Buying a House: The Process Explained (Step-by-Step Guide)

A complete, easy-to-follow guide to buying a home — from preparing your finances and viewing homes to writing offers, navigating contingencies, securing financing, and closing on the property. Every step is linked to an in-depth explanation so you can understand the process with confidence.

🏡 Overview: How the Home Buying Process Works

The home buying process can be broken into seven stages: preparation, home search, offer, escrow, inspections, loan approval, and final closing. This guide walks you through each stage using clear explanations and links to detailed “What Is” definitions so you can understand every term, document, and step of the journey.

Use this guide as both a roadmap and a glossary — each step links to a deeper explanation where needed.

📍 Phase 1 — Preparing to Buy a Home

Before touring listings or contacting sellers, buyers must ensure their finances, credit, and expectations are aligned with the realities of the market. This phase establishes how much you can afford and positions you as a credible buyer.

1. Review Your Credit Score

Your credit score influences your interest rate and loan approval. Higher scores reduce borrowing costs.

For a deeper breakdown of minimum score requirements, see What Credit Score Is Needed to Buy a House?

2. Calculate Your Budget and Debt-to-Income Ratio (DTI)

Lenders use your Debt-to-Income ratio to determine loan eligibility and maximum payment.

3. Get Pre-Approved for a Mortgage

A mortgage pre-approval verifies income, assets, employment, and credit. It shows sellers you are financially prepared to purchase.

Learn more in the Real Estate Mortgages Guide.

4. Choose Your Property Type

Select whether you want a single-family home, townhouse, condo, or other type.

Read the full Types of Houses Guide for detailed comparisons.

5. Understand Upfront Costs

6. Research Neighborhoods

Location affects price, appreciation, schools, taxes, and lifestyle. Understand fair market value trends and comparable sales.

📍 Phase 2 — Searching for the Right Home

Once pre-approved, buyers begin exploring homes online, in person, and through showings. This phase focuses on understanding listings, property condition, and market competition.

7. Browse Online Listings (MLS)

Most listings come from the Multiple Listing Service (MLS), the central database for properties on the market.

8. Learn How Listing Statuses Work

Understand Active, Under Contract, Pending, and Contingent statuses so you know whether a home is still available.

For a full breakdown of every status and what each one means, see the Complete Guide to MLS Listing Status Types.

9. Attend Showings and Open Houses

Pay attention to condition, layout, neighborhood noise, natural light, and maintenance issues. These may affect market value and your offer strategy.

10. Review Seller Disclosures

Sellers must disclose known issues such as latent defects and material facts. Review documents carefully to avoid surprises.

11. Understand HOA Restrictions (If Applicable)

If the home belongs to an HOA, review CC&Rs, HOA fees, rules, and architectural controls.

12. Narrow Down Your Options

Create a shortlist of homes that fit your budget, needs, location, and long-term goals.

📍 Phase 3 — Making an Offer

This phase involves drafting an offer with price, terms, contingencies, deadlines, and deposit details. Strong offers balance competitiveness with buyer protections.

13. Analyze Comparable Sales (Comps)

Homes are priced using comparables (comps). This helps determine whether the asking price is fair.

14. Decide Your Offer Price

Consider recent sales, condition, days on market, and local demand.

15. Determine Your Earnest Money Deposit

Earnest money shows commitment and is held in escrow.

16. Include Necessary Contingencies

Common protections include:

Read the full Contingencies Guide.

17. Review Seller Concessions

Buyers may request seller concessions to lower out-of-pocket costs.

18. Decide Whether to Use an Escalation Clause

An escalation clause automatically increases your offer if competing bids appear.

For a deeper look at the clauses that can strengthen or protect your offer, see the Real Estate Contract Clauses Guide.

19. Determine Buyer Agent Compensation

Post–NAR settlement changes mean buyers often pay or negotiate their agent’s compensation. See buyer agent compensation agreement.

20. Prepare the Purchase Agreement

The purchase agreement outlines price, terms, contingencies, timelines, and obligations.

21. Submit the Offer to the Seller

The seller may accept, reject, or issue a counteroffer.

22. Finalize Acceptance

Once both parties sign, the contract becomes binding. This activates deadlines and officially begins the escrow process.

📍 Phase 4 — Entering Escrow

Once the seller accepts your offer, the transaction moves into escrow. Escrow is a neutral third party that manages funds, documents, and deadlines until closing.

23. Earnest Money Deposit Delivered

The buyer sends the earnest money deposit to escrow, typically within 1–3 days of acceptance.

24. Opening Title

Title company issues a title commitment detailing ownership history, liens, easements, and requirements before closing.

Not sure who covers the cost? See who pays for title insurance in a real estate transaction.

25. Review Title Exceptions

Buyers should understand:

26. Order HOA Documents (If Applicable)

If the home is in an HOA, escrow retrieves CC&Rs and financial statements. Learn more: What Are CC&Rs?

27. Seller Provides Disclosures

Sellers must disclose all latent defects, past repairs, and known issues.

For a full overview of required forms, see what a Seller’s Disclosure Statement includes.

28. Buyer Reviews Escrow Instructions

These instructions outline the duties of escrow and the process for handling funds and documents.

📍 Phase 5 — Inspections & Appraisal

This stage ensures the home’s condition and value meet expectations. Buyers verify safety, repairs, and market value.

29. Schedule the Home Inspection

The buyer hires a professional inspector to evaluate systems, structure, and safety. Learn more: What Is a Home Inspection?

30. Review the Inspection Report

Inspectors identify defects, safety hazards, and repair needs.

31. Submit a Repair Request (If Needed)

Buyers may ask for fixes or credits. Related terms:

32. Remove the Inspection Contingency

After negotiations, buyers remove the inspection contingency.

33. Lender Orders the Appraisal

The lender requires an appraisal to confirm the home’s value.

34. Handle Low Appraisal Issues

If the appraisal is low, buyers may renegotiate or cover the appraisal gap.

35. Remove Appraisal Contingency

Once the appraisal is satisfactory, the appraisal contingency is released.

📍 Phase 6 — Final Loan Approval & Title Work

At this stage, lenders finalize the mortgage, escrow prepares closing documents, and title ensures the property can transfer cleanly.

36. Underwriting Review

The lender evaluates risk and verifies financial documents. See What Is Underwriting?

37. Clear Loan Conditions

Underwriters may request additional documents such as bank statements or explanations.

38. Homeowners Insurance Required

Buyers must secure coverage before closing.

39. Title Clears All Requirements

This may include removing:

40. Buyer Reviews Closing Disclosure

The lender issues the Closing Disclosure (CD) summarizing loan terms and fees.

41. Escrow Prepares Final Documents

Includes deed, affidavits, and settlement statements (ALTA).

For a deeper look at grant, warranty, and quitclaim deeds, see the Real Estate Deeds Guide.

📍 Phase 7 — Closing on the Home

The final stage where funds are transferred, documents are recorded, and the buyer becomes the new legal owner.

42. Final Walkthrough

The buyer verifies the property condition before closing. Learn more: Final Walkthrough.

43. Sign Closing Documents

Buyers sign loan documents and the seller signs the deed (Grant, Warranty, or Quitclaim depending on state).

44. Lender Funds the Loan

This releases the funds required for closing. See What Is Funding?

To understand how money is distributed at closing — including title fees, commissions, taxes, and recording costs — review our detailed guide on seller closing costs.

45. Escrow Records the Deed

County records the deed and other conveyance instruments, officially transferring ownership.

46. Buyer Receives Keys & Possession

Possession timing depends on the purchase agreement (possession clause).

Sometimes the buyer or seller needs extra time before or after the official closing date. To understand how temporary occupancy works, see:

📈 Ready to Buy or Sell With Confidence?

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