What Do You Need to Buy a House? Start with This Home Buying Checklist

A home buying checklist is a smart way to make sure buying your first home (or your seventh home) goes smoothly. You'll know exactly what you need to buy a house from the beginning. Buying a new home is super exciting and comes with a lot of logistics! Getting started with the right team and prepping as much as you can before you start will make all the difference.

We've consolidated what you need to buy a house into a home buying checklist for every stage of the journey. Follow this checklist, find a solid real estate agent, and you'll be well on your way to homeownership bliss.

Home buying checklist: preparing to buy

Taking some time to prep what you need to buy a house before you start looking at houses will really pay off. Then you can just focus on the fun stuff, knowing you've got your bases covered. Here’s what to tick off your checklist before you begin your house hunt.

1. Get your finances ready.

You’ll need to make sure your financial health is in good shape before buying a house. A strong financial foundation will ensure you can enjoy your home comfortably for years to come and qualify for a loan that's enough to cover the home you want to buy.

• Calculate debt-to-income (DTI) ratio: This is the percentage of your monthly income that goes toward paying down debt, such as car loans and credit cards. Your DTI is a major factor in the mortgage approval process, with most lenders looking for a ratio of under 36%.
• Calculate future expenses: Many new homebuyers tend to focus on whether or not they’ll be able to afford future mortgage payments. However, other future expenses — like property taxes, utility bills, and maintenance — also need to be taken into consideration, especially if you’re moving into a bigger property where costs could increase.

2. Get your credit report.

While it is possible to secure a mortgage with a low credit score, it will be an uphill battle. The better your credit score is, the easier it will be to get a better interest rate. Many lenders will look for a score above 620. Paying down existing debt and disputing any inaccuracies in your report can help raise your score.

3. See if you have enough for a down payment and closing costs.

You can usually qualify for a mortgage with a down payment of 3.5–20% of the home price (and some programs like VA loans require no down payment at all), but the more you can put down, the better. Not only will a larger down payment reduce your monthly mortgage payments, but if you put down 20% or more you can avoid having to pay for private mortgage insurance (PMI). Closing costs are considered separate from your down payment, although they'll both be due when you close on the house. Closing costs are usually 1-3% of your home's purchase price and cover things like taxes, commission, lender fees, and more.

4. Apply for mortgage preapproval.

After you get prequalified for a mortgage, you need to get a mortgage preapproval before you begin the actual house hunt. This will allow you to make a strong offer on a house when you're ready! Your lender will assess your ability to repay your mortgage based on multiple factors, including your credit rating, DTI ratio, and current income. Bring paperwork, such as pay stubs and tax returns, to help your lender better understand your financial situation.

• Explore different loan options: Conventional mortgages are the most common home loan type, but alternative home loans exist, such FHA, USDA, and VA loans. These loan options may come with attractive features, such as low down payment requirements, if you’re eligible for them. If you want to find a lender to start with, check out our top mortgage lender recommendations.

Checklist for searching for a house

With your mortgage pre-approval letter in hand, you’re ready to begin the actual process of hunting for a new home. In addition to asking all the right questions when buying a house, this home buying checklist will show you what to look for when buying a house.

1. List your must-haves.

This part is exciting! Create a list of things in your new home that are absolute must-haves and some that you're willing to compromise on if the right opportunity came up. Combined with your budget — which will largely be determined by your mortgage preapproval — you’ll be able to narrow down areas and homes to look for with your real estate agent. Here are some things you might want to think about:

• Size
• Yard space
• Proximity to work, school, and other amenities
• Upgrades, like a remodeled kitchen or bathroom
• City
• Traffic
• Neighborhood noise
• Space between houses

2. Choose a solid real estate agent with a good track record.

Working with a real estate agent will make the home buying process feel easier and less stressful. An experienced agent should have local market knowledge and be in tune with your needs as a buyer. You should interview at least 2 to 3 realtors to make sure you’re choosing the agent that’s right for you.

Be aware that major real estate commission changes mean buyers are now usually responsible for covering buyer agent fees. When finding a realtor, focus on these areas:

• Expert knowledge
• Negotiation skills
• Help with paperwork

Choosing a top realtor doesn’t have to be a complicated process. Try Clever Real Estate to help you pick an experienced real estate agent in your area. You’ll be able to compare handpicked agents from brands like Century 21 and RE/MAX and you may qualify for a home buyer’s rebate.

3. Look at the bones of the house—not just the appearance.

When touring homes, it’s good to go in with a plan of what to look for and not overlook potential issues. If you find a good real estate agent, they'll be able to help you know what to look for in a house and line you up with trusted inspectors who can do a more thorough check once you're under contract on the home.

4. Consider how easy it would be to resale the house.

While you may plan to stay in your new home for many years, it’s always a good idea to choose a property that is likely to increase in value over time. Excellent schools, new developments, and access to transportation may indicate that an area is likely to remain attractive well into the future.

Your real estate agent can provide data showing whether a particular neighborhood has strong growth potential and what a particular property's historical values look like.

Checklist to complete closing

After you’ve found a home and had your offer accepted, you’ll begin moving toward closing. Again, your realtor will provide assistance during these steps, which involve lots of paperwork and legalities.

1. Order a home inspection.

Once you go under contract, it's time to order the inspection and appraisal and you'll be responsible for paying for both. Your offer to purchase will probably be contingent on a home inspection report and your lender will want an appraisal to make sure the house is truly worth as much money as they're lending you for it. Work with your realtor to schedule a home inspection in order to identify potentially costly and hidden issues, such as foundation problems and outdated wiring.

• Negotiate repairs: Depending on what the inspection uncovers, you may be able to negotiate with the seller for help covering the cost of the repairs. If the issues are significant, you may want to back out of the deal entirely.
  

2. Schedule a home appraisal.

A home appraisal is a necessary step to ensure the property is actually worth its purchase price. The appraisal is a necessary step for securing a mortgage and you’ll need to schedule it by contacting your lender. If the appraisal is lower than expected, you should try renegotiating the price.

3. Check the closing disclosure document.

The closing disclosure is an important document provided by your lender that outlines all the costs involved in your home purchase, such as your mortgage amount and interest rate. Carefully review the document and discuss any concerns you have with your lender or realtor.

4. Review and sign paperwork.

You’ll need to sign a lot of paperwork in order to complete the closing, including the title transfer, mortgage agreement, and other documents. Make sure you understand everything you’re signing and consult a real estate attorney for assistance, if needed.

• Bring valid ID: You’ll need to verify your identity in order to complete the paperwork by bringing government-issued ID, such as a driver’s license or passport.

5. Pay closing fees.

The closing costs will include loan fees, title insurance, inspection fees, and real estate agent commission. They usually total around 3% to 5% of the purchase price for buyers. You’ll need to bring a cashier’s check on closing day or have a wire transfer arranged beforehand in order to pay the closing fees. 

Once the paperwork is signed and closing costs paid, you’ll collect your keys from the previous owner.

Checklist for moving in

Once you’ve collected the keys, it’s time to begin the process of moving into your new home. This move-in checklist will ensure you’re able to comfortably settle in with minimal stress.

1. Change the old locks.

For your security, you should change the locks on all exterior doors. It’s always possible that the previous owner may have forgotten to give you all the copies of the keys for the property.

2. Contact utilities.

Set up utility services at your new property, such as electricity, water, gas, and internet. You should contact utility providers within a month before your move so that all of your services can be transferred seamlessly.

3. Find the water shut-off and breakers.

In case of power or plumbing issues, you’ll want to locate your home’s main water shut-off valve and the circuit breakers as soon as possible. Test the circuit breaker to make sure it’s labeled properly, which will help avoid confusion later on during a power outage.

4. Update your address.

Be sure to update your address with your bank, post office, and any subscription services. Since it can be difficult to keep track of every service, you may want to pay for mail forwarding for the first couple months at your new property.

Ready to buy your next home?

Buying a new home is one of the most exciting purchases in your life—but it does come with a lot of paperwork and money. But with a home buying checklist, you’ll have a roadmap to guide you through the entire process. From applying for a mortgage to transferring utilities, using a home buying process checklist ensures you know what needs to get done at every step.

Having the help you need also goes a long way toward making buying a home an exciting and enjoyable experience. With an experienced real estate agent assisting you throughout your journey, you’ll discover the house that best fits you and your future plans.