Before you begin touring properties or reaching out to agents, it’s essential to ensure your finances are positioned for success. This means resolving outstanding debts, strengthening your credit profile, and, where possible, building toward a 20% down payment. Attending to this groundwork first will make every step that follows more seamless.
At minimum, most lenders require 5% down. It’s worth noting that a down payment below 20% typically requires private mortgage insurance (PMI), an added monthly cost worth factoring into your budget.
Once your finances are in order, the next step is securing pre-approval from a lender. It’s important to distinguish this from pre-qualification, as the two are often confused:
- Pre-Qualification — An informal estimate of what you may be able to afford.
- Pre-Approval — A lender’s formal commitment to a specific loan amount, based on a full review of your financial standing.
Arriving at a showing with pre-approval in hand signals to sellers that you are a serious, well-prepared buyer — and it gives you a clear, confident framework for your search. As you plan your budget, be sure to account for the full scope of homeownership costs beyond the purchase price, including:
- Inspections
- Repairs and improvements
- Closing costs
- Contingencies
- Other associated fees
With your finances in place, you’re ready to begin the search — supported by a strategy built for long-term confidence, not just a closing date.