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Home Buying Checklist: 10 Tips and Tricks for New Buyers

By Michael Stradford
Updated September 16, 2019
9 min read
home buyers checklist for fha loans

Buying a house is a big undertaking. Not only is it a lot of work (and a lot of money), but it’s also a decision that will impact your life significantly — for years, maybe even for decades to come.

As such, it’s important to take your home search seriously. That means knowing what you want, understanding your budget, and being organized about the process from the very beginning.

Is buying a home on your radar in the near future? Want to make sure you go about it properly? Our comprehensive home buying checklist can keep you on track from start to finish.

Check your Credit

Your credit is going to play a featured role in your quest to buy a home. Not only will mortgage lenders use it to gauge your risk as a borrower, but they’ll also use it when determining your interest rate.

To get a feel for what lenders might see when you apply for a loan, go ahead and pull your credit report. Every American is allowed a free credit report once a year from all three credit bureaus — Experian, Equifax, and TransUnion.

Late payments, accounts in collections, and other negative marks will all impact your mortgage prospects, as will a low score. Though these items won’t preclude you from getting a mortgage altogether, they will mean a higher interest rate and fewer mortgage options on the whole.

If you want to reduce the negative impact, you might consider repairing your credit and boosting your score before applying for your loan. To do this, you should:

  • Report any errors you find on your credit report.
  • Pay down some of your debts.
  • Settle any collections and get current on overdue accounts.
  • Become an authorized user on a high-credit loved one’s account.
  • Consider a secured credit card or credit-building loan.

Delaying your home purchase to work on your credit might not be ideal, but if it increases your score even just a few points, it could save you thousands in interest over the course of your loan.

Research Mortgage Loans (And Mortgage Lenders)

Mortgage loans aren’t one-size-fits-all. In fact, there are a number of loan options you can choose from, all with different down payment requirements, credit score minimums, and eligibility standards. The best choice really depends on your budget, where you’re buying a home, and your credit.

Here are the options you’ll have to choose from:

  • FHA loans - These are low-interest loans designed for moderate- to low-income earners. FHA loans have the lowest credit score requirements of all mortgages, and they require just a 3.5% down payment.
  • Conventional loans - These are the most popular type of mortgage loan in the country, but they come with higher credit requirements than FHA loans. If you can qualify, you can get by with a down payment as low as 3%.
  • VA loans - Reserved only for military members, veterans, and their surviving spouses, VA loans are one of the lowest-cost mortgages you can get. They have very few up-front costs and require no down payment.
  • USDA loans - If you’re considering buying a house in a more rural part of the country, you may be able to use a USDA loan to finance it. These require no down payment whatsoever.

You can go directly to a bank, credit union, or other financial institution for these products, or you can also go to a mortgage broker, who can get quotes from various lenders and loan programs on your behalf. The important thing is that you shop around for your loan. Not only do rates, fees, and qualifying standards vary greatly from lender to lender, but customer service will also differ significantly, too. Make sure you’re getting the best value you can for the money you’re spending.

Secure Mortgage Preapproval

Once you’ve determined the best loan and lender for your needs, it’s time to get preapproved for your mortgage, but don’t confuse this with prequalification. Prequalification is a simpler process in which a lender uses borrower-provided information (income, purchase price, credit score range, etc.) to gauge your mortgage prospects. With a preapproval, the lender actually pulls your credit report and verifies your financial information and documentation. When they’re done, they’ll give you a preapproval letter confirming your “conditional” approval for a loan, as well as your maximum loan balance and projected interest rate.

Preapproval is a much more in-depth and important process, and it can give you a better idea of what you can afford in terms of a home. You’ll also want to use your preapproval letter when submitting offers, as it can show you’re serious about purchasing a home (and give sellers more confidence in your bid).

To get preapproved, you’ll likely need a series of financial documents for your lender. This will usually include things like:

  • Paystubs
  • Tax returns
  • W-2s
  • Bank statements
  • Statements for your 401K and other assets

There may be additional documentation if you’re self-employed or own your own business, so talk to your loan officer for more detail.

Save for Down Payment

Your down payment will likely account for the largest share of your up-front homebuying costs. On conventional loans, most buyers put down 10 to 20% of the purchase price (though 3% is the minimum). For some loans, like VA and USDA loans, you might not need a down payment at all.

The important thing to remember is that your down payment will directly impact your monthly mortgage costs. A larger down payment will mean a smaller monthly mortgage and, in many cases, a lower interest rate, too. That can mean thousands saved over the course of your loan. Smaller down payments will also equal larger monthly payments and more interest paid over time.

Fortunately, there are tons of options when it comes to making that down payment. If you don’t have the savings or cash to cover it outright, you can also tap your IRA or 401K for the funds. Most loan programs also allow for gift money (meaning your parents or loved ones can donate some or all of the down payment), and there are also crowdfunding platforms if you want to leverage your network to raise the cash. Keep in mind that you’ll also need money for closing costs, so allot some funds for these expenses, too.

Make Your New Home Wish List

Now that you have the resources in place, you can start to think about the fun part: actually searching for that dream home. Before you start, put together a new home checklist — a running tick-list of all the must-have features and amenities for your property.

Make sure to include more than just physical attributes, and really think about the long-term needs of your household when putting this list together. Does it need to be located in a good school district? Within 20 minutes of work? In a neighborhood with plenty of trails and outdoor activities? Somewhere with low property taxes? Add these requirements to your list and let them guide your home search.

Contact a Real Estate Agent

Finally, it’s time to let the house hunt begin. Since you’re new to the real estate process, it might be helpful to bring in a pro to guide the way. You generally have three choices: a real estate agent, a Realtor, or a broker. Agents are state-licensed real estate professionals who can help you buy or sell a home, while brokers are one step above them. They can help you buy or sell a home, too, but they also have the ability to hire and oversee other agents’ transactions as well. They have a bit more education and training. A Realtor, while not a specific profession, is a member of the National Association of Realtors. NAR members have to abide by certain ethical standards.

It’s important to shop around when choosing your agent or broker. As with your mortgage loan, your agent options vary greatly. Some boast more experience than others, and some even specialize in just one side of the transaction (buying or selling). Other agents might offer reduced commissions or unique fee structures, so make sure you interview several options and choose the best one for your budget and goals.

Look at Homes

With your agent and new home checklist in tow, you can now begin searching for that dream home. Head to various listing platforms like Realtor.com, Homes.com, and Zillow, and sign up for alerts. These will notify you when a listing goes up that meets your budget and needs. You should also give your agent your checklist, so they can begin monitoring listings on your behalf.

When touring properties, be sure to look at more than just the home itself. You should also take into account:

  • The neighborhood
  • The location (both within the neighborhood and in the city)
  • Proximity to work, schools, stores, and amenities
  • Traffic and local road conditions
  • Area schools
  • Safety and crime in the community

You should also ask your agent for help in this process. If they’re experienced, they’ll likely have inside knowledge of neighborhoods, communities, and local amenities that could influence your decision.

Make an Offer

Once you find that dream home, you’ll want to submit an offer as soon as possible — especially if you’re in a high-demand market. This is where you’ll lean on your agent most, and it’s when having a truly great agent can really make a difference.

Your agent will need to work fast to draw up an offer that aligns with local sales trends, your budget, and the seller’s expectations. They might also need to negotiate if you’re looking to offer below listing price or make other demands of the seller.

To give yourself an extra edge, you should include your preapproval letter with any offer you submit. If you really want to make a memorable impact on the seller, consider writing an offer letter, too. This allows you to address the seller directly, share what you love about the home, and make a personal, heartfelt appeal. Sometimes, if there’s a heated bidding war going on, a well-written letter can make all the difference.

Close on a Home

If the seller accepts your offer, it’s time to move toward closing. This process usually takes three to four weeks and includes a number of very important steps along the way.

You’ll need to:

  • Make your earnest money deposit - This is a good faith deposit that protects the seller in the event you back out of the deal. It’s held in an escrow account until the transaction closes.
  • Get your home inspection - If you included a home inspection contingency in your offer, you’ll have a short period of time in which you can hire a home inspector to assess your property. Once they’re done, you can request repairs (or cash credits for those repairs) from the seller.
  • Have the home appraised - Most mortgage lenders will require an appraisal before they’ll finance a house. The home needs to appraise for the full loan amount; if it doesn’t, you’ll need to make up the difference or negotiate with the seller for a lower price point.
  • Work with your mortgage lender to close your loan - Your lender will likely need additional documentation to underwrite your loan, so be responsive when questions and requests come in. Any delay on your end could delay your closing date (and your move-in.)

Finally, you’ll attend your closing appointment, sign the paperwork, wire over your closing costs and down payment, and receive your keys. The entire process usually takes about 40 days but getting preapproved ahead of time can help speed things up.

You’re a Homeowner!

As you can see, buying a home isn’t a simple, one-step process, and for many first-time homebuyers, it can be quite stressful. Fortunately, doing your research, planning ahead, and being organized about your purchase can help ease the process. Take our first-time homebuyer tips to heart, start prepping now, and you’ll be walking over that threshold in no time.

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