How to buy a house: Your step-by-step guide to buying in 2025

If the thought of buying a house in 2025 has you overwhelmed, you’re not alone. Millions of others are in the same position, hoping to purchase a home yet not even sure where to begin.

Let’s not sugarcoat it: Home buying can be an expensive and complex process. But let’s also acknowledge that with proper planning, you can buy a great home in only 13 steps – and stress isn’t one of them.

We here at Rocket Mortgage® feel it’s important everyone has access to real estate resources. It helps build a healthier market for buyers and sellers. We want to demystify the home buying process by offering this stress-free 13-step plan for closing on your next home.

How to buy a house in 13 steps

It only takes 13 steps to purchase most homes. Let’s examine each one, and by the end, you’ll have a much better understanding of what to expect.

Step 1: See if you meet the requirements to buy a house

Houses are expensive, there’s no question about it. So if you’re serious about buying, you should also get serious about your financial situation.

There are five key factors that will help you – and your lender – determine if you’re ready to buy a house.

• Income and employment status: Lenders want to see stable incomes, preferably 2 years’ worth. You can prove this with your W-2s and tax returns. Also think about this for your own sake. A steady income is needed to cover long-term loan repayments.
• Debt-to-income ratio: Your DTI ratio shows lenders —and yourself — how much of your monthly income goes toward debt repayment. Most lenders want to see a DTI of 43% or less as proof you can accommodate mortgage debt.
• Credit score: Your credit score is a measurement of your history of handling debt. A score of 620 will qualify you for most home loans, but the higher your number, the more likely you’ll receive lower interest rates.
• Down payment: When you pay money up front, you lower your future monthly payments. If your current financial situation allows for it, aim for a 20% down payment. Fortunately for those who can’t, you can offer as little as 3% down on many loans, or even no money down when available.
• Closing costs: Not only do you need to save for your house, you need to save for closing costs. Expect a fee from 3% – 6% of your total loan amount to go toward your lender and other third parties for their services.

Step 2: Calculate how much you can spend on a house

If you meet the requirements to buy a home, the next step is figuring out how much home you can afford. Before letting online listings sway your perspective, do your best to calculate a realistic monthly mortgage payment. This hypothetical budget should take into account your current income, debts, and DTI ratio.

Don’t forget to add extra homeowner costs, such as property taxes and homeowners insurance. Yes, it’ll lower how much you can afford in total, but your goal is to be honest with your finances now. You’ll thank yourself later.

Let Rocket Mortgage help you with the math. Use our Home Affordability Calculator to get an unbiased perspective of the right mortgage amount for you.

Step 3: Save for a down payment and closing costs

When it comes time to save for a home, earlier is always better. Investments and savings accounts can help you build up capital until it's time to cover the down payment and closing costs. If you’re fortunate to have generous relatives, gift money can also go toward a down payment. Just remember to provide your lender with a gift letter.

There’s no one-size-fits-all for a down payment amount. However, you can still plan with some essential information.

What down payment do you need to buy a house?

Most lenders will require at least some money down. Offering 20% down is a great option for some. However, it’s certainly not a requirement, and there’s actually many options available to offer much less up front. The minimum amount required depends a lot on the loan type.

If you can safely offer more than the minimum down payment, you could gain some great benefits:

• You could have more mortgage options available to you.
• You can often lower your monthly payments.
• You’ll encounter lower interest rates.
• You’ll avoid paying for private mortgage insurance if you can put 20% or more down on a conventional loan.

Still concerned about covering the down payment? Check out down payment assistance programs offered by many states. They could give you that needed boost to reach your goal.

Step 4: Decide what type of mortgage is right for you

With many loan types available, it can be difficult to know which to choose. That being said, most people will choose one of the more common types.

Step 5: Get preapproved for a mortgage

Getting preapproved for a mortgage is the next step. In this process, you’ll learn how much money you can borrow, an essential piece of information for knowing what kind of home you can buy. Use a preapproval checklist to understand the ins-and-outs of the application, but in general, mortgage lenders want to look at the following:

• Your credit
• Your assets
• Your income

You’ll receive a preapproval letter with your borrow limits clearly stated. Now your real estate agent can use this letter to find homes that fit your budget. Plus, having a preapproval letter makes your offer more attractive when bidding on a home. If a mortgage company trusts you, sellers will, too.

Rocket Mortgage offers a Verified Approval. This process involves collecting documentation detailing your income and assets, along with a review by an underwriter, giving you even more credibility than typical preapproval. We’d be happy to take the guesswork out of deciding how much home you can buy. Reach out to speak with one of our Home Loan Experts.

Step 6: Find the right real estate agent for you

Your real estate agent is your number one advocate in finding a home you’ll love. They use their expertise to get you showings, assist with writing offers, and negotiate on your behalf. Best of all, they’ll likely help you for free. Their fee is paid by the seller on closing, not the buyer.

Make sure you research and talk to multiple agents before committing. As an important member of your real estate team, you want the agent who best understands what kind of home you’re looking for.

Step 7: Begin house hunting

Your chosen real estate agent will begin searching for houses and showing you what they find. To make the most out of their house hunting, provide your agent with a list of your priorities — what you want, what you need, and what you must have.

Consider the following as a start for your priorities list:

• Price
• Square footage
• Home condition and possible need for repairs
• Access to public transportation
• Number of bedrooms
• Backyard features
• Local entertainment options
• Local school district ranking
• Property value trends
• Property taxes

Your objective is to see as many homes as possible, but don’t overwhelm yourself. Stick to your list of priorities and your budget as best as you can. House hunting online can add to your search, but you’ll still want to see the property in person.

Sooner or later, you’ll find it: the perfect home. Now it’s time to make an offer.

Step 8: Make an offer on a house

The offer on the house begins with making an offer letter. While you could write this letter on your own, agents usually write it on your behalf. It includes basic information like your name and address, your bid, and often an earnest money deposit.

The earnest money deposit helps show the seller you’re serious about the offer. It’s typically 1% – 3% of the purchase price, but ask your agent what’s common for that particular neighborhood. If you do end up purchasing the home, the earnest money deposit goes toward your down payment and closing costs. If the sale gets cancelled, however, you might lose the deposit.

Your agent will submit the finished offer letter to the seller or the seller’s agent. You’ll include a deadline for the seller to respond to the offer. That way, they can’t put your home-buying process on hold for too long.

You’ll receive one of three responses to your offer letter:

1. Accept the offer. Congratulations! You’re not finished buying the home yet, but you passed this important step.
2. Reject the offer. Don’t take it too hard. Submit another offer or move on to a different home.
3. Send back a counteroffer. The seller wants to negotiate. They’ll include their updated asking price or terms of the sale. You can then accept this counteroffer, counter it with a new offer, or try your luck with another property.

The offer stage might take several back-and-forths before a decision is made. It’s a normal part of the process, one that your agent will help you with. But your goal is to land on a deal that makes you happy. If the seller’s terms aren’t doing that, you can always walk away.

Step 9: Get a home inspection

While not required by most lenders, a home inspection may provide valuable insight into the home you intend to buy. A professional inspector will examine every inch of the property to identify problems with the following:

• Foundation
• Roofing
• Utilities
• Windows
• Doors
• Plumbing
• Wiring

The inspector will then give you an inspection report listing all the concerns they discovered.

What do you do with your inspection report?

Carefully read the inspection report and determine the seriousness of the issues found. Some issues are minor, like a clogged toilet. Others can be deal-breakers, like lead paint, mold, or foundation cracks. Talk the inspection report over with your agent and get their opinion on how to proceed.

Remember, once the seller hands over the keys, all repairs fall on you to fix. If replacing all of a house’s pipes is out of your budget, make sure the inspection report doesn’t include cracks in the drainage. Serious repairs may require serious reconsidering of the deal.

How does an inspection contingency work?

You may want to include a home inspection contingency in your purchase offer. If the home inspection comes back with more issues than you’re bargaining for, this clause gives you the chance to back out of a purchase or negotiate repairs while keeping your earnest money deposit.

Step 10: Get a home appraisal

You’ll typically need a home appraisal, an assessment of the current value of the property. Lenders require these because they can only lend you as much money as the home is worth.

You might run into the situation where you offer the seller more money than the appraised value. In this situation, you could increase your down payment, re-negotiate your offer, or pursue other options.

In case you disagree with the appraisal, you can contest the results. Talk with your real estate agent if that’s a reasonable response. They’ll have a better perspective given their familiarity with the local market.

How does an appraisal contingency work?

Consider adding an appraisal contingency to your offer. If the appraisal values your home below the offer amount, this precaution may allow you to back out of a purchase or negotiate a lower price without losing your earnest money deposit. Appraisal contingencies have varying terms, so carefully read your agreement.

Step 11: Ask for repairs or credits

An unexpected appraisal and inspection are not the end of the road. Your agent can work out a deal with the seller’s agent or with the seller directly if the house is for sale by owner. Three options are available to get a better deal:

• Ask for a discounted purchase.
• Request credits to cover some of your closing costs.
• Require the seller to fix these discovered problems before closing.

If all goes well, the selling team will accept your terms. But if they reject it, you’ll need a Plan B. Here is where an inspection contingency in your offer letter comes into play. This contingency allows you to walk away from the sale without losing your earnest money deposit.

Step 12: Do a final walk-through

Always do a final walk-through before closing. Even if everything up to this point has gone smoothly and you’re ready to sign on the dotted line, your first-hand inspection will ensure what you see is what you’ll get.

Has the seller completed all the repairs they claimed they’ll fix? Did they leave any of their furniture behind? Are all utilities in working order? These are just some of the issues you can catch by inspecting the property one last time before closing.

Step 13: Close on your new home

You made it all the way to step 13, which means it’s time to close. Your lender is required to send you the Closing Disclosure 3 business days before closing. This disclosure includes what you must pay upon closing and a summary of your loan details.

You have five action items to officially close on your new home:

• Read your Closing Disclosure. Double-check that the numbers look close to your Loan Estimate.
• Attend the closing meeting. You’ll bring with you your ID, a copy of your Closing Disclosure, and proof of funds for your closing costs.
• Sign the settlement statement. This statement lists all costs related to the sale. At this time, you’ll pay your down payment and closing costs.
• Sign the mortgage note. Here, you’re confirming your commitment to repay the loan.
• Sign the mortgage or deed of trust. This secures the mortgage note.

And with that, you have completed every step of the process. The home is now officially yours.

Buying a house FAQ

You probably still have questions about the home buying process. Let’s answer some common ones.

How long does the process of buying a house take?

While everyone’s path is different, the average length of time to buy a house is 5 – 12 months. Factors that may shorten or extend this process is the amount of work you complete ahead of schedule, complications due to selling and buying at the same time, or paying with cash versus applying for a mortgage.

How much money should I have before buying a house?

While having more money on hand is always the goal, you’ll at least want enough to cover your closing costs and down payment. Without that, you can’t finish the process. Emergencies happen, so try to have at least 2 months’ worth of mortgage payments ready to avoid falling behind. Some lenders may require even more months of payments depending on the loan type and your financial status.

Is 2025 a good time to buy a house?

Mortgage rates are predicted to fall in 2025 and home availability is expected to rise. For many, that will signal a good time to buy a house. But given that home prices are also expected to rise, many others may choose to wait.

Ultimately, the decision to buy a house in 2025 depends on your unique situation. If you’re unsure, speak with a real estate agent or lender to help navigate this difficult decision.

The bottom line: Buying a house is hard but rewarding

With the right plan and realistic expectations, you can take the first step today toward buying your next home. Sure, it can be a complicated, lengthy, and expensive process, but the end result means having a place to call your own. Keep this 13-step guide close at hand, work with licensed professionals who have your best interest at heart, and head out into the market with confidence.

We here at Rocket Mortgage can also help you in your home buying journey. Start the mortgage approval process online or give us a call at (833) 326-6018.