18.3% of homes are selling below the asking price in the US. This means on a median home price of $429,963, you could save up to $5,600 if you buy a house now! Plus, with new listings up by 8%, buyers have more options to choose from.
Additionally, the average number of days spent on the market has increased to 43. This gives you more room to negotiate and secure a competitive deal. With the market working in your favor, now is the perfect time to purchase your dream home.
9 Steps to Buying a House in 2025
Here’s a step-by-step guide to help you navigate the home-buying process across the United States:
Step 1: Decide Your Homebuying Purpose
Before you start your home search, decide why you’re buying a home. Are you looking for a long-term residence, an investment property, or a vacation home? It will help you decide on an ideal location and property type.
💡 Tip: Research regional factors like cost of living, property taxes, and quality of life before finalizing your location.
Step 2: Assess Your Financial Readiness
With the median home price at $429,963, it’s important to evaluate your financial situation before buying a home:
- Review Your Credit Score: Your credit score determines how much you can borrow and the interest rates you qualify for. A minimum credit score to buy a house is 500 for an FHA loan and 620 for a conventional loan.
- Calculate Your DTI Ratio: Lenders use the debt-to-income ratio to determine your mortgage eligibility. Ideally, your monthly debt payments should not exceed 36% of your gross monthly income.
- Determine Your Monthly Mortgage Budget: Decide how much you can afford for your monthly mortgage, including the loan, taxes, and insurance. A good rule of thumb is to keep housing costs under 28% of your gross monthly income.
» Free Mortgage Calculator: Find how much house you can afford for free now. 🏡
Step 3: Explore Home-Financing Options
The average down payment on a home ranges from 10% to 20%. However, there are several financing options to help you cover the costs:
1. Home Loans
| Loan Type | Down Payment | Key Benefit | Ideal For |
|---|---|---|---|
| FHA Loans | 3.5% | Low down payment, flexible credit score | First-time buyers |
| VA Loans | 0% | No down payment, lower interest rate | Veterans |
| USDA Loans | 0% | No down payment, lower interest rate | Rural homebuyers |
2. Assistance Programs
- First-Time Homebuyer Programs: If you’re buying a house for the first time, you should consider the Fannie Mae HomeReady Loan. This program requires only 3% down and a minimum credit score of 620.
- Down Payment Assistance (DPA) Programs: Explore programs like the National Homebuyers Fund or Bank of America grant programs. They provide down payment support with beneficial terms, such as the down payment received can be counted as taxable income.
Step 4: Research the US Housing Market
Understanding the housing market in your target area is crucial. Some trends to watch in 2025 include:
- Track Mortgage Rates: The mortgage rate for a 30-year fixed home loan as of Jan 5 is at 6.95%. Experts predict rates to stay in the mid-6% range throughout 2025 and 2026, now is a great time to lock in a competitive rate.
- Home Inventory Levels: In Nov 2024, 54.5% of home listings remained on the market for at least 60 days without going under contract. This indicates a shift towards a buyer’s market, offering more options and potential for negotiation.
- Local housing trends: The US housing market also varies locally. For instance, San Francisco has experienced significant price declines due to tech sector layoffs. The condominium prices dropped by 14.7% and single-family homes by 15.4% from their peaks.
Also, research property taxes, insurance costs, and local market trends to make an informed decision.
Step 5: Get Pre-Approved for a Mortgage
86% of sellers favor buyers with a pre-approval. So, get pre-approved before house hunting to show you’re serious about the purchase and financially capable.
Pre-approval also speeds up the buying process, helps you negotiate better, and reduces delays in the transaction.
Get Pre Approved for a Mortgage 🏡
Select Your Loan Type
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New Home Purchase
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Mortgage Refinance
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Cash-out Refinance
Step 6: Start Your Home Search
Traditionally, buyers relied on real estate agents to find a house, but this comes with hefty commissions. Instead, you can also:
- Search for Listings Online: Use high-tech home search sites like Houzeo to explore homes for sale. Look for neighborhoods that cater to your needs.
- Consider FSBO Homes: You can also search for Homes For Sale By Owner. It allows you to bypass Realtor commissions and directly negotiate with sellers.
» 💡 Where is the nicest most affordable place to live?
Rockford, IL is one of the cheapest places to live. The cost of living is 12% lower, and housing costs are 33% below the national average.
Step 7: Make a Competitive Offer
Once you’ve found a home you like, it’s time to make an offer. Here’s what your home offer should include:
- Seller’s Name and Address: Include the seller’s legal name and property address.
- Offer Price: Offer an amount based on the Fair Market Value (FMV) and comparable sales.
- Down Payment: The portion of the purchase price that you pay upfront.
- Earnest Money: A deposit to show you’re serious, often 1%-2% of the offer price, credited toward the purchase.
- Contingencies: Conditions such as home inspection, appraisal, or financing that must be met for the deal to close.
- Concessions: Requests for the seller to cover some costs, like closing fees or repairs.
- Closing and Move-in Dates: Specify when you aim to close the deal and move in, based on your and the seller’s needs.
- Offer Deadline: Specify the date by which the seller must respond to the offer.
Step 8: Conduct Inspections and Appraisals
A home inspection ensures the property is in good condition and there are no major hidden issues. In fact, the results can help buyers save around $14,000 on the final sale price.
A standard home inspection should cover:
- HVAC: Checks the heating and cooling systems for proper operation.
- Plumbing: Inspects pipes and fixtures for leaks or damage.
- Electrical: Evaluate the electrical system for safety and functionality.
- Roofing: Assesses the roof for damage or wear.
- Foundation: Examines for cracks or issues with the home’s foundation.
Once the inspection is complete, your lender will arrange for a home appraisal to ensure the property’s value matches the loan amount.
Step 9: Close on Your Home
Before closing, do a final walkthrough. Check if the home’s condition and repairs are in the agreed-upon condition. It can take 30 to 45 days to close your home after signing the purchase agreement.
You’ll also need to pay closing costs for buyers, which are usually 2% to 5% of the home’s purchase price. Once everything is finalized, escrow will record the deed and hand you the keys to your new home!
Should You Buy a House Right Now?
Absolutely! With more homes being sold below the list price, now is the best time to buy a house. But you need to plan it properly.
Assess your financial situation to ensure your credit score is ready for quick pre-approval. Also, calculate your down payment and closing costs to be fully prepared.
How to Buy a House Near Me
Frequently Asked Questions
Which is the best place to buy a house in the US?
Green Bay, WI is considered as one of the best places to live in the US. The city is 6% more affordable than the rest of the country. The housing prices are also 21% lower averaging to $280K.
How much down payment do I need to buy a house?
It depends on the type of mortgage you choose. For a conventional loan, you have to put down 20%. On the other hand, FHA loans only need 5% money down.
What are requirements for buying a house?
To buy a house, you'll need a minimum credit score of 620, proof of income, funds for a down payment, and a 36% debt-to-income ratio. You should also get pre-approved if you plan to get a mortgage.
What credit score do I need to buy a house?
For an FHA loan, you'll need a minimum credit score of 500, while conventional loans typically require 620 or higher. A better credit score can help you secure lower interest rates.
How to purchase a house with no money?
USDA or VA loans allow you to buy a house with no money down.
