Before touring a single home, your financial foundation needs to be solid. Lenders look at four core factors: credit score, debt-to-income ratio (DTI), employment history, and available assets. A FICO score of 620 is a common minimum for conventional loans, though borrowers with scores above 740 typically access the most favorable terms. FHA loans allow lower scores but require mortgage insurance premiums.

Getting pre-approved — not merely pre-qualified — is the essential first move. Pre-qualification is a rough estimate based on self-reported information; pre-approval involves a hard credit pull and verified documentation, making it meaningful to sellers. Use this financial readiness checklist to audit your savings, credit, and debt load before approaching any lender.

Also review local market conditions early. This market-readiness checklist helps you set realistic expectations about inventory, price ranges, and competition before your search begins.

2–5%

Typical closing costs as share of loan amount

According to the Consumer Financial Protection Bureau, closing costs commonly fall within this range and must be budgeted in addition to the down payment.

43%

Maximum DTI allowed for most conventional loans

Fannie Mae guidelines generally cap the debt-to-income ratio at 43–45%, though individual lender overlays may set stricter limits.

30–60 days

Average time from accepted offer to closing

Industry data indicates most purchase transactions close within 30 to 60 days, though cash purchases and complex files can shorten or extend this window.

Making an Offer That Stands Out

When you find the right home, your agent will help you draft a purchase agreement — a legally binding document that goes well beyond listing a price. Key components include the offered purchase price, earnest money deposit (typically 1–3% of the purchase price, held in escrow), proposed closing date, and contingencies.

Contingencies are protective clauses that allow you to exit the contract without losing your deposit under defined circumstances. The most common are the financing contingency (protects you if your loan falls through), inspection contingency (lets you negotiate repairs or walk away after the inspection), and appraisal contingency (protects you if the home appraises below the agreed price). Waiving contingencies can make an offer more competitive, but each one removed raises your financial risk.

For a detailed breakdown of what sellers evaluate when comparing offers, see our guide to making an offer.

Write your earnest money deposit as a personal check, not a cashier's check, when allowed — it gives you a brief window to address any last-minute issues before funds are drawn.

Cashier's checks are immediately negotiable; personal checks provide a small but meaningful buffer during high-pressure negotiation periods.

Request the seller's disclosure statement before making an offer, not after — known defects revealed there can inform your offer price and your inspection focus areas.

Sellers are legally required to disclose known material defects in most states; reviewing this document early prevents surprises that derail transactions after you're under contract.

Under Contract: What Happens Next

Once a seller accepts your offer, you are "under contract" — sometimes called "in escrow." A neutral third party, the escrow holder (often a title company or attorney depending on the state), manages funds and documents until closing. At this point, the clock starts on every contingency deadline written into your contract.

You will formally apply for your mortgage within days of going under contract. Your lender will issue a Loan Estimate — a standardized three-page document outlining projected interest rate, monthly payment, and estimated closing costs — within three business days of your application. Review it carefully and compare it against your pre-approval terms.

The Home Inspection and Appraisal

These two steps are often confused, but they serve entirely different purposes.

The home inspection is hired by and for you. A licensed inspector examines the property's structure, roof, electrical systems, plumbing, HVAC, and more. The goal is to uncover material defects before you own them. After receiving the inspection report, you can negotiate repairs, request a price reduction, or — if the inspection contingency is in place — walk away.

The appraisal is ordered by your lender to confirm the home is worth what you agreed to pay. An independent, licensed appraiser evaluates the property and compares it to recent comparable sales. If the appraised value comes in below the purchase price, your lender will only finance up to the appraised value — leaving a gap you must either negotiate with the seller or cover out of pocket.

Low Appraisals Can Stall or Kill a Deal

If an appraisal comes in below the agreed purchase price, your lender will not automatically cover the difference. You will need to either renegotiate the purchase price with the seller, make up the gap in cash, or — if you included an appraisal contingency — exit the contract. Buyers who waive the appraisal contingency in competitive markets face real financial exposure if valuations fall short.

Navigating Mortgage Underwriting

Underwriting is the lender's formal verification process. The underwriter reviews your full financial profile — income documentation, tax returns, bank statements, employment verification, credit history — and confirms the property meets lending standards. This stage can take anywhere from a few days to several weeks depending on the lender's volume and the complexity of your file.

Buyers often receive a "conditional approval," meaning the loan is approved pending specific items: a letter explaining a credit inquiry, updated pay stubs, or proof of a deposit's source. Respond to these requests immediately. Delays in providing documentation are the most frequent reason closings get pushed back.

Avoid making large purchases, changing jobs, or applying for new credit during this period. Any significant change to your financial profile can trigger a re-review or jeopardize approval entirely.

Closing Day: What to Expect

Closing — also called settlement — is the legal transfer of property ownership. You will typically receive a Closing Disclosure at least three business days before the event, which itemizes every cost: lender fees, title insurance, prepaid property taxes, homeowners insurance escrow, and more. Closing costs generally run 2–5% of the loan amount; budget for this separately from your down payment.

On the day itself, you will sign a substantial stack of documents — the promissory note (your legal promise to repay the loan), the deed of trust or mortgage, the Closing Disclosure, and transfer paperwork. Bring a government-issued photo ID and a cashier's check or confirmation of a wire transfer for any remaining funds due.

Once all documents are signed and funds are disbursed, the deed is recorded with the county. At that moment, you are a homeowner. For a grounded perspective on what comes after — from maintenance responsibilities to costs that surprise new owners — see our first-timer's guide to homeownership.

This article is for general informational purposes only and does not constitute financial, legal, or real estate advice. Readers should consult a licensed real estate agent, mortgage professional, or attorney regarding their specific circumstances.