What Do You Need to Buy a House? The Full Checklist

Buying a house requires more than finding a property you like. Before you make an offer, you need to know what you can afford, have enough money available for the transaction and be prepared to qualify for financing if you’re using a mortgage.

The exact requirements depend on your loan program and financial situation, but most buyers should prepare their credit, income, debts, savings and mortgage documents before they begin shopping seriously.

Key Takeaways

1. Most buyers need qualifying income, acceptable credit, enough money for upfront costs and documentation for a mortgage.
2. You may need far less than 20% down, but closing costs and cash reserves also need to fit into your budget.
3. Getting preapproved before making offers can show what a lender may be willing to finance.

What do you need to buy a house?

For a financed home purchase, the major pieces generally include:

• A realistic homebuying budget
• Income that can be documented and used to qualify
• A credit profile that meets the requirements of your mortgage
• A manageable amount of existing debt
• Money for the down payment, closing costs and other upfront expenses
• Financial documents for your lender
• A mortgage preapproval when you’re ready to make offers

You do not necessarily need perfect credit, a 20% down payment or a particular salary to buy a house.

What you need depends on the price of the property, your mortgage program and how the lender evaluates your overall financial profile.

1. A homebuying budget

Start with the amount you can comfortably spend rather than the maximum amount a lender might approve.

Your housing budget should account for more than principal and interest. Depending on the home, your monthly costs can include:

• Mortgage principal and interest
• Property taxes
• Homeowners insurance
• Mortgage insurance
• HOA dues
• Utilities
• Maintenance and repairs

Lenders consider your income and debt obligations when determining how much you may qualify to borrow. Your personal budget also includes expenses that typically are not part of the mortgage debt-to-income calculation, such as groceries, transportation, child care and savings goals.

That is why the amount you qualify to borrow and the amount you should spend can be different.

Movoto’s home affordability guide can help you look at income, debt, down payment and monthly housing costs together.

2. Enough income to qualify for the mortgage

If you’re financing the purchase, your lender needs to determine whether you have enough qualifying income to repay the mortgage.

There is no universal salary requirement for buying a house. The income you need depends on the mortgage amount, interest rate, existing debts, taxes, insurance and other expenses included in the housing payment.

Lenders also evaluate whether the income you use to qualify can be documented and is reasonably expected to continue.

Traditional wages and salary can be relatively straightforward to document. Self-employment, commission, bonuses, overtime, rental income and other variable earnings can require additional analysis.

Changing jobs also does not automatically prevent you from getting a mortgage. The lender instead evaluates whether the income and employment meet the applicable loan guidelines.

3. A credit profile that works for your loan

You do not need one particular credit score to buy every type of home or qualify for every type of mortgage.

Credit requirements vary by loan program, underwriting method and lender.

FHA, for example, has formal score thresholds tied to maximum financing. VA and USDA do not establish the same kind of programwide minimum score, although individual lenders can impose their own requirements.

Conventional underwriting can also vary depending on whether the loan is evaluated through an automated underwriting system or manually.

A current breakdown of mortgage credit-score requirements by loan type can help you see why a single number such as 620 should not be treated as the minimum for every home loan.

Your score is only one part of your credit profile. Lenders can also evaluate payment history, outstanding debt, recent credit activity and other information in your credit report.

4. A manageable debt-to-income ratio

Your lender also compares qualifying monthly debt payments with your gross monthly income.

This is your debt-to-income ratio, or DTI.

Suppose you earn $7,000 per month before taxes and your proposed housing payment plus other qualifying debts total $2,800. Your back-end DTI would be 40%.

That does not automatically mean you qualify or do not qualify. Acceptable DTI can vary substantially by mortgage program and underwriting result.

Existing car loans, student loans, credit cards and other obligations can reduce the amount of income available to support a new mortgage payment.

If you’re preparing several months ahead, reducing recurring debt can sometimes improve your mortgage qualification and increase the room available in your monthly budget.

5. Money for a down payment

Twenty percent is not a universal down payment requirement.

Some conventional mortgages allow eligible buyers to purchase with as little as 3% down. FHA financing can allow a minimum 3.5% investment for borrowers meeting its applicable credit requirements, while eligible VA and USDA borrowers may be able to buy with no required down payment.

The minimum down payment varies by mortgage type, so identify which programs you may qualify for before assuming how much you need to save.

A larger down payment can still have advantages. It reduces the amount you borrow, lowers the principal-and-interest payment and can reduce or eliminate conventional private mortgage insurance.

But putting more down also means committing more of your available cash to the house.

Movoto’s guide to choosing a down payment can help you compare those trade-offs.

6. Money for closing costs

The down payment is not the only money you may need upfront.

The Consumer Financial Protection Bureau says closing costs typically range from about 2% to 5% of the purchase price, excluding the down payment. Actual costs vary by property, loan, lender and location.

On a $400,000 home, a rough 2% to 5% planning range would equal $8,000 to $20,000.

Closing costs can include expenses such as:

• Lender charges
• Appraisal costs
• Title and settlement services
• Recording fees
• Prepaid interest
• Initial property-tax or insurance amounts
• Initial escrow funding when applicable

Your actual Loan Estimate will give you a much more useful transaction-specific estimate once you apply for a mortgage on a particular property.

7. Cash left over after closing

Do not plan your purchase around using every available dollar for the down payment and closing.

You can also encounter moving expenses, utility deposits, furniture purchases, maintenance and repairs shortly after taking ownership.

The CFPB recommends accounting for those expenses and maintaining an emergency cushion when determining how much cash is actually available for closing.

Your mortgage can also require reserves in some situations. Reserves are assets you still have available after the transaction closes, commonly measured in months of housing payments.

That makes cash remaining after closing another factor to consider when deciding whether to put 5%, 10%, 20% or another amount down.

8. Documents for your mortgage application

A lender has to verify the financial information used to approve your mortgage.

The exact documents depend on your income, assets and loan type, but the CFPB’s mortgage application checklist includes items such as:

• Recent pay stubs
• W-2 forms
• Federal tax returns when required
• Documentation of other income
• Recent bank statements
• Documentation showing the source of down payment funds
• Government-issued identification
• Your Social Security number

Additional documentation can be required if you are self-employed, receive variable income, have recently made large deposits or are using gift funds.

Movoto’s mortgage document checklist can help you start organizing your paperwork before underwriting begins.

Keeping current copies readily available can also make it easier to respond when your lender asks for updated documentation later in the process.

9. A mortgage program that fits your situation

Not every borrower should use the same mortgage.

Conventional, FHA, VA and USDA mortgages differ in their down payment rules, mortgage insurance or guarantee fees, eligibility requirements and property standards.

A borrower with limited cash might prioritize a low-down-payment program. An eligible Veteran may find a VA mortgage attractive because it can provide 100% financing without monthly mortgage insurance. A buyer purchasing an eligible rural property may qualify for USDA financing.

Your credit, income, debts, down payment and the property itself can determine which options are available.

If you put less than 20% down on many conventional mortgages, you will also need to account for private mortgage insurance when estimating the monthly payment.

10. A mortgage preapproval when you’re ready to shop seriously

Preapproval gives you a lender’s preliminary assessment of how much it may be willing to lend based on the information reviewed.

It can help establish a realistic price range and demonstrate to a seller that you have already discussed financing with a lender.

The CFPB notes that sellers frequently require a preapproval letter before accepting an offer.

Preapproval is still not final mortgage approval. Your lender must ultimately verify the required financial information, underwrite the loan and evaluate the property.

If you’re approaching the offer stage, understanding how mortgage preapproval works can help you prepare your documentation and understand what the lender is actually reviewing.

Do you need a real estate agent to buy a house?

Not necessarily. A real estate agent is not a universal requirement for purchasing a home.

Many buyers choose to work with one because an experienced agent can help identify properties, prepare offers, negotiate terms and coordinate parts of the transaction.

If you use an agent, understand how the agent will be compensated and read any buyer representation agreement before signing it.

An agent’s role is also different from the lender’s. Your lender determines whether you qualify for financing, while the real estate professional generally represents you in the purchase transaction.

Homebuying readiness checklist

When are you financially ready to buy a house?

Being able to qualify for a mortgage is not the only test.

You are in a stronger position when you can handle the upfront costs, afford the ongoing payment, maintain savings after closing and absorb the normal costs of homeownership without depending on everything going perfectly.

You also do not need to satisfy every item in the most conservative way possible. A buyer can be financially prepared with 5% down rather than 20%, for example, if the resulting payment is affordable and sufficient savings remain after closing.

Homebuying readiness is ultimately about whether the entire transaction fits your finances, not whether you hit one arbitrary savings, income or credit threshold.

Bottom Line

To buy a house, you generally need a workable budget, qualifying income, acceptable credit, manageable debt, enough cash for the transaction and the documentation a lender needs to verify your finances.

You do not necessarily need 20% down or perfect credit.

Before shopping seriously, determine what monthly payment you can afford, estimate your down payment and closing costs, organize your mortgage documents and talk with lenders about the financing options available to you.

FAQ

How much money do you need saved to buy a house?

There is no single amount. You need enough for your required down payment, closing costs and other upfront expenses, plus whatever savings you want to preserve after closing. CFPB says closing costs alone typically run about 2% to 5% of the purchase price, excluding the down payment.

Do you need 20% down to buy a house?

No. Some conventional mortgages allow as little as 3% down, FHA loans can allow 3.5% down for qualifying borrowers, and eligible VA and USDA mortgages can offer zero-down financing.

What credit score do you need to buy a house?

There is no single credit score required for every mortgage. Requirements vary by loan type, underwriting method and lender, and your score is considered alongside income, debts, down payment and other factors.

What documents do you need to buy a house?

Mortgage applicants commonly need documents showing identity, income, employment and assets. Examples include pay stubs, W-2s, tax returns when required, bank statements and documentation showing where down payment funds came from.

Do you need to be preapproved before buying a house?

Preapproval is not a legal requirement to purchase a home, but it can help establish your financing range and sellers frequently expect a preapproval letter with a financed offer. It is still preliminary and does not guarantee final mortgage approval.

Do you need a real estate agent to buy a house?

No. Buyers can purchase without an agent, although many choose to work with one for help finding properties, preparing offers, negotiating terms and navigating the transaction.