How to Buy a House in 2025: A 10-Step Guide

Buying a home can be daunting. In our recent survey of 1,000 homeowners, we found that 48% reported that purchasing a home was more expensive than expected, and 72% said they had regrets about their home-buying experience. 

To help you prepare and save money, we’ve put together this 10-step guide to buying a house. These steps, along with the help of an expert realtor, can give you the confidence you need to secure a good deal — even if you're buying a home for the first time.

🔎 Start the search: Get matched with top buyer’s agents near you and get cash back on your purchase.

Step 1: Save for a down payment

Traditionally, experts recommend saving at least 20% of a home’s total cost to use as a down payment. This lets you avoid paying private mortgage insurance (PMI), which is usually required for conventional loans until you reach 20% home equity. In the United States, a 20% down payment on the median value home would be around $88,000.

You can still get a conventional loan and pay less than a 20% down payment. According to a recent homeownership study, we found that the average home buyer pays a 15% down payment, the average first-time home buyer pays a 8% down payment, and the average repeat buyer pays a 19% down payment. If you pay less than 20%, you’ll likely have to pay PMI.

Loans by Veterans Affairs (VA) and the Federal Housing Administration (FHA) allow even lower down payment amounts.

• Federal Housing Administration (FHA) loan: Offers 3.5% and 10% down payment options, depending if you meet the FHA mortgage loan requirements. 
• VA loan: Offers 0% down payment options with no private mortgage insurance required — only available to certified U.S. veterans and active-duty military service members.

The catch is that FHA loans require borrowers to pay mortgage insurance for the life of the loan, and VA loans include a one-time funding fee. These loans also have stricter requirements for qualifying for a loan than a conventional mortgage.

If you’re eligible, take advantage of first-time home buyer programs to save money. Most states offer special programs for first-time buyers, which you can find through the Department of Housing and Urban Development HUD.

Compare down payment assistance programs

If you're having trouble affording a home, there are several down payment assistance (DPA) programs available to first-time and low-income buyers throughout the United States. These programs provide eligible homebuyers with a grant or second mortgage to help cover closing costs or a down payment.

Every DPA program has its own unique requirements for eligible buyers. Participants are often required to pay a certain percentage of the down payment or take a homeowner education course.

Some DPA programs provide loans that will need to be repaid, whereas others provide grants to buyers. Make sure you understand the program's conditions before applying so you won't face any surprise fees later.

Here are a couple of nationwide DPA programs that you might be eligible for:

Step 2: Find a local real estate agent

Once you have a budget and a general area in mind, you can find a great realtor to help you make the most of your house-hunting goals. An experienced agent can help you navigate a tricky local market, explore your financial options, and negotiate the best deal when buying a house.

In addition to finding and showing you properties, your real estate agent will help you make offers, negotiate contracts, and navigate the closing process. Plus, they can recommend other service providers (like title companies and inspectors) to help you buy your house.

To make sure a realtor is the right fit for you, it's always a good idea to ask your agent questions before signing an agreement with them. You can also narrow down your options by:

• Checking online reviews
• Asking friends for recommendations
• Using an agent-finding tool to find vetted agents

Clever Real Estate’s free agent matching tool connects you with the best realtors in your area. To join our network, agents must meet competitive standards for customer service and past sales — making it simpler for you to interview and compare top agents. Match with top agents in your area today and receive a discounted 1.5% listing fee! 

3. Get pre-approved for a mortgage

Mortgage pre-approval is a lender's conditional offer to lend you a maximum amount of money to buy a home. Getting a pre-approval letter for a mortgage is important for three reasons:

• You have an exact budget to keep your home search realistic.
• You can make an offer right away when you find a home you love, which can be a game-changer in a fast-paced market.
• A pre-approval letter shows the seller you're serious about buying since there's less chance your financing will fall through.

When you go to a lender to apply for a mortgage, you need to have your ID, employment information, proof of income, and a list of your current debts. Lenders consider you less of a risk if you have a reliable source of income and a history of on-time payments for other debts.

How long it takes to get pre-approved for a mortgage can vary. However, lenders look at the following information to determine your mortgage pre-approval amount:

Total income

Lenders need to know that you earn enough to make your mortgage payments each month. Most lenders want your monthly housing costs to be less than 28% of your monthly income.

Personal debt

Lenders also consider your other debts, including credit cards, student loans, auto loans, and personal loans. Paying off some of your debts before applying for a mortgage may help you get pre-approved.

Lenders use this information to calculate your debt-to-income ratio (DTI) — or your total monthly debt (including future mortgage) divided by your total monthly income.

While some lenders will approve mortgages for buyers with a high DTI ratio, as high as 43%, it's best to keep your DTI under 36%.

Cash reserves

Mortgage lenders want to see that you have enough cash in the bank to cover your down payment and closing costs without completely draining your cash reserves.

While this requirement varies by lender, most want you to keep at least enough to cover two mortgage payments, including insurance and taxes.

Credit score

Lenders typically rate credit scores on this scale:

• ✅ Excellent: 800–850
• ✅ Very good: 740–799
• ✅ Good: 670–739
• 🟡 Fair: 580–669
• ⛔ Poor: 579 or below

It’s possible to get a mortgage with poor credit, but be prepared for higher interest rates that will make your monthly mortgage payment more expensive. Both FHA and VA loans allow for lower credit scores, but they may require a higher down payment than their standard requirements.

4. Find the right location

Before looking at houses, decide on a few potential locations first. Start zooming in on the best neighborhoods where home prices fall within your budget, and consider what you want out of your home.

Housing affordability in the United States

Housing affordability varies greatly by state and city in the United States. According to our recent home affordability study, here are some of the most affordable states to live in.

State	Median sale price	Median household income	Income needed to afford median home
🥇 West Virginia	$175,432	$54,329	$47,405
🥈 Ohio	$200,959	$65,720	$62,029
🥉 Iowa	$217,833	$69,588	$67,875
4️⃣ Indiana	$229,424	$66,785	$65,374
5️⃣ Maryland	$328,639	$94,991	$95,415

Best places to live in the United States

When you’re looking at different home prices, don’t forget to look at how the location will affect your quality of life. Here are some of the best states to live in the US, according to our recent study. 

• 🥇 Florida
• 🥈 California
• 🥉 Texas
• 4️⃣ Hawaii
• 5️⃣ New York

In that same study, we surveyed 1,000 Americans about the most important factors to consider when choosing a location. Here’s what we found:

• 🥇 Low crime rates: 68% of surveyed Americans
• 🥈 Low living and housing costs: 66%
• 🥉 Good weather: 62%
• 4️⃣ Low taxes: 52%
• 5️⃣ Lots of things to do: 50%

Other considerations may include school quality, access to healthcare, home appreciation rates, natural disaster risk, and commute times.

5. Start your home search

You might not find a house that checks all your boxes, so keep your options open by making a list of your must-haves and nice-to-haves. Once you have a good idea of what you’re looking for, your agent will search for homes on your local Multiple Listing Service (MLS), bring you top picks, and schedule viewings and tours.

You can also search for houses by:

• Checking home-buying sites like Zillow, Realtor.com, and Trulia
• Finding "for sale" signs in your desired neighborhoods
• Asking your agent to look for off-market properties that match your criteria
• Attending open houses
• Scheduling private tours of homes

While you might find the perfect home within just a week of searching, it’s likely that you’ll search for at least 1-3 months to find the right property for you. In our recent home buyer study, 61% of home buyers said it took longer than expected to find the right home. 76% of these buyers said they searched for at least one month, while 47% said it took at least three months. 

As you’re house hunting, consider the full costs of owning a home, not just the monthly mortgage payments. Other potential costs of owning the home include maintenance and repairs, property taxes, homeowner's insurance, and HOA fees.

6. Draft and submit an offer

Once you find a house you love, you'll have to draft an offer. Your real estate agent will help you write a compelling offer that will give you the best shot at convincing the homeowner to sell. Your offer should include the following items:

• Offer amount: In a competitive market, you might need to go above the actual listing price, regardless of the house's condition. If the market is slower, you could try offering below the asking price and see if the seller accepts.
• Earnest money deposit: Part of your offer could include an earnest money deposit, which may be 1–2% of the purchase price. If the sale goes through, the earnest money goes toward your down payment, so you won't be anything additional out of pocket.
• Seller concessions: If you might have trouble covering your closing costs, you can ask the seller to pay for some of these expenses. This is called a concession. A seller concession could include paying attorney fees, title search fees, buyer’s agent commission, or appraisal fees.
• Letter to the seller: Including a letter to the seller is a bit of a gray area in the home-buying process. Some brokerages claim that a letter could potentially violate Fair Housing Laws. If you’re not sure if you should include a personal letter with your offer, ask your agent for advice.
• Contingencies: A contingency states that you'll only move forward with the sale if specific requirements are met. The most common types include inspection, financing, and appraisal contingencies.
• Repair credits: If a seller doesn't want to repair an issue with the home, they can offer a repair credit instead. This will cover the cost of getting a problem fixed after you move in.

According to our recent home buyer study, 95% of home buyers made more than one offer, so be prepared to negotiate and move onto other properties as needed.

How fast do I need to make an offer on a house? 

The speed of your offer often depends on how fast your local housing market is moving and how many houses are currently on the market. 

When houses are on the market for a short amount of time, it typically indicates that demand is high and houses are selling fast. Last year in , US houses stayed on the market for an average of days — the least amount of days.

When houses sit on the market for a while, demand may be lower, and you could have more time to make an offer. Last year in , US houses stayed on the market for an average of days.

7. Negotiate with the seller

After you submit your offer, the seller can decide to accept, reject, or counteroffer.

In most locations, sellers generally respond within 72 hours of receiving an offer. However, if you’re looking to buy a foreclosed home, it can take several days to a month before you hear a response (especially if it’s a bank-owned foreclosure).

If a seller responds to your offer with a counteroffer or requests all prospective buyers for their "highest and best offers," you have a few options.

• Increase offer price: Raising your offer price is the most straightforward way to strengthen your counteroffer. Even a modest increase of 1-2% can show sellers you're serious while staying within your budget. This approach works particularly well in competitive markets or when dealing with multiple offers, as it directly addresses the seller's primary concern of maximizing their return.
• Increase earnest money deposit: A larger earnest money deposit demonstrates financial strength and commitment to the purchase. By offering to increase this good-faith deposit from the typical 1-2% to 3-5% of the purchase price, you signal to sellers that you're unlikely to back out of the deal. Since this money ultimately goes toward your down payment, it's not an additional cost.
• Offer flexibility on closing timeline: Accommodating the seller's preferred closing schedule can make your offer more attractive. Whether they need a quick closing to move for a job or a longer escrow period to find their next home, aligning with their timeline removes a potential obstacle.
• Remove contingencies: Waiving certain contingencies reduces the seller's risk and streamlines the transaction. Common options include removing inspection contingencies (while still performing inspections) and the appraisal contingency. However, exercise caution, as removing these safeguards increases your risk as a buyer.

If your offer is accepted, you’ll need to:

• Pay the earnest money deposit.
• Sign several legal documents, such as the agreement of sale and estimated closing cost sheet.
• Get in touch with your mortgage or loan officer so they can start the underwriting process.

8. Get an appraisal, inspection, and title search

Before you can close on your home, your lender will require you to get an appraisal and title check. You'll also want to get an inspection for peace of mind.

Home appraisal

Appraisals are conducted by state-licensed appraisers who estimate a home's value based on comparable houses in the area, local market trends, and a visual inspection of the home. Your lender will select an appraiser.

The appraiser’s report will determine how much you’ll actually receive for your loan. If the appraisal comes back low, you'll either have to pay the difference out of pocket, renegotiate with the seller, challenge the appraisal, or walk away from the sale (if you have an appraisal contingency).

The buyer typically pays the appraisal fee, which is between $233 and $361 in the United States.[5]

Home inspection

A home inspection is supposed to uncover any defects that the seller didn't catch or disclose. An inspector will check out key areas, such as the:

• 🔌 Electrical system
• 🏗 Foundation
• 🔥 HVAC system
• 🚽 Plumbing system
• 🏚️ Roof condition

If the inspector finds serious issues, you can ask the seller to make repairs before you move in or to offer you repair credits. 

As the home buyer, it's up to you to hire a home inspector. If you’re not sure who you can trust, your agent will likely have recommendations for local pros. A home inspection costs between $249 and $347 in the United States, depending on factors like the home's location, condition, and age.[6]

Title search

A property title search is usually conducted by a title company or an attorney. It involves reviewing property records to make sure that the seller is the rightful owner of the home.

A title search also reveals if there are any liens on the home. A lien is a legal claim against a property that can be used as collateral to repay a debt.

Since liens are attached to the property itself (not the property owner), you may face the consequences if a previous owner had any debt. For instance, things like unpaid property taxes, HOA fees, or other bills might become your responsibility without a title search.

9. Do a final walk-through

Final walk-throughs usually happen a day or two before closing. This is your opportunity to make sure that everything the seller agreed to take care of has been repaired or replaced.

Bring your realtor with you, and thoroughly check each room of the home. It helps to bring a copy of your home inspection or contract for reference.

If you find a minor problem, you can ask the seller to fix it before closing. For a more serious issue, you may need to move back the closing date to give the seller enough time to repair it. You could also ask for repair credits to cover the cost of repairs after closing.

10. Close on your home

A few days before your closing date, you should send your down payment and the money you need for closing costs to your escrow agent through a wire transfer. Your lender should tell you when and where to send these funds, but it never hurts to ask if you're unsure.

On the actual closing day, you'll usually meet at a title company to sign documents and finalize the property transfer. You'll review and sign the closing disclosure, promissory note, deed of trust, and certificate of occupancy.

For buyers, it takes about 1.5–2 hours to review and sign all necessary documents.

Pay buyer closing costs

Average closing costs for buyers make up 3%-5% of the loan amount. For a $440,126 home — the median sale price in the United States — that's between $13,204 and $22,006. Note that closing costs don't include your down payment — that’s another fee altogether.

Closing costs for buyers can include:

• Buyer agent fees: According to the NAR lawsuit settlement of August 2024, buyers are now responsible for negotiating buyer's agent commission rates with their agent. If the seller hasn't agreed to pay the buyer's agent fee as a concession, you'll likely be on the hook for covering the fee. In the United States, the average buyer’s agent commission fee is 2.58%.
• Prepaid costs: Ongoing costs of homeownership, such as property taxes and homeowners insurance. Mortgage lenders often require buyers to pay these monthly fees upfront.
• Title and escrow charges: Charges for the title company's services, such as title searches and title insurance.
• Lender fees: Fees for the mortgage company to originate and underwrite your loan. Lender fees might include other expenses associated with your loan, such as appraisal fees or mortgage points.
• Other closing costs: Miscellaneous costs unique to each buyer. Other closing costs can include pest inspection fees, natural disaster certification fees, and other variable expenses.

After signing all of the paperwork, you'll get the keys and can move into your new house in United States. Congrats! 

If you took out a mortgage to purchase the home, your first monthly payment is likely due within a month after closing. Ask your lender for more specific details about the monthly payment schedule, how to make the first payment, and how to set up automatic payments (if desired).

Frequently asked questions about buying a house

Why trust us?

Data sources

To create this home-buying guide, our team gathered historical housing data from Realtor.com, Redfin, and Zillow, mortgage rate data from Freddie Mac, and home loan information from multiple government websites. As our primary sources update, we refresh the data in our series accordingly. As always, we recommend consulting with a real estate agent to learn more about local housing data and developments within your market. 

About Clever Real Estate

Clever strives to provide our readers with the most up-to-date, accurate, and useful information. We’ve earned buyers’ trust with a 5-out-of-5-star rating on Trustpilot and over 3,300 customer reviews.

Our team of industry-leading researchers is committed to making homeownership more accessible by educating buyers through guides like this one. We've spent thousands of hours analyzing publicly available data, surveying consumers, and interviewing industry experts. Our research has been featured in The New York Times, Business Insider, Inman, HousingWire, and many more.

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