From checking your credit to getting your keys. A clear, honest walkthrough of the homebuying process so you know exactly what’s coming and how to prepare for it.
Before you browse a single listing, get clear on what you can actually afford. Lenders look at three things above everything else: your credit score, your debt-to-income ratio, and the cash you have available for a down payment and closing costs.
620+
Minimum credit score for most conventional loans (580 for FHA)
<36%
Debt-to-income ratio lenders typically want to see
3–5%
Minimum down payment for many loan programs
Calculate your debt-to-income ratio
Your DTI is simple math. Add up all your monthly debt payments — student loans, car payments, credit cards, any other obligations — and divide by your gross monthly income. If you earn $6,000/month and have $1,800 in monthly debts, your DTI is 30%. Lenders generally want this below 36%, though some programs allow higher.
Beyond the mortgage payment
Your monthly mortgage is just the start. Budget for property taxes, homeowners insurance, HOA fees if applicable, utilities, and ongoing maintenance. A common rule of thumb: budget 1–3% of your home’s value annually for maintenance and repairs. On a $350,000 home that’s $3,500–$10,500 per year — roughly $300–$875 per month on top of your mortgage.
Lender approval ≠ what you can comfortably afford. Lenders calculate the maximum they’re willing to lend you. That number doesn’t account for your savings goals, childcare costs, career plans, or quality of life. Buy for your budget, not your maximum approval.
Section 02
Get pre-approved before you shop
Pre-approval is not optional if you’re serious about buying. In competitive markets, sellers won’t even entertain an offer without one. It gives you a firm budget, shows sellers you’re qualified, and dramatically speeds up the closing process once your offer is accepted.
Pre-qualification vs. pre-approval
Pre-qualification is a quick estimate based on information you provide yourself — it carries very little weight. Pre-approval involves a full review of your financial documents and a hard credit pull. Lenders verify income, assets, and debts before issuing a pre-approval letter. Pre-approval is what actually matters when you make an offer.
Documents you’ll need
Pay stubs — last 30 days showing current income
Tax returns — previous two years with all schedules
Bank statements — last 2–3 months for all accounts
W-2s or 1099s — last two years
Employment verification — letter from employer or recent offer letter if recently changed jobs
ID — government-issued photo ID
Apply with multiple lenders. Rates vary more than most buyers realize. Getting quotes from two or three lenders and comparing doesn’t hurt your credit score if you do it within a 14–45 day window — credit bureaus treat multiple mortgage inquiries in a short period as a single inquiry.
Fully underwritten approval
Some lenders will complete the full underwriting process during pre-approval, not after your offer is accepted. A fully underwritten approval means your financing is essentially guaranteed — the only remaining step is tying it to a specific property. This makes your offers significantly more competitive because sellers know the deal won’t fall through due to financing.
Section 03
Choosing the right mortgage
Your credit score, down payment, military status, and the type of property you’re buying all determine which loan types you’re eligible for. Most buyers have more options than they realize.
Conventional Loan
Most common
Not backed by a government agency. Typically requires better credit and a larger down payment than government-backed programs, but offers more flexibility on property types and loan amounts.
Min credit: 620 — Min down: 3% (with PMI)
FHA Loan
Lower credit OK
Backed by the Federal Housing Administration. More forgiving on credit scores and down payments. Requires mortgage insurance premium (MIP) for the life of the loan in most cases.
Min credit: 580 — Min down: 3.5%
VA Loan
Military & veterans
Backed by the Department of Veterans Affairs. Available to eligible active-duty service members, veterans, and surviving spouses. One of the most valuable mortgage benefits available — no down payment required.
Min credit: Varies — Min down: 0%
USDA Loan
Rural properties
Backed by the US Department of Agriculture for eligible rural and some suburban properties. Income limits apply. Like VA loans, requires no down payment for eligible buyers.
Min credit: 640 — Min down: 0%
Fixed vs. adjustable rate
Fixed-rate mortgages lock your interest rate for the life of the loan. Your payment never changes — easier to budget, and protects you if rates rise. Best for buyers planning to stay long-term.
Adjustable-rate mortgages (ARMs) start with a lower rate that adjusts after a set period (commonly 5, 7, or 10 years). Can make sense if you plan to sell or refinance before the rate adjusts, but carry risk if plans change.
Rate locks and buydowns
A rate lock freezes your interest rate from application to closing, protecting you if rates rise during the process. Most locks last 30–60 days. If your closing is delayed beyond the lock period, you may need to pay to extend it.
A 2-1 buydown temporarily reduces your rate for the first two years — often paid for by the seller as a concession. It lowers your initial payments while you settle in, with the rate returning to the standard level in year three.
Section 04
Saving for a down payment
The 20% down payment is largely a myth for most buyers today. Many loan programs allow 3–5% down, and there are assistance programs that can help with even that. The tradeoff: less than 20% typically means paying PMI (private mortgage insurance) until you reach 20% equity.
Build your down payment faster
Automate transfers — set up a recurring transfer to a dedicated savings account the day you get paid. Even $300/month is $3,600/year
Pay down high-interest debt first — eliminating credit card debt improves both your DTI and credit score while freeing up cash flow
Cut recurring expenses — subscription audits, refinancing auto loans, and renegotiating insurance can find $200–500/month you didn’t know you had
Consider a side income — even $500/month of additional income directed entirely to savings adds $6,000/year to your down payment fund
Down payment assistance programs
Many state and local housing agencies offer grants, low-interest loans, or forgivable second mortgages to help first-time buyers with down payments and closing costs. Eligibility typically requires income limits and first-time buyer status (not having owned in the past three years). Search your state housing finance agency website — these programs are often underutilized because buyers don’t know they exist.
Gift funds
Family members can contribute to your down payment as a gift. Lenders require a signed gift letter confirming the funds are not a loan. Most loan programs have rules about the maximum percentage of the down payment that can come from gifts — ask your lender about specific requirements.
Section 05
The buying process from search to keys
Once your finances are in order, the actual buying process follows a predictable sequence. Here’s every step, in order.
1
Define your must-haves and nice-to-haves
Make two lists before you start browsing. Must-haves are non-negotiable — location, school district, minimum bedrooms, accessibility. Nice-to-haves are features you’d love but won’t walk away without. This prevents decision fatigue and keeps you from falling in love with homes outside your criteria.
2
Tour homes online and in person
Filter online listings by price, size, location, and features. Use virtual tours and photos to narrow the list, then schedule in-person visits for serious candidates. Take notes and photos during every tour — homes blur together quickly.
💡 ARS’s available properties can be toured by contacting us directly. Reach out here.
3
Make a competitive offer
Your offer includes the purchase price, earnest money (typically 1–3% of the price, held in escrow), and contingencies. Common contingencies include inspection (right to back out if major problems are found), financing (protects you if your loan falls through), and appraisal (allows renegotiation if the home appraises below the purchase price).
⚠️ In competitive markets, some buyers waive contingencies to win. This is risky. Never waive an inspection contingency on a property with unknown condition issues — you could inherit major problems with no recourse.
4
Negotiate and get under contract
The seller may accept your offer, reject it outright, or counter. Most transactions involve at least one round of negotiation on price, contingencies, closing date, or seller concessions. Once both parties agree, you sign the purchase agreement and the home is officially under contract.
5
Schedule inspection and appraisal
Hire a licensed inspector within your contingency window (typically 7–10 days). They’ll examine plumbing, electrical, HVAC, roof, structure, and more. Your lender will order an independent appraisal to confirm the home’s value supports the loan amount. If the appraisal comes in low, you can renegotiate the price or make up the difference in cash.
6
Final walk-through
Typically 24–48 hours before closing, you walk through the property one last time to verify that agreed-upon repairs were completed and the home’s condition hasn’t changed since the inspection. Don’t skip this step — it’s your last chance to catch anything before you own it.
7
Close and get your keys
At closing you’ll sign loan documents, transfer ownership, and pay your down payment and closing costs (typically 2–5% of the purchase price). Bring a cashier’s check or arrange a wire transfer — personal checks are not accepted at closing. Once everything is signed and funds transfer, the home is yours.
💡 Most transactions close 30–60 days after going under contract. With a fully underwritten approval, some buyers close in as few as 14–21 days.
Section 06
Buying while selling your current home
Many buyers face the challenge of coordinating the purchase of a new home with the sale of their current one. Timing these transactions requires planning — and sometimes creative financing.
Sell first, then buy
Selling first gives you a clear, known budget for your next purchase. You won’t be carrying two mortgage payments and you’ll know exactly how much equity you have available. The downside: a potential gap between when you sell and when you find your next home. Many sellers negotiate a rent-back agreement to stay in the sold home for a few weeks while searching.
Buy first, then sell
Buying before selling gives you more time to find the right home without pressure. The tradeoff is managing two properties — and often two mortgage payments — temporarily. Bridge loans use your current home’s equity to fund the new purchase and are typically paid off when the old home sells.
Sell to ARS, buy with certainty
A cash sale to ARS gives you a known closing date and a specific number in hand. You know exactly when your current home closes and exactly how much you’ll have for your next purchase — eliminating the timing risk entirely. Many sellers use an ARS cash sale specifically to remove uncertainty from the buy-sell coordination.
Lenders approve you for the most they’re comfortable lending, not the most you can comfortably afford. Consider future expenses, career changes, family plans, and savings goals when setting your real budget.
Waiving the inspection contingency
Skipping the inspection to make your offer more competitive is one of the riskiest moves in real estate. A problem you don’t discover before closing becomes entirely your problem after. Major defects can cost tens of thousands to fix.
Skipping the final walk-through
The final walk-through is your last chance to verify the home’s condition before you own it. Sellers occasionally remove fixtures they weren’t supposed to, or new damage occurs between inspection and closing. Don’t skip this step.
Making large purchases before closing
New car loans, furniture financing, or any large credit purchase before closing can change your DTI and put your mortgage approval at risk. Lenders re-verify your finances before funding. Don’t touch your credit until after you have the keys.
Shopping without pre-approval
Falling in love with a home before knowing your budget is a recipe for disappointment. Get pre-approved first — you’ll know exactly what you can afford, and your offers will be taken seriously by sellers.
Forgetting about closing costs
Closing costs typically run 2–5% of the purchase price — on a $350,000 home that’s $7,000–$17,500 due at closing on top of your down payment. Many first-time buyers are blindsided by this. Factor it into your savings target from the start.
Section 08
Frequently asked questions
How long does buying a house take from start to finish?
The full process — from starting your search to receiving keys — typically takes 2–6 months depending on how quickly you find a home and market conditions. Once under contract, most purchases close in 30–60 days. With a fully underwritten pre-approval, some buyers close in 14–21 days.
What salary do I need to buy a $400,000 home?
A common rule is that housing costs shouldn’t exceed 28% of gross monthly income. For a $400,000 home with a standard down payment at current rates, you’d typically need $90,000–$135,000 in annual income, depending on your interest rate, down payment size, and other debts. Use a mortgage calculator with current rates for a more precise estimate.
What happens if the home appraises below the purchase price?
If you have an appraisal contingency, you have three options: negotiate with the seller to reduce the price to the appraised value, bring extra cash to closing to cover the difference between the appraised value and your purchase price, or cancel the contract and recover your earnest money. Without an appraisal contingency, you’d be obligated to make up the difference in cash.
Do I need a real estate agent to buy a house?
Not legally required, but strongly recommended — especially for first-time buyers. A buyer’s agent represents your interests, helps you navigate offers and negotiations, coordinates inspections and closing, and is typically compensated by the seller (though this is increasingly negotiated on a case-by-case basis following recent NAR settlement changes).
What is earnest money and do I get it back?
Earnest money is a good-faith deposit (typically 1–3% of the purchase price) you put into escrow when your offer is accepted. It shows the seller you’re serious. If you back out within your contingency windows (inspection, financing, appraisal), you generally get it back. If you back out without a valid contingency, you typically forfeit it. At closing, it’s credited toward your down payment and closing costs.
How much should I put down on a house?
20% avoids PMI and often gets you better rates, but many buyers put down 3–10% and pay PMI until they reach 20% equity. The right amount depends on your cash reserves, how long you plan to stay in the home, and current rate environments. Putting less down preserves cash for emergencies and other investments, but increases your monthly payment and total interest paid.
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ARS has investment and traditional properties available across the region. See what’s on the market and get in touch with any questions.