, and Underwriting
Once your offer is accepted, three things happen roughly simultaneously:
Home inspection. Hire an independent inspector (not one recommended by your agent or the seller). A thorough inspection covers structure, roof, electrical, plumbing, HVAC, and more, though not everything, pest, radon, and a few other items need their own specialist. Based on the results, you may need to renegotiate the sale amount or request repairs or credits. If the seller won’t budge, your contingency lets you back out and recover your earnest money.
Appraisal. Your lender orders this to confirm the home is worth what you’re paying. If it comes in below the purchase price, you’ll need to renegotiate or make up the difference in cash.
Underwriting. Your lender verifies everything you submitted in your application. Don’t open new credit cards, make large purchases, change jobs, or move large sums of money during this period, any of these can delay or derail your closing.
Step 7: Final Walk-Through and Closing
The final walk-through is your opportunity to check the state of the home and make sure it’s in the agreed-upon condition, clean, damage-free, vacated, and everything is working properly. Do this, it’s your last chance to flag problems before the sale is final.
At closing, you’ll sign a significant amount of paperwork, pay your closing costs and down payment, and receive the keys. The whole process from accepted offer to closing typically takes 30-60 days.
The Real Costs to Budget For
Beyond the down payment and closing costs, first-time buyers consistently underestimate:
Moving costs: $1,000-5,000+. Immediate repairs and updates. New appliances if not included. Ongoing maintenance: budget 1-2% of the home’s value annually. Property taxes and homeowners insurance added to your monthly payment.
Owning a home means you pay for everything that breaks. A robust emergency fund, separate from your down payment and closing costs, is what actually gets you through the first year without a surprise repair turning into a crisis. If you haven’t sized yours yet, the emergency fund calculator is worth running before you close.
Related: How Mortgages Actually Work – Plain English, No Jargon
Frequently Asked Questions
You’re now contractually responsible for your own agent’s fee by default, following a 2024 legal settlement that changed industry rules. In practice, sellers still voluntarily cover this fee as a negotiated concession in most transactions, but it’s no longer automatic. You’ll sign a written agreement upfront that spells out exactly who pays.
No, this is a common misconception. Conventional loans allow as little as 3% down, and FHA loans allow 3.5%. Putting down less than 20% typically means paying PMI until you reach 20% equity, but it doesn’t prevent you from buying.
Conventional loans typically require at least 620. FHA loans go as low as 580 with 3.5% down, or even 500 with a 10% down payment. A higher score generally gets you a better interest rate, which matters significantly over a 30-year loan.
Typically 30-60 days, covering the inspection, appraisal, and underwriting process. Avoiding major financial changes, new credit cards, large purchases, job changes, during this window helps prevent delays.
Generally not lightly. The inspection contingency lets you back out or renegotiate if serious problems turn up, and the financing contingency protects your earnest money if your loan falls through. Waiving them can strengthen an offer, but it removes real protection.
Sources
NAR settlement mechanics and current buyer-agent compensation practices: ShopProp, US Realty Training
2026 national commission averages: iBuyer