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5 things you can do to prepare to buy a house


Once you decide to buy a home, the first thing you’ll need to do is get your credit in order.

Your credit determines whether you’re eligible for a mortgage, and it influences your mortgage rate. The higher your score, the lower your rate.

Most mortgage programs require a minimum credit score between 580 and 620.

Ideally, you should check your credit at least six to 12 months before applying for a mortgage.


Today, the majority of mortgage programs require a down payment. This amount ranges from a minimum 3% to 5% for a conventional loan, and a minimum 3.5% for an FHA home loan.

If you pay $200,000 for a house, you’ll need at least $6,000 to $10,000 as a down payment.

A down payment isn’t required with a VA loan or a USDA loan.


Once you know how much you can likely afford, you can then estimate how much to save for your down payment and closing costs.

If a mortgage calculator tells you that you can likely afford a $250,000 home, aim to save a minimum $12,500 for your down payment, and perhaps another $5,000 to $7,500 for closing costs.

Mortgage calculators vary.


A pre-qualification is the first step to getting a mortgage, where you provide your mortgage lender with basic information about your financial situation via an online form. The lender doesn’t verify this information but uses it to determine whether you might qualify for financing.

On the other hand, a pre-approval involves submitting a mortgage application and providing your lender with supporting documentation. This includes tax returns, paycheck stubs, W2s, financial statements, and a credit check.

Find a Realtor

Buying a home can be hard, and it takes an expert to help you through the process. A realtor will help make sure you don’t go past your budget and end up in a bad spot. Without a realtor, you’ll be putting your trust in a seller directly that only has their own interest in mind. The seller pays for your realtor’s services for bringing you, the buyer, to the home. Every seller in the MLS will do this, so your agent is not compelled to push one over the other. 

Earnest Money

Make sure you have liquid cash in the form of an earnest money check. Once you find a property, you’ll need to submit an earnest money check with your offer. This is good faith money that says, “I’m a serious buyer.”

Earnest money deposits vary in amount but typically range from 1% to 2% of the purchase price, usually a minimum of $500 to $1,000. The seller doesn’t pocket the money, though. Funds are held in an escrow account, and either returned to you at closing or applied to your closing costs and/or down payment.

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