Key takeaways:
- Set a realistic budget that accounts for upfront and ongoing costs.
- Get pre-approved and find an agent before starting your home search.
- Protect yourself with inspections, contingencies, and a careful review before closing.
Buying your first home comes with a lot of steps, from figuring out what you can afford and getting pre-approved to making an offer, completing an inspection, and finally closing on your home. It can be easy to lose track of what comes next.
This first-time home buying checklist walks you through the process step by step, so you know what to expect from pre-approval to getting the keys.
1. Calculate your affordability and debt-to-income (DTI)
Before you start looking at homes, figure out how much you can comfortably afford each month. Your housing costs can include more than your mortgage payment, so account for property taxes, homeowners insurance, HOA fees, and ongoing maintenance.
Lenders will also look at your debt-to-income (DTI) ratio, or how much of your monthly income goes toward debt payments. As a general guideline, the 28/36 rule suggests spending no more than 28% of your gross monthly income on housing and 36% on all debts combined.
Affordability is especially important in today’s market, with home prices still near record highs and mortgage rates above 6%. Use a mortgage calculator to see how different home prices, rates, and down payments would affect your monthly payment, and set a budget you’ll be comfortable with even after accounting for the other costs of owning a home.
2. Save for your down payment and other upfront costs
Your upfront budget needs to stretch beyond just the purchase price. While down payments start as low as 3% for conventional loans and 3.5% for FHA loans (or 0% for qualified VA/USDA buyers), putting down 20% eliminates the added monthly cost of Private Mortgage Insurance (PMI).
In addition to your down payment, prepare for these other out-of-pocket expenses:
- Closing costs: Expect to pay 2% to 5% of the loan amount for lender origination, appraisal, title search fees, and prepaid taxes/insurance.
- Buyer agent compensation: If you work with a buyer’s agent, make sure you understand how they’ll be compensated and whether you could be responsible for some or all of their fee. Depending on your agreement and the transaction, you may be able to negotiate for the seller to cover some or all of this cost.
You can also explore state and local Down Payment Assistance (DPA) grants or forgivable second loans, which can significantly offset these initial upfront requirements.
3. Audit and boost your credit profile
Your credit score can affect your mortgage interest rate and loan qualification terms. Pull your free annual credit reports from Equifax, Experian, and TransUnion to inspect for errors, fraudulent accounts, or incorrect late payments, and dispute any discrepancies immediately.
To optimize your score before applying:
- Reduce credit utilization: Pay down revolving credit card balances below 30% of your available credit limit.
- Maintain on-time payments: Set up automatic payments for all bills; even a single 30-day late payment can drop a strong credit score significantly.
- Avoid new credit applications: Avoid opening new credit cards, taking out auto loans, or making large financed purchases, as hard inquiries and new debt lower your score and increase your DTI.
4. Get pre-approved for a mortgage
Before you start seriously shopping for a home, get pre-approved for a mortgage. A pre-approval letter gives you an estimate of how much a lender may be willing to lend you based on your finances and shows sellers that you’ve taken steps toward securing financing.
To get pre-approved, lenders will typically ask for financial documents such as:
- W-2 forms and tax returns from the past 2 years
- Recent pay stubs (covering the last 30 days)
- Bank and brokerage statements (past 60–90 days)
- Proof of additional income, gift letters, or child support documentation
You can also compare lenders to find the best combination of interest rates, fees, and loan options for your situation. Just remember that the amount you’re pre-approved for isn’t necessarily the amount you should spend. Stick to the monthly housing budget you established earlier, and avoid stretching your finances just because you qualify for a larger loan.
5. Hire a buyer’s agent
A buyer’s agent can help you find homes, understand your local market, make a competitive offer, negotiate with sellers, and navigate the paperwork throughout the buying process. If you work with an agent who participates in the MLS, you’ll generally need to sign a n Buyer Representation Agreement before touring a home with them.
Before signing an agreement, make sure you understand:
- How your agent is paid: Confirm how your agent is compensated, whether through a flat fee, an hourly rate, or a percentage of the purchase price.
- Services provided: Define the exact scope of duties your agent will handle, from finding listings to negotiating offers.
- How long the agreement lasts: Check whether the agreement covers a single home or commits you to working with the agent for a set period of time.
Note: Agent commissions are fully negotiable by law. While you agree to your agent’s fee upfront, you may be able to negotiate for the seller to cover some or all of this cost as part of your offer.
6. Research neighborhoods and define your needs and wants
Finding the right community is just as vital as finding the right home. Before scheduling private home tours, narrow your search by considering factors like local schools, commute times, public transit options, nearby amenities, and anything else that could affect your day-to-day life in the neighborhood.
Once you identify your top target areas, separate your home priorities into two clear categories:
- Must-haves (non-negotiables): Essential factors you cannot easily change, such as school district, overall square footage, number of bedrooms and bathrooms, structural layout, or single-story living needs.
- Nice-to-haves (flexibility points): Preferred features that can be added or updated later, such as granite countertops, a swimming pool, smart home automation, or updated paint colors.
Sharing this list with your buyer’s agent can help them narrow your search to homes that best fit your budget and priorities.
7. Tour homes in person and virtually
Attending open houses and private showings allows you to evaluate property floor plans, natural lighting, exterior lot conditions, and storage space firsthand.
During each tour, look past aesthetic staging and evaluate the home’s core physical condition:
- Structural details: Check for visible foundation cracks, uneven flooring, or signs of water damage along ceilings and basements.
- Major mechanical systems: Inquire about the age and service history of the HVAC system, furnace, water heater, electrical panel, and roof.
- Environmental factors: Observe exterior noise levels, traffic density, proximity to commercial properties, and natural drainage patterns on the lot.
Take notes and photos during each tour so you can easily compare homes later.
8. Submit a competitive offer with concession requests
When you find the right home, work with your agent to draft a written purchase offer based on recent local sales comparisons (comps). A strong offer clearly details your purchase price, target closing timeline, financing terms, and an earnest money deposit, typically 1% to 3% of the purchase price held in an escrow account to demonstrate good faith.
The amount of competition you face can vary significantly by market, so work with your agent to understand how much negotiating power you have. As of July 2026, 59.2% of U.S. homes sold below their original list price. With homebuying demand relatively slow, some buyers may have room to negotiate on price or ask for seller concessions, though conditions vary by market and property.
Your purchase contract should also protect your interests with essential contingencies:
- Financing and inspection contingencies: These can provide important protections if you’re unable to secure financing or the inspection uncovers significant issues, depending on the terms of your contract.
- Seller concession requests: Include explicit terms requesting that the seller cover specific closing costs or contribute toward your agreed-upon buyer agent representation fees.
9. Negotiate price, terms, and counter-offers
After submitting your offer, the seller may accept, reject, or issue a counter-offer modifying your proposed purchase price, earnest money, closing date, or concession requests.
Your buyer’s agent will guide you through negotiations to keep the deal aligned with your budget:
- Evaluate the full offer: When the seller counters, make sure the new price fits both your upfront cash (down payment and closing costs) and your monthly mortgage payment before you agree.
- Negotiate concessions: If a seller refuses to lower the purchase price, you may be able to negotiate for closing cost credits or inclusion of specific home items (such as appliances) to offset your upfront expenses.
- Maintain walk-away limits: Stay firm on your financial boundaries. If negotiations stall or terms become unfavorable, your agent can help you determine your options based on the terms of your offer or purchase agreement.
10. Schedule a home inspection and order an appraisal
Once your offer is accepted, it’s time to make sure the home is in good condition and worth what you’ve agreed to pay. Two important steps happen during this stage:
- Home inspection: Hire a licensed home inspector to conduct an in-depth evaluation of the property’s structural foundation, roof, plumbing, electrical panels, and HVAC systems. Use the inspector’s detailed report to request necessary repairs or negotiate seller repair credits before your inspection contingency period expires.
- Home appraisal: Your lender orders an appraisal to confirm the property’s fair market value supports the loan amount. If the appraisal comes in lower than your agreed purchase price, your options may include negotiating a price reduction with the seller, paying the difference out-of-pocket, or potentially terminating the contract if your agreement includes an applicable appraisal contingency.
11. Review your title search and Closing Disclosure (CD)
As you get closer to closing, there are two important things to review before the home is officially yours:
- Title search and insurance: A title company reviews public records to confirm the seller has the legal right to sell the home and identify potential title issues, such as liens or unpaid taxes. You may also purchase owner’s title insurance, while your lender may require a separate lender’s title insurance policy.
- Closing Disclosure (CD) review: Federal law requires your lender to provide your Closing Disclosure at least three business days before closing. Review this document line-by-line to verify that your final loan amount, interest rate, monthly payment, and itemized closing costs are what you expect.
12. Complete the final walkthrough and close
Before closing, you’ll want to do a final walkthrough of the home with your agent to confirm that required repairs were completed and the home is in the condition you agreed to.
On closing day, you will complete the transaction:
- Transfer funds: Send your down payment and closing costs via a secure bank wire or certified cashier’s check as instructed by the settlement agent.
- Sign documents: Sign the final legal paperwork, including the mortgage note, deed of trust, and settlement statements (bring a valid government-issued ID).
- Receive your keys: Once the closing process is complete, you’ll officially become a homeowner and receive the keys to your new home.