Buying your first home — Adulting in America

Buying your first home is the largest single purchase most people make in their lifetimes. It also involves roughly 147 acronyms, at least five professionals you’ve never met, and a sequence of events that nobody really walks you through in advance. This is that walk-through.

We’ll assume nothing — if you’re pretty sure you know what escrow is, skim. If you don’t, we’ve got you.

Step 1: Are you actually ready to buy?

“Ready” is not the same as “can afford the down payment.” Ready means:

Stable income — ideally at least 2 years of documented income. W-2 is easiest; self-employment requires more paperwork.
Decent credit — 620 is typically the minimum for a conventional mortgage, 740+ gets you the best rates. Check your score free through your bank or Credit Karma.
Down payment + closing costs + reserves — more on this below.
Plan to stay put — if you might move in under 3 years, renting is usually cheaper than buying once you factor in closing costs, moving costs, and transaction fees.

If any of these is shaky, it may not be “no, not yet” — but it might be “fix this first.”

Step 2: How much house you can actually afford

Lenders will tell you how much they’ll lend you. That number is almost always more than you should actually spend.

The honest math:

Down payment: 3.5% (FHA) to 20% (conventional, to avoid PMI) of the home price. More on PMI in a minute.
Closing costs: 2–5% of the purchase price. This includes lender fees, title insurance, appraisal, prepaids. It’s not optional, and it’s on top of the down payment.
Reserves: ideally 3–6 months of mortgage payments in savings after closing. Because something will break.
Monthly payment: the classic rule is 28% of gross monthly income on housing costs total (principal + interest + taxes + insurance + HOA). Many lenders will approve you for more. Don’t take them up on it.

PMI (Private Mortgage Insurance): if you put less than 20% down on a conventional loan, the lender makes you pay PMI — typically 0.5%–1.5% of the loan amount per year. It protects them, not you. You can cancel PMI once you have 20% equity (roughly: once you’ve paid down enough principal). FHA loans have a similar-but-different version called MIP that’s much harder to cancel.

One thing most first-time buyers miss: property taxes and homeowners insurance usually get rolled into your monthly payment via an escrow account. So the “payment” your lender quotes isn’t just principal + interest — it’s PITI (principal, interest, taxes, insurance), sometimes plus HOA. Make sure you’re comparing apples to apples when other people tell you what their payment is.

Step 3: Getting pre-approved

Pre-approval is a letter from a lender saying “we’ve looked at your finances and we’re willing to lend you up to $X on Y terms.” Sellers want to see it before they’ll take your offer seriously.

Pre-approval is not pre-qualification. Pre-qualification is based on self-reported numbers and means basically nothing. Pre-approval requires:

Recent pay stubs
W-2s and tax returns (usually 2 years)
Bank statements
ID
A credit pull (this is a “hard” pull that slightly dings your score, but all mortgage shopping within a ~45-day window counts as one pull for scoring purposes)

Shop lenders. Get quotes from at least 3: a big bank, a credit union, and a mortgage broker. Rates can vary by 0.25%–0.75%, which on a 30-year loan is tens of thousands of dollars. This is the single highest-ROI hour of your homebuying process.

Get your pre-approval letter with a number at or slightly above what you actually want to spend. Don’t get pre-approved for the maximum and then feel pressured to use it.

Step 4: Finding a realtor (who actually works for you)

You want a buyer’s agent — a realtor representing you, not the seller. In most U.S. markets, buyer’s agents are now paid either by the seller’s side, by a flat fee you negotiate upfront, or some combination; the rules changed in 2024 and are still settling out. Ask how they’re compensated in writing before you sign anything.

Good signs in a buyer’s agent:

Willing to walk you through a home without pressure
Honest about a house’s downsides (if they only ever say “it’s great,” that’s a red flag)
Responsive to texts and calls within a reasonable window
Knows the specific neighborhoods you’re looking at
Will write offers with sensible contingencies (inspection, financing, appraisal)

Interview 2–3 before committing. Your agent is with you for months and has enormous influence over how this goes.

Step 5: House hunting and making offers

Write down your must-haves vs. nice-to-haves before you start looking. Once you see a pretty kitchen, you will forget that you “had to have” a garage.

When you find one:

Offer price — your agent will pull comps (recently sold similar homes). In a cold market you offer below ask; hot market, above. Your agent earns their keep here.
Earnest money — a deposit (usually 1–3% of offer) that goes into escrow to show you’re serious. You get it back if you walk away for reasons protected by your contingencies.
Contingencies — conditions under which you can back out without losing earnest money. The three non-negotiable ones for first-time buyers:
1. Inspection contingency — you can back out or renegotiate if inspection reveals problems
2. Financing contingency — you can back out if your mortgage falls through
3. Appraisal contingency — you can back out if the home appraises for less than your offer
Closing date — usually 30–45 days from accepted offer

In a competitive market, buyers sometimes waive contingencies to win. This is risky. Do not waive inspection. If you waive appraisal, know exactly how much cash you’d need to cover a low appraisal.

Step 6: The inspection

Once your offer is accepted, you have typically 7–14 days to do inspection. This is your window to find anything wrong with the house.

General inspector — checks structure, roof, plumbing, electrical, HVAC, appliances. Costs $400–$700. Always get one.
Specialty inspections — if the general inspector flags anything (or the house has certain features), add: sewer scope ($200), termite/pest ($100–$200), radon ($150), pool ($200), chimney ($200). Worth it.

Go to the inspection in person if you can. You’ll learn more about your house in those 2–3 hours than in the entire rest of the process.

After inspection, you typically have options:

Accept as-is
Request seller to fix items
Request a credit at closing (usually easier than having the seller do repairs)
Walk away

Pick your battles. Don’t ask the seller to fix every cosmetic thing — you’ll look unreasonable. Do ask about safety issues, major systems, and anything that’ll cost real money.

Step 7: Escrow, appraisal, and the part where you wait

Between inspection and closing is the “escrow period” — 30–45 days of things happening without you needing to do much. What’s going on:

Appraisal — your lender sends an appraiser to confirm the house is worth what you’re paying. If it appraises low, you and seller renegotiate or you walk.
Title search — someone confirms the seller actually owns the house and there are no liens or weird claims.
Underwriting — your lender does a final deep-dive on your finances. Heads up: do not change jobs, buy a car, open credit cards, or move large sums of money during this window. Any of those can blow up your loan.
Homeowners insurance — you need to have a policy in place before closing. Start shopping a few weeks out.

Your lender will ask for more paperwork. Answer fast. Slow responses stretch the timeline.

Step 8: Closing day

Closing day is when you sign approximately your body weight in paper and the house becomes yours.

What to bring:

Government ID
Cashier’s check or wire confirmation for the down payment + closing costs (your lender sends you the exact number a few days before — verify by phone using a number you already have, not one from an email; wire fraud is a real thing in real estate)
Proof of homeowners insurance

You’ll sign the closing disclosure (review this against your initial loan estimate — fees should match within tight tolerances), the promissory note (your promise to repay the loan), and the deed (the transfer of ownership). Plus twenty other things.

After closing, you get the keys. You are now a homeowner. Take the photo.

Step 9: The first 30 days after keys

Stuff to do quickly:

Change the locks. You don’t know who has keys.
Find the water shut-off, gas shut-off, and breaker panel. Before you need them.
Claim your inherited warranties — see our guide. Most transfer windows are 30–90 days.
Update your address — USPS, DMV, banks, employers, insurance, voter registration.
File for homestead exemption (if your state has one — most do, it lowers your property tax).
Set up automatic mortgage payment. Miss even one and your credit takes a hit.
Take photos of your house move-in condition for your own records.
Schedule HVAC service if the seller hasn’t done it recently. A tune-up is $100–$200 and finds problems cheap.

And then — live in it. You earned it.

Closing a house is one of the few adult experiences where no amount of vibes or confidence will help you; it’s entirely about having a checklist, asking for things in writing, and keeping your cool when the process feels absurd. It is absurd. It’s also pretty cool to own a thing.