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Getting a mortgage in 2026 isn't the same as it used to be. As of December 2025, the average mortgage rate was 6.22%, the median home price was $415,200, and first-time home buyers made up only 21% of the market-the lowest percentage since 1981. This means that it takes more planning and patience than ever to buy a home. But here's what I tell every borrower I work with: knowing how the process works and what to expect can make a big difference in how you feel about it.
I've been in the mortgage business my whole life, from when I was 18 years old to now, when I run sales operations in 37 states. I've seen thousands of borrowers successfully go through this process. The truth is that today's market has problems with higher rates and home prices, but it also has benefits that many borrowers don't see. In 2025, the Federal Reserve cut rates three times (in September, October, and December). Inventory has grown by 10.9% year over year to 1.52 million units. Historically, current rates are still below the long-term average of 7.8% since 1971.
This full guide will show you every step of the mortgage process in 2026, whether you're a first-time buyer trying to get into the market, a repeat buyer using equity from a previous home, or someone looking to refinance. I'll tell you what's the same and what's different, and most importantly, what you need to do to get ready to succeed in today's competitive lending market.
This guide will tell you everything you need to know about buying a home, from the first affordability check to the day you sign the papers. It has current market data for 2026, realistic timelines, and helpful tips that actually work. Let's get started.
Before you even think about touring homes or talking to lenders, you need an honest assessment of your financial situation. In 2026's market, with the median qualifying income needed to buy a home at $100,272 (based on a 25% qualifying ratio) and median monthly mortgage payments of $2,089 representing 23.5% of income, affordability has become the single biggest challenge facing prospective buyers.
Start by calculating your total housing budget. This isn't just your mortgage principal and interest-you need to account for property taxes, homeowners insurance, HOA fees if applicable, maintenance reserves (budget 1-2% of home value annually), utilities, and for properties with less than 20% down, private mortgage insurance (PMI). On a $415,200 home (the current median price) with a 6.22% interest rate and 10% down payment, your monthly principal and interest would be approximately $2,300. Add $500-700 for property taxes and insurance, plus PMI of roughly $250-300, and you're looking at a total monthly payment around $3,100-3,300.
Your lender will calculate your debt-to-income ratio (DTI) to determine how much you can borrow. Take all your minimum monthly debt payments-credit cards, student loans, auto loans, personal loans-and divide by your gross monthly income. Most conventional loans cap DTI at 50%, though lower ratios give you better rates and more flexibility. For example, if you earn $8,000 monthly and have $800 in existing debts, a $3,200 mortgage payment would put you at 50% DTI ($800 + $3,200 = $4,000 ÷ $8,000 = 50%). Many lenders prefer to see 43% or lower.
Your credit score directly impacts both your approval odds and the interest rate you'll receive. In 2026, with rates already elevated, even a 20-point difference in credit score can cost you thousands over the life of your loan. Check your credit reports from all three bureaus (Experian, Equifax, TransUnion) at AnnualCreditReport.com and review them carefully for errors.
As of November 16, 2025, Fannie Mae and Freddie Mac removed the minimum credit score requirement from their conventional loan eligibility guidelines-loan approval is now based on overall credit risk evaluation rather than a hard score cutoff. However, most lenders still use 620 as their internal minimum for conventional loans. FHA loans require 580 for 3.5% down (or 500 with 10% down). VA and USDA loans have no set minimums, but lenders typically prefer 620 or higher.
If your score needs improvement, focus on these high-impact actions: pay down credit card balances below 30% of limits (ideally under 10%), dispute any errors on your report, avoid opening new accounts in the 6-12 months before applying, and maintain perfect payment history. Even a modest score increase from 680 to 720 could save you 0.25-0.5% on your interest rate-that's $50-100 monthly on a $400,000 loan.
Not all mortgages are created equal, and in 2026's diverse lending landscape, matching the right loan type to your specific situation can save you tens of thousands of dollars and significantly improve your approval odds. Let me break down your primary options and when each makes the most sense.
Conventional loans are the most common mortgage type, representing about 72% of originations in 2025. These private loans come in two varieties: conforming loans that meet Federal Housing Finance Agency (FHFA) standards, with 2026 loan limits of $806,500 for single-family homes in most counties (higher in expensive areas), and non-conforming jumbo loans for amounts exceeding these limits.
Conventional loans require minimum 3% down (though 5-20% is more common), credit scores of 620 or higher at most lenders, and DTI ratios typically under 50%. If you put down less than 20%, you'll pay PMI, which costs 0.5-1.5% of the loan amount annually. For a $400,000 loan, that's $167-500 monthly. The benefit? PMI drops off automatically when you hit 78% loan-to-value through principal paydown or appreciation.
FHA loans, insured by the Federal Housing Administration, are designed for borrowers with lower credit scores or smaller down payments. You can qualify with as little as 3.5% down and a 580 credit score (or 10% down with scores as low as 500). FHA loans have become less popular recently, dropping from 55% of first-time home buyers in 2009 to just 28% in 2025, as conventional 3% down programs have improved.
The tradeoff? FHA loans require both upfront mortgage insurance (1.75% of loan amount, typically rolled into the loan) and annual mortgage insurance premium (0.55-1.05% of loan amount, depending on loan size and down payment). Unlike conventional PMI, FHA mortgage insurance usually stays for the life of the loan if you put down less than 10%. On a $350,000 FHA loan with 3.5% down, expect to pay about $240-300 monthly for mortgage insurance that never goes away unless you refinance.
If you're an active-duty military member, veteran, or eligible surviving spouse, VA loans offer some of the best terms available: zero down payment required, no monthly mortgage insurance, competitive interest rates, and lenient credit requirements. The VA funding fee (0.5-3.6% of loan amount, depending on down payment and whether it's your first VA loan) can be financed into the loan.
VA loans have become particularly attractive in 2026's rate environment. On a $400,000 loan, you're saving $250-300 monthly by not paying mortgage insurance compared to FHA, which adds up to $90,000-108,000 over the life of a 30-year loan. Plus, VA loans allow sellers to pay up to 4% toward your closing costs, reducing your upfront cash requirements significantly.
USDA loans, backed by the U.S. Department of Agriculture, offer zero-down financing for low-to-moderate income borrowers purchasing in designated rural areas (which often include suburban communities just outside major metros). Income limits vary by location but generally max out around 115% of area median income.
Like FHA loans, USDA loans require both upfront (1% of loan amount) and annual mortgage insurance (0.35% of loan balance). However, if your target home falls within USDA's eligible areas and your income qualifies, the zero-down benefit is hard to beat-particularly given that building the 3-20% down payment required for other loan types remains the biggest barrier for many 2026 buyers.
Most borrowers in 2026 are choosing fixed-rate mortgages-either 30-year (83% of originations) or 15-year (14% of originations). With the 30-year averaging 6.22% and 15-year at 5.54% as of December 2025, fixed rates provide payment predictability and protection if rates rise further. The 15-year mortgage builds equity much faster and saves dramatically on interest (often 0.5-0.75% lower rate), but requires monthly payments about 50% higher than the 30-year.
Adjustable-rate mortgages (ARMs) have seen modest increases in popularity as rates have risen-they now represent about 3% of originations, up from under 2% in 2021. Common ARMs include 5/1, 7/1, and 10/1 structures, where the first number indicates how many years the rate stays fixed before adjusting annually. Initial ARM rates typically run 0.25-0.75% below comparable fixed rates. If you're confident you'll sell or refinance within the fixed period, ARMs can save money. But be cautious-when the adjustment period hits, rates can jump significantly based on the index plus margin specified in your loan documents.
This might be the most important action item in this entire guide: shop with at least three different lenders. Research from Realtor.com shows that borrowers who compare multiple lenders can save up to $44,000 over a 30-year loan. That's not a typo-we're talking about real money left on the table when you accept the first offer you receive.
Instead of just looking at the interest rate, look at the APR (annual percentage rate). APR is a true cost comparison because it includes both the interest rate and lender fees. If you look at the total cost, a lender that offers 6.125% with $8,000 in fees might be more expensive than one that offers 6.25% with $3,000 in fees. Ask each lender for a loan estimate within the same two-week period. This will only count as one credit inquiry, so it won't hurt your score.
Think about different types of lenders: big national banks usually have competitive rates and strong technology platforms; credit unions usually offer lower rates to members but may take longer to process applications; online lenders make it easy to apply and have competitive prices; and local community banks may be more flexible with special cases. Depending on your priorities for rate, service, speed, and how complicated your situation is, each has its own pros and cons.
There's a critical difference between prequalification and preapproval, and in 2026's competitive market where 26% of buyers are paying all-cash, you can't afford to show up with just a prequalification letter. Prequalification is a rough estimate based on unverified information you provide to a lender. Preapproval involves submitting actual documentation-pay stubs, W-2s, tax returns, bank statements-that the lender reviews to give you a commitment for a specific loan amount.
When you're competing against other buyers, sellers want to see preapproval. It demonstrates you're a serious buyer who's already cleared the major financial hurdles. Preapproval letters typically remain valid for 60-90 days, though lenders may require updated documentation if anything changes with your employment, income, or debts.
To get preapproved, you need to show two years' worth of W-2s and tax returns (or business tax returns if you are self-employed), two months' worth of bank statements showing your down payment and reserves, recent pay stubs covering at least 30 days, a photo ID, permission for a credit check, and proof of any gifts or other sources of down payment. If you get alimony or child support, you need to show proof that you will keep getting it for at least three years.
People who are self-employed and want to borrow money should expect to be looked at more closely. Most of the time, lenders will look at your income over the past two years and may ask for a profit and loss statement for the year so far. They will add back some non-cash deductions, like depreciation, but write-offs that lower your taxable income will also lower your qualifying income for the mortgage. Many self-employed buyers are surprised by this: the aggressive tax strategies that lowered your tax bill can also lower your borrowing power.
Plan when to get preapproved carefully. Before you start looking for a house seriously, get preapproved, but not more than 90 days before you plan to make an offer. If your preapproval runs out while you're still looking, you can usually get it renewed with new pay stubs and bank statements without having to fill out a new application. Don't make any big changes to your finances while you're looking for a house. For example, taking on new debt, changing jobs, or taking out a lot of money from savings can all stop you from getting approved.
With your preapproval in hand, you're ready to start the exciting part-actually looking at homes. But before you start scrolling through listings, let me share some 2026 market realities that should shape your strategy. The median home search in 2025 took 10 weeks, buyers typically viewed a mix of online and in-person properties, and 56% of buyers identified finding the right property as the most difficult aspect of the process.
Online listings are a great place to start, but 88% of buyers in 2025 bought through a real estate agent or broker. This is for a good reason. Real estate agents have many benefits. They can see properties before they are listed on public sites, quickly set up viewings, know the local market and fair prices, negotiate on your behalf, handle complicated paperwork, and often catch problems with properties that you might miss.
In the 2025 NAR survey, 54% of buyers said their agent pointed out things about the property that they hadn't noticed, and 76% of first-time buyers said their agent helped them understand the process. That's not just marketing talk; it's real value. As a buyer, you don't have to pay your agent anything (the seller pays the commission), and the time they save you, the problems they help you avoid, and the negotiating power they give you are usually much better than doing it yourself.
Talk to at least two or three agents before making a choice. If they work with first-time home buyers, ask them about their experience with them. Also, ask them how well they know the neighborhoods you're interested in, how long it usually takes them to respond, how many clients they currently have, and if they have connections with trustworthy home inspectors, appraisers, and contractors. Chemistry is important because you'll be working closely with this person for weeks or months. Make sure that their communication style and availability work for you.
Before viewing properties, sit down and categorize your wants: must-haves (non-negotiable), want-to-haves (nice but not required), and nice-to-haves (bonus features). This isn't academic-in a market with 4.4 months of inventory (up from 4.1 a year ago but still below the balanced 6-month threshold), you'll rarely find a home that checks every single box. Knowing your priorities helps you make faster decisions and avoid second-guessing yourself.
Your must-have list might include: number of bedrooms and bathrooms, maximum commute time, school district quality, being within your budget, minimum square footage, and specific accessibility features. Want-to-haves could be a home office, two-car garage, updated kitchen, or backyard. Nice-to-haves might include a pool, finished basement, or proximity to parks.
Be realistic about condition. In 2026's market, turnkey homes command premium prices, while properties needing work offer opportunities-but only if you have the budget and willingness to handle renovations. Median age of sellers in 2025 was 62, with many having owned their homes for 11 years (an all-time high). That means you're likely looking at homes with dated finishes and deferred maintenance. Run the numbers on renovation costs before making offers on fixer-uppers-contractor and materials costs remain elevated in 2026.
Most buyers start online-which makes sense given the wealth of information available. Use major real estate sites to get familiar with neighborhoods, price ranges, and what's available in your target areas. Set up alerts for new listings matching your criteria. But don't stop there. Drive neighborhoods at different times of day, talk to residents, check local amenities, and look for signs of investment or decline.
When you go to see a house in person, don't just look at the staged furniture and fresh paint. Check the water pressure, flip every light switch, flush the toilets, open the windows, test the appliances, look for signs of water damage (stains on walls or ceilings, musty smells, soft spots in floors), check the roof and foundation from the outside, and write down the condition of the HVAC systems, water heaters, and electrical panels. Take pictures and notes because after seeing 5 to 10 houses, they all start to look the same.
Go to open houses even if you're not sure about the house. They're low-pressure ways to look at homes, narrow down your search criteria, and find out what different price points offer in the areas you're interested in. When you make your own offers, talk to listing agents about how long homes are sitting and if sellers are willing to negotiate.
You've found it-the home that checks enough boxes to make you excited. Now comes one of the most nerve-wracking parts of the process: writing and submitting an offer. Your offer needs to be competitive enough to get accepted while protecting your interests if problems emerge. Let me walk you through the key components and strategies for 2026's market conditions.
Your offer price should reflect three factors: comparable sales (what similar homes in the area have sold for recently), current market conditions (inventory levels, average days on market, how many offers typical homes receive), and the specific property's condition and unique features. Your agent will prepare a comparative market analysis (CMA) showing recent sales and active listings to guide your decision.
In October 2025, with 4.4 months of inventory and homes taking an average of 36 days from listing to contract, we're in a more balanced market than the frenzy of 2021-2022. You have negotiating leverage-but not unlimited. Lowball offers waste everyone's time and often backfire. Generally, if a home is priced fairly and hasn't been sitting long, offering within 3-5% below asking is reasonable. For overpriced homes that have been listed 30+ days, you might go 7-10% under asking.
Factor in what you'll need to spend post-purchase. If the roof is 20 years old and will need replacing within 2-3 years ($8,000-15,000), account for that. Same with outdated HVAC systems, old appliances, or cosmetic updates. Sometimes offering closer to asking price but negotiating for a seller credit toward repairs or closing costs gets you farther than a lower cash offer.
Contingencies are conditions that must be met for the sale to proceed-if they're not met, you can walk away without penalty and get your earnest money deposit back. The three standard contingencies in 2026 are financing, inspection, and appraisal.
The financing contingency protects you if your loan falls through. You'll specify a timeframe (typically 30-45 days) to secure final loan approval. If you're denied, the contract is voided and your deposit returned. Always include this unless you're paying cash-even with preapproval, final underwriting can uncover issues.
The inspection contingency (typically 10-14 days) allows you to hire a professional home inspector to examine the property's condition. If major problems emerge-foundation issues, roof damage, electrical problems, plumbing leaks-you can request repairs, negotiate a credit, or walk away. Professional home inspections cost $300-500 but are worth every penny. Even new-construction homes can have significant defects.
The appraisal contingency protects you if the home appraises for less than your offer price. This happens more often than buyers expect-about 8-12% of appraisals come in low. If you're buying at $450,000 and it appraises at $435,000, you're short $15,000. With an appraisal contingency, you can renegotiate the price, bring additional cash to make up the difference, or cancel the contract. Without it, you're stuck or you lose your deposit.
Some buyers include a home sale contingency if they need to sell their current home to fund the purchase. This protects you but makes your offer less attractive to sellers, who don't want to wait for your house to sell. If you must include this contingency, keep the timeframe tight (30-60 days) and consider making your house contingent offer stronger with a larger earnest money deposit.
Your earnest money deposit, which is usually 1–3% of the purchase price, shows the seller that you are serious. When the sale is over, this money goes into an escrow account and is used to pay for your down payment or closing costs. When you make an offer on a $400,000 home, you should expect to write a check for $4,000 to $12,000.
The more competitive the property, the larger the earnest money deposit you may want to offer. It signals financial strength and commitment. However, make sure you understand exactly under what circumstances you can and cannot get this money back. If you back out for reasons not covered by your contingencies, the seller typically keeps the earnest money as compensation.
Your agent will prepare a purchase and sale agreement incorporating your offer price, contingencies, earnest money amount, proposed closing date, and any personal property you want included (appliances, window treatments, etc.). Timing matters-if a property just hit the market, sellers often wait a few days to review all offers together. If it's been sitting for weeks, submit promptly.
Be prepared for three possible responses: acceptance (the seller signs your offer as written-celebrate!), rejection (the seller declines to counter-time to move on), or counteroffer (the seller proposes different terms). Counteroffers might adjust price, contingency timelines, closing date, or what's included. You can accept the counteroffer, reject it, or counter back with your own revised terms.
Most deals take 1 to 3 rounds of negotiation before they can be agreed upon. Be calm and think things through. Sometimes it's best to meet halfway on price but stick to your guns when it comes to contingencies. You might also agree to a later closing date (if the seller needs more time) in exchange for a lower price. Your agent should help you make decisions based on the state of the market and what they know about the seller's situation.
You are now under contract once both parties sign the purchase and sale agreement. You still have to do inspections, an appraisal, final underwriting, and other things before the sale is guaranteed. But it means you've taken the biggest step and the property is no longer for sale.
Now that you're under contract, it's time to officially apply for your mortgage. This is different from preapproval-you're now submitting a complete application for a specific property at a specific purchase price. The underwriting process will examine both your financial profile and the property itself to ensure both meet lending requirements.
Your lender will provide an application (either online, in person, or by mail) that collects detailed information about your employment, income, assets, debts, and the property you're purchasing. Even though you provided much of this during preapproval, be prepared to submit updated documentation: your two most recent pay stubs, 60 days of bank statements, most recent retirement account statements, a copy of the signed purchase agreement, and any documentation for gift funds or other sources of down payment.
Within 3 business days of receiving your complete application, federal law requires your lender to provide a Loan Estimate. This 3-page document breaks down your estimated interest rate, monthly payment, total closing costs, cash required at closing, and other key loan terms. Review it carefully-compare it to the Loan Estimates from other lenders if you're still shopping, and raise questions about anything that seems off or different from what you expected.
Underwriting is the process of carefully looking over and confirming your loan application. An underwriter will check your employment and income by calling your employer, look over your bank statements to make sure your down payment and reserves are in order, look over your credit report and payment history, calculate your DTI ratio, look over the property appraisal to make sure it meets value requirements, and look for any red flags or inconsistencies.
This process usually takes 30 to 45 days for conventional loans, but it may take a little longer for VA and FHA loans because they have more requirements. When you buy a new home, it can take 60 to 90 days for the builder to finish the work. While underwriting is going on, you might be asked for more documents. If this happens, respond quickly. Every day you wait could mean that your interest rate lock expires or your closing date moves.
Underwriters often ask for explanations for any unusual bank deposits (anything over $500–1,000 may need a paper trail), letters explaining credit problems, proof of gaps in employment, proof of any changes to your financial situation, updated pay stubs if underwriting takes too long, and divorce decrees or legal documents related to child support or alimony.
Your lender will order an appraisal (typically costing $400-600, paid by you) to determine the property's market value. The appraiser will inspect the home, photograph it, measure square footage, note condition and features, and compare it to recent sales of similar homes (comparables or 'comps') in the area. The appraised value protects the lender-they won't loan more than a property is worth because it serves as collateral.
What happens if the appraisal comes in low? Let's say you're buying at $425,000 but it appraises at $410,000. You have several options: renegotiate the purchase price down to $410,000, make up the $15,000 gap with additional cash (tough for many buyers), meet somewhere in the middle where you both compromise, or walk away using your appraisal contingency (if you included one). Sellers don't want deals to fall apart either, so many will negotiate when faced with a low appraisal.
Don't do these things from the time you apply for a loan until it closes: don't change jobs or become self-employed; don't take on new debt (no car loans, credit cards, or personal loans); don't make large purchases on credit; don't co-sign loans for anyone; don't make large cash deposits without proof; don't move money between accounts without proof; don't close credit accounts (this can hurt your credit score); and don't skip any bill payments.
Before closing, underwriters check your credit again. They may have to re-run your qualification if you get a small new debt or your credit score goes down. I've seen buyers lose their approval just days before closing because they took out a loan to buy furniture for their new home. Don't buy anything that isn't necessary until after closing.
At least 3 business days before closing, you'll receive your Closing Disclosure. This document finalizes all terms of your loan-interest rate, monthly payment, closing costs, and cash required at closing. Compare it line-by-line with your Loan Estimate. While some variance is normal (the appraisal cost might have been slightly different, or title fees varied from estimates), significant differences need explanation.
Key figures to verify: loan amount should match purchase price minus your down payment, interest rate should match what you locked (if you locked), monthly principal and interest payment calculation, property tax and insurance amounts (these affect your monthly payment), total closing costs in Section H, and cash to close in Section I. If anything looks wrong, contact your lender immediately. You have the right to question any fees or charges before signing.
Closing day-also called settlement-is when ownership officially transfers from the seller to you. You'll sign dozens of documents, hand over the remaining funds, and walk out with keys to your new home. While it's exciting, closing requires focus and attention. Budget 1-2 hours for the process, and don't show up unprepared.
You'll need a cashier's check or wire transfer confirmation for your down payment and closing costs (personal checks usually aren't accepted for amounts over $1,000), a government-issued photo ID (like a driver's license or passport), proof of homeowners insurance (the policy must be in effect on closing day), your Closing Disclosure for reference, and any other documents your lender or closing agent asked for. Check with the person who needs the money 2–3 days ahead of time to make sure you have the right amount and the right way to pay. These amounts usually can't be changed.
Be very careful if you are wiring money. Scammers are pretending to be title companies or real estate agents to steal hundreds of thousands of dollars from home buyers. Never send money based on wire instructions sent by email. Before sending anything, call your title company using a number you find on your own (not the one in the email) to confirm the wiring instructions.
The closing agent, who is usually from a title company or an attorney's office, will go over each document with you. The promissory note is your promise to pay back the loan on certain terms. The deed of trust or mortgage gives the lender a lien on the property as collateral. The closing disclosure is the final settlement statement that shows all the costs. The deed transfers ownership from the seller to you. There are also various affidavits and disclosures that your state or lender may require.
Take your time. Even if it takes longer, read what you're signing. If you don't understand something, ask questions. Some things that people often get confused about are the difference between your interest rate and APR (APR includes fees), the details of your escrow account (how much you'll pay each month for property taxes and insurance), prepayment penalties (most mortgages in 2026 don't have these, but check), and when your first mortgage payment is due and when you can make it late (usually 30-45 days after closing).
Before closing, typically 24 hours prior, conduct a final walk-through of the property. This isn't a second home inspection-it's a chance to verify that the seller has moved out, the property is in the same condition as when you made your offer (or repairs were completed as agreed), all included items are still there (appliances, fixtures), and there's no new damage. If you discover problems, address them before closing. Options include delaying closing until repairs are made, getting an escrow holdback (portion of seller's proceeds held until repairs complete), or negotiating a credit to handle repairs yourself.
You're officially a homeowner once you sign the papers and send the money. The agent for the seller will give you the keys, garage door openers, security codes, and other things. Your loan servicer (the company that collects your monthly payments and is often different from your original lender) will send you payment information within a few weeks. Set up automatic payments so you never miss a payment, which hurts your credit.
Most of the time, your first payment is due 30 to 45 days after closing, not on the day of closing. This gives you time to move and get used to your new home. Don't forget to change the locks (you don't know who has copies from previous owners), put utilities in your name, tell the post office your new address, file for homestead exemption if your state offers it (this can lower your property taxes), keep all closing documents safe, and carefully read your first mortgage statement to make sure the terms match what you closed on.
One of the most common questions I hear from borrowers is: how long does this actually take? The short answer: from application to closing typically requires 30-45 days for conventional loans, though this timeline varies based on loan type, property type, and your specific situation. Let me break down the typical timeline so you can plan accordingly.
Plan to spend 2 to 6 months getting ready before you even apply. This includes checking and raising your credit score (3–6 months if you need a lot of help), saving for the down payment and closing costs (ongoing), gathering financial documents (1–2 weeks), looking for lenders and getting preapproved (2–4 weeks), and looking into neighborhoods and home search criteria (ongoing). Rushing through this step often doesn't work. It could save you $30,000 to $50,000 over the life of your loan to take the time to raise your credit score by 40 points.
The median home search in 2025 took 10 weeks, though this varies wildly. In hot markets with limited inventory, you might submit offers on multiple homes before getting one accepted. In slower markets, you might find your home quickly. Factor in: weekly house tours (2-3 per week for serious buyers), time to review each property and make decisions, researching neighborhoods and comparable sales, making offers and potential counter-offer negotiations, and dealing with competing offers or falling out of contract (requires starting over).
Most deals will close in 30 to 60 days after your offer is accepted. Week 1: Turn in a full loan application with updated paperwork. Get a home inspection done (usually within 5 to 7 days). Get a loan estimate from the lender within three business days.
Week 2: Finish the home inspection and go over the report with the inspector and agent. Talk to the seller about any repair requests. Send in any other papers that the underwriter asks for. The lender asks for an appraisal, which takes 7 to 14 days to complete.
Weeks 3–4: Keep answering requests from the underwriter (this is an ongoing task). If you haven't already, lock in your interest rate. When you get an appraisal, look it over and address any concerns about the value. Get homeowners insurance and show it to the lender. Set up the last walk-through for 24 to 48 hours before the closing.
Week 4–5: The underwriter will send you a "clear to close" message, which means the loan is approved. Get the Closing Disclosure at least three business days before closing. Look over and compare to the Loan Estimate. Check the final closing costs and the amount of cash needed. Set up a wire transfer or cashier's check.
Closing Day: A final walk-through in the morning. Appointment to close (1–2 hours). Put your name on the papers. Send money. Get the keys. Have a party!
Some situations allow faster closings: all-cash purchases can close in 7-14 days (no loan approval needed), FHA and VA loans may extend to 45-60 days due to additional inspections and documentation, new construction typically requires 60-90+ days (waiting for builder completion), and condo purchases sometimes need extra time for HOA document review. Always build in buffer time-unexpected issues (title problems, missing documents, appraisal delays) are common.
In my years of working with borrowers across 37 states, I've seen certain mistakes come up repeatedly. These errors can cost you thousands of dollars, delay your closing, or even blow up your deal entirely. Let me walk you through the most critical pitfalls and how to avoid them.
This is the single biggest money mistake home buyers make. Research shows that comparing just three lenders can save you up to $44,000 over a 30-year loan. Yet many borrowers accept the first offer they receive-often from their primary bank, a referral from their real estate agent, or whoever approved their preapproval. Lenders can vary by 0.5-1% on interest rates and thousands of dollars in fees. A seemingly small 0.5% rate difference on a $400,000 loan costs you $54,000 over 30 years. Take two weeks to get Loan Estimates from at least three different lenders and compare the APRs.
Just because you're approved for $500,000 doesn't mean you should spend $500,000. Lenders qualify you based on DTI ratios up to 50%, but that doesn't account for other financial goals, unexpected expenses, potential income changes, or your comfort level with a larger payment. A good rule: keep your housing costs (principal, interest, taxes, insurance, HOA) below 28% of gross income, and total debt payments below 36%. This leaves breathing room for retirement savings, emergency funds, home maintenance, and quality of life. Remember, median buyers in 2025 spent 23.5% of income on housing-you can always buy more house later.
In competitive markets, buyers sometimes waive the inspection contingency to make their offers more attractive. This is almost always a mistake. A $400-500 inspection can uncover $15,000-50,000 in needed repairs-foundation issues, roof damage, electrical problems, plumbing leaks, mold, or failing HVAC systems. Even if you don't want to risk losing the deal by asking for repairs, at minimum get an inspection for informational purposes so you know what you're buying. You can't un-know major problems, and sellers must disclose them to future buyers if you walk away.
Underwriters verify your employment and run your credit again right before closing. Buyers lose their approval days before closing because they: financed a car, opened new credit cards, changed jobs, co-signed a loan for a family member, moved money between accounts without documentation, or made large purchases on credit for their new home. Every one of these actions can trigger a re-review of your file and potentially kill your loan. Wait until after you close to make any financial changes-even seemingly harmless ones.
Many people who are buying their first home forget about closing costs, which usually add 2–5% to the purchase price. They only think about saving for the down payment. That's $8,000 to $20,000 more than your down payment on a $400,000 home. You will need to pay this money up front with a cashier's check or a wire transfer. Some of the most common closing costs are loan origination fees, appraisal fees, credit report fees, title insurance fees, title search fees, attorney fees (in some states), recording fees, transfer taxes, the first year's homeowners insurance premium, and property tax prorations. Look over your Loan Estimate carefully and make a plan for how to spend your money.
Even after covering down payment and closing costs, you need reserves. Lenders often require 2-6 months of housing payments in savings for approval. But beyond lender requirements, life happens-HVAC units fail, roofs leak, appliances break, people lose jobs, medical emergencies occur. Home ownership is expensive. Budget 1-2% of your home's value annually for maintenance and repairs. On a $400,000 home, that's $4,000-8,000 per year or $333-667 monthly. Start building an emergency fund immediately after closing if you've depleted savings.
ARMs can be valuable tools, but too many borrowers don't understand what they're signing up for. A 5/1 ARM means your rate stays fixed for 5 years then adjusts annually based on an index plus a margin. If you get a 5/1 ARM at 5.5% with a 2.5% margin over SOFR (Secured Overnight Financing Rate), and SOFR is at 4% when your adjustment hits, your new rate becomes 6.5% (4% + 2.5%). Most ARMs have annual caps (maximum rate increase per adjustment, typically 2%) and lifetime caps (maximum rate over the loan's life, typically 5% above start rate). Know these numbers and run worst-case scenarios. Can you afford a 7-8% rate in 5-7 years? If not, stick with fixed.
Common mortgage rate myths that cost people money: Myth: I need to wait for rates to drop. Reality: Trying to time the market often backfires. You can always refinance if rates drop significantly. Myth: I can't get approved without perfect credit. Reality: FHA loans accept scores as low as 580, and many lenders work with borrowers who have past credit issues. Myth: 20% down payment is required. Reality: Many loan programs offer 3-5% down (conventional), 3.5% down (FHA), or 0% down (VA, USDA). Myth: My bank will give me the best rate. Reality: Your existing bank relationship doesn't guarantee competitive rates. Shop around.
Getting a mortgage in 2026 requires more financial preparation, patience, and strategic thinking than in previous years. With rates averaging 6.22%, home prices at $415,200, and first-time buyers representing just 21% of transactions, the barriers to entry are real. But they're not insurmountable-and current conditions actually offer advantages for prepared buyers.
The market has shifted from the pandemic-era frenzy to something more balanced. Inventory is up 10.9% year-over-year, homes are sitting on market for 36 days instead of under a week, and sellers are negotiating again. The Federal Reserve has made three rate cuts in 2025, and while mortgage rates haven't dropped dramatically (they track Treasury yields more than Fed rates), the trend is gradually downward. Forecasters predict rates could drift into the mid-6% range through 2026.
The key to success: take time to prepare properly. Improve your credit score before applying-even 20-40 points can save you tens of thousands. Save aggressively for both down payment and closing costs plus reserves. Shop multiple lenders to find the best rates and terms. Work with experienced professionals-real estate agents, loan officers, home inspectors-who understand today's market. And most importantly, understand that buying a home is a long-term investment. Focus on what you can afford comfortably, not what you can barely qualify for.
This guide has walked you through all seven steps, from initial affordability assessment through closing day. You know what documentation you'll need, what timelines to expect, what mistakes to avoid, and what questions to ask at each stage. Whether you're a first-time home buyer breaking into the market or a repeat buyer leveraging equity from a previous home, the process is the same-just your circumstances and opportunities differ.
One last thing: there is almost never a "perfect" time to buy. Don't wait for the market to be perfect if you're ready to buy a house, have found one you love in a good location, and can make the payments while still reaching your other financial goals. When you're ready, that's the best time to buy. There will always be uncertainty in the housing market. Rates could go up or down, prices could go up or down, and inventory could get tighter or looser. You can control how well you prepare, how much money you have, and how you make decisions. If you keep your mind on those things, you'll be able to do this well.
The minimum credit score needed for a loan depends on the type of loan. As of November 16, 2025, Fannie Mae and Freddie Mac no longer required a minimum credit score for their conventional loans. Most lenders still use 620 as their internal minimum for conventional loans, though, because prices go up a lot and getting approved is hard below this level. If you can put down 3.5% of the loan amount, FHA loans will accept credit scores as low as 580. If you can put down 10%, they will accept scores between 500 and 579. The government doesn't set a minimum credit score for VA and USDA loans, but most lenders want to see at least 620 to qualify. Your credit score doesn't just decide whether or not you're approved; it also has a big effect on your interest rate. Someone with a 640 score might get 6.75% on the same loan, while someone with a 760 score might get 6.0%. On a $400,000 loan, that 0.75% difference costs about $180 a month, or $64,800 over 30 years. If you need to improve your score, work on paying off your credit card debt, fixing mistakes on your credit report, and keeping a perfect payment history for at least 12 months before applying.
The amount of your down payment will depend on the loan program you choose. You can put down as little as 3% on a conventional loan, but 5% to 20% is more common and gets you better rates. If you have a credit score of 580 or higher, you need to put down 3.5% for an FHA loan. If your score is between 500 and 579, you need to put down 10%. VA loans (for military members, veterans, and their spouses) and USDA loans (for rural properties) let qualified borrowers put down 0%. In 2025, the median down payment for first-time buyers was 10%, the highest since 1989. For repeat buyers, the median down payment was 23%. A 10% down payment on the current median home price of $415,200 is $41,520. If you put down 3%, you would pay $12,456. If you put down 20%, you would pay $83,040. If you put down 20% or more, you won't have to pay private mortgage insurance (PMI), which costs 0.5% to 1.5% of your loan amount each year. But if you wait to save 20%, you might miss out on years of home value growth and have to pay more rent. Do the math: sometimes it's better to put down 5% to 10% and pay PMI for a few years than to wait years to reach 20%. You can always refinance to get rid of PMI once you have 20% equity from paying down the principal and the value of your home going up.
When deciding between a 15-year and a 30-year mortgage, you need to think about how much money you can afford to pay each month and how much interest you will pay over the life of the loan. A 15-year mortgage saves you a lot of money on interest and builds equity much faster, but the monthly payments are about 50% higher than those of a 30-year mortgage. The average interest rate for a 15-year loan is 5.54% as of December 2025. For a 30-year loan, it is 6.22%. The 15-year loan costs about $2,850 a month, while the 30-year loan costs about $2,150 a month. That's a $700 difference. The 15-year mortgage costs $513,000 in total ($350,000 principal plus $163,000 interest), while the 30-year mortgage costs $774,000 in total ($350,000 principal plus $424,000 interest). The 15-year plan saves you $261,000 in interest, but you have to keep making the higher monthly payment. Most people who take out loans choose 30-year mortgages (83% of all loans) because the lower payment gives them more options. You can always make extra payments to pay it off early, but you can't lower a mandatory 15-year payment if you need money for other things. If you're in your peak earning years, don't have any other high-interest debt, have a lot of money saved up for emergencies, and want to be mortgage-free before you retire, think about the 15-year. If you're having trouble paying for the house, want to invest extra money elsewhere, value payment flexibility, or have other financial priorities that are competing for your income, choose the 30-year.
People often mix up prequalification and preapproval, but they are very different in terms of value and trustworthiness. Prequalification is a quick, informal estimate based on information you give to a lender that hasn't been checked out yet, like your income, debts, assets, and credit score. The lender doesn't check any of this information, doesn't check your credit, and doesn't promise to give you money. It takes 15 to 30 minutes and gives you a rough idea of what you can afford. Sellers don't care much about prequalification letters because they know nothing has been checked out. On the other hand, preapproval is a full preliminary underwriting review. You give them real documents like W-2s, pay stubs, tax returns, and bank statements and give them permission to look at your credit. The lender checks your income and assets, looks at your credit report, figures out your DTI ratio, and sends you a letter promising to lend you a certain amount of money (as long as you find a property that meets their standards and the loan is approved). This process takes 3 to 10 days and shows sellers that you have the money and are serious about buying. In 2026, when 26% of buyers are paying cash, preapproval is important because sellers won't take your offer seriously without it. Before you start looking for a house, get preapproved, not prequalified. When you're up against other buyers, the work pays off.
For regular loans, the average time from applying for a mortgage to getting the keys is 30 to 45 days. However, some things can make this time longer. FHA and VA loans usually take 45 to 60 days because they have extra steps, like VA appraisals that check for safety issues as well as value, and FHA's stricter property standards. When you buy a new home, it usually takes 60 to 90 days or more because you have to wait for the builder to finish the work, not just the loan processing. Sometimes it takes the lender longer to look over the HOA's financial documents and make sure the condo project meets lending standards. The timeline is as follows: Week 1: Submit a complete application and order a home inspection. Week 2: Complete the inspection, negotiate repairs, and have the lender order an appraisal. Weeks 3-4: Underwriting reviews your file and orders more documents. The appraisal is finished and reviewed. Week 4-5: Final underwriting approval (clear to close), receive the Closing Disclosure three or more days before closing, and schedule the closing appointment. Delays often happen because borrowers take too long to submit documents, appraisers are in short supply in many markets, title issues come up during the title search, information is missing or inconsistent and needs to be explained, the seller takes too long to finish repairs that were agreed upon, or holidays or weekends extend the 3-day Closing Disclosure review period. You can speed things up by responding to document requests on the same day, having all your paperwork in order before you apply, and getting in touch with your lender, agent, and closing attorney right away.
Self-employed borrowers have to provide more paperwork and prove their income, but you can still get a mortgage. Lenders usually want to see two years' worth of tax returns (both personal and business) and will average your income over those two years to figure out if you qualify. They add back some non-cash deductions, like depreciation, but a lot of tax write-offs that lowered your taxable income will also lower your qualifying income. This is where self-employed people get stuck: the business deductions that helped them save money on taxes now make it harder for them to borrow money. For instance, if your business made $150,000 but you had to write off things like your car, home office, meals, travel, and depreciation, your taxable income would be $65,000. Lenders will qualify you closer to the $65,000 even though you know your true earning power is higher. To increase your chances, don't take aggressive deductions in the year or two before you apply for a mortgage. Keep your personal and business accounts separate, keep detailed records, be ready to show a year-to-date profit and loss statement, and show that your income is stable or rising (lenders get nervous when income goes down). If you're an S-corp or LLC, you might want to pay yourself a higher salary instead of taking distributions. Some lenders also have bank statement programs that look at 12 to 24 months of business bank deposits to figure out income instead of just tax returns. These programs usually have higher interest rates, but they can help self-employed people whose tax returns don't show how much money they really make. The most important thing is to plan ahead. Talk to a mortgage lender 12 to 18 months before you want to buy so you can set up your income in the right way.
You can definitely buy a home even if you have student loan debt. Millions of people do. The problem isn't having student loans; it's how they change your debt-to-income ratio and the amount of money you have for a down payment. Even if your student loans are in deferment or forbearance, lenders will still include your payment in your DTI calculation. For regular loans, they'll use the higher of your actual payment amount, 1% of the balance that is still owed, or the fully amortizing payment. This means that even if you have $40,000 in student loans that are currently in deferment, lenders will still count $400 per month ($40,000 × 1%) toward your DTI. If you have an income-driven repayment plan that shows $0 or very low payments, lenders may use the actual payment if you can prove that it will stay that low. Student loans affect you in two ways: they make it harder to get a loan (higher DTI means lower loan approval), and the monthly payments make it harder to save for a down payment. The 2025 NAR survey found that student debt was one of the main reasons first-time home buyers said they couldn't save. To improve your situation, you could make extra payments on your principal to lower your balance before applying, refinance to a lower rate if you can (but be careful-you might lose federal protections), raise your income to make up for the higher DTI, look into down payment assistance programs for first-time buyers, and pay off high-interest debt first (credit cards with rates of 20% or more hurt you more than student loans with rates of 4-5%). Don't let student loans stop you from buying a home. With rates at 6–7%, waiting years to pay off loans at 4–5% might not be worth it.
The interest rate and the APR (Annual Percentage Rate) both show how much your mortgage will cost, but they measure different things. Knowing the difference will help you compare lenders more accurately. The interest rate is just the percentage that is added to your principal balance. You pay $25,000 in interest the first year on a $400,000 loan with a 6.25% interest rate. This amount goes down as you pay off the principal. You pay $2,462 each month in principal and interest. That's easy to understand. APR includes the interest rate and some fees that come with getting the loan, such as origination fees, discount points, broker fees, some closing costs, and mortgage insurance (in some cases). APR is a percentage that shows the real yearly cost of borrowing when you add in these upfront costs. For instance, you could get two loan offers: Lender A has a 6.25% interest rate, $3,000 in fees, and a 6.35% APR; Lender B has a 6.125% interest rate, $8,000 in fees, and a 6.37% APR. Lender B has a lower interest rate, but Lender A has a lower APR and would cost less overall because the fees are much lower. When you shop for lenders, use APR to make sure you're comparing the same things. Two important things to keep in mind: APR assumes you keep the loan for the full term (30 years), but most people don't; the average mortgage is paid off or refinanced in 7 to 10 years. High-fee loans are worse than APR says if you pay them off early. Also, APR doesn't include all of your closing costs, like title insurance, attorney fees, or property taxes that you pay ahead of time. Even so, APR is the best way to compare loan offers.
You can "buy down" your interest rate by paying an upfront fee at closing with discount points. One point is 1% of your loan amount and usually lowers your rate by 0.25%. One point costs $4,000 on a $400,000 loan and could lower your rate from 6.50% to 6.25%. This cuts your monthly payment from $2,528 to $2,466, which is about $62 less. To figure out the break-even point, simply divide the cost of points by the monthly savings. In this case, $4,000 ÷ $62 = 64.5 months, which is 5.4 years. Buying points is a good way to save money over time if you plan to live in the house for more than 5.4 years. You will lose money if you sell or refinance before that. If you plan to stay in the home for a long time (7 years or more), you have extra money after paying the down payment and reserves, interest rates are high and you plan to keep the loan until the end, you want the lowest monthly payment possible, and you're close to qualifying (lower payment improves DTI), then buying points makes sense. If you might move or refinance in the next three to five years, you're saving every dollar for the down payment and closing costs, you're in a high tax bracket and would rather invest the money somewhere else, or rates are already pretty low (less benefit to buying down further), then skip points. Points are worth more now that rates are between 6% and 7% than they were when rates were between 3% and 4%. A 0.25% cut at today's higher rates saves more money in real terms than the same cut at lower rates. Do the break-even calculation for your situation and be honest about how long you plan to live in the house. A lot of borrowers think they will stay longer than they actually will.
This is when rate locks are very important. You can lock in your interest rate for a certain amount of time when you apply for a mortgage. This is usually 30, 45, or 60 days. Once you lock in your rate, it will stay the same for that time period, no matter what happens in the market. This is true as long as you close within the lock period and nothing about your application changes (like your income, credit score, loan amount, etc.). Most people lock in their rate when their offer is accepted or soon after, since closing usually takes 30 to 45 days. If you don't lock in your rate, you're "floating," which means your rate can change every day based on how the market is doing. Floating is dangerous when rates are going up. If rates go up from 6.25% to 6.75% while you're underwriting, your monthly payment on a $400,000 loan goes up by $120. Worse, the higher payment could raise your DTI ratio above the limits for qualification, which could ruin your deal. Longer locks (60, 90, or 120 days) cost more, usually between 0.125 and 0.50 percent of the loan amount, depending on how long they are. If you're building a new house and don't know when it will be finished, you might need a 90- to 120-day lock at a high cost. Some lenders offer float-down provisions, which let you lock in a rate but still get a lower rate if rates drop before closing. This usually only works if rates drop by at least 0.25% to 0.50%. You usually have to extend your lock (which costs 0.125–0.375% for every 15-day extension) or take the current market rate if it runs out before closing. This can be costly and cause a lot of stress. To keep yourself safe, lock in your rate as soon as you get an accepted offer and a realistic closing date. If closing is expected to happen in 35 days, get a 45-60 day lock. Also, respond quickly to all lender requests to avoid delays that could cause your lock to expire, and if rates are changing, ask your lender about float-down options. In 2026's economy, where rates may go down but stay high, locking in sooner rather than later gives you peace of mind and budget certainty.
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