The Comprehensive Home Buying Guide: From Pre-Approval to Keys

Buying a home is one of the largest financial decisions you'll ever make. Unlike most consumer purchases, the process can take months and involves dozens of professionals, legal documents, and financial hurdles. This guide walks you through every stage—from that first credit check to the moment you receive your keys.

Step 1: Financial Health Check

Before you even browse listings, you need to understand your financial position. Lenders will scrutinize three main areas:

Credit Score

Conventional loans: Typically require 620+ credit score
FHA loans: Accept scores as low as 580 (with 3.5% down) or 500 (with 10% down)
VA/USDA loans: No official minimum, but most lenders want 620+

Pro Tip: Pull your free credit report from AnnualCreditReport.com at least 3 months before house hunting. Dispute any errors immediately—corrections can take 30-45 days.

Debt-to-Income Ratio (DTI)

Lenders calculate your DTI by dividing your total monthly debt payments by your gross monthly income. Most prefer:

Front-end DTI: Housing costs ≤ 28% of gross income
Back-end DTI: All debts ≤ 43% of gross income (some programs allow up to 50%)

Cash to Close

You'll need funds for:

Down payment: 3% to 20%+ depending on loan type
Closing costs: Typically 2-5% of loan amount
Reserves: Some lenders require 2-6 months of mortgage payments in savings

Step 2: Pre-Approval vs. Pre-Qualification

These terms are often confused, but the difference matters:

Factor	Pre-Qualification	Pre-Approval
Credit Check	Soft pull or none	Hard pull
Documentation	Self-reported	Verified (W-2s, tax returns, bank statements)
Time Required	Minutes	1-3 days
Seller Impact	Weak—offers may be dismissed	Strong—shows you're a serious buyer
Binding?	No	No (but close to final)

Strategy: Get pre-approved by at least 2-3 lenders to compare rates. Multiple mortgage inquiries within 45 days count as a single hard pull on your credit.

Step 3: Search & Offer

Once pre-approved, the house hunt begins. When you find "the one," your agent will help you craft an offer.

Key Offer Components

Earnest Money Deposit (EMD): Typically 1-3% of purchase price, shows good faith
Contingencies: Protect you if inspection fails, appraisal comes low, or financing falls through
Closing Timeline: Typically 30-45 days from accepted offer

📋 Pre-Offer Checklist

✓ Pre-approval letter in hand (dated within 30 days)
✓ Proof of funds for down payment and EMD
✓ Understanding of comparable sales in the area
✓ Home inspection contingency included
✓ Realistic closing date that works for both parties
✓ Agent has verified seller's motivation and timeline

Step 4: Inspection, Appraisal, Underwriting

After your offer is accepted, the clock starts ticking:

Home Inspection (Days 1-10)

Hire a licensed inspector to examine the property. They'll check structural integrity, electrical, plumbing, HVAC, roof, and more. Based on findings, you can:

Request repairs
Negotiate a price reduction
Walk away (if contingency allows)

Appraisal (Days 10-20)

The lender orders an independent appraisal to confirm the home's value matches the loan amount. If it comes in low, your options are:

Renegotiate purchase price with seller
Pay the difference out of pocket
Challenge the appraisal with comparable sales data

Underwriting (Days 20-35)

The lender's underwriter reviews all documentation with a fine-toothed comb. Expect requests for:

Updated pay stubs and bank statements
Letters explaining large deposits or job changes
Additional documentation for rental income or self-employment

Warning: Do NOT make major financial changes during underwriting—no new credit cards, no large purchases, no job changes. These can derail your loan at the last minute.

Step 5: Closing Table

You've made it! At closing, you'll sign a mountain of paperwork and officially become a homeowner.

Key Documents

Closing Disclosure (CD): Final loan terms, monthly payment, closing costs—you must receive this at least 3 business days before closing (TRID rule)
Promissory Note: Your legal promise to repay the loan
Deed of Trust/Mortgage: Gives the lender a security interest in the property

Home Buying Timeline Overview

Phase	Typical Duration	What to Do
Financial Prep	1-3 months	Check credit, save for down payment, reduce debt
Pre-Approval	1-3 days	Submit documents, compare lender offers
House Hunting	2 weeks - 6 months	Tour homes, work with agent, make offers
Under Contract	30-45 days	Inspection, appraisal, underwriting
Closing	1-2 hours	Sign documents, receive keys

Educational purposes only. Not financial advice.