Before you buy a house, get pre-approved, save for more than just the down payment, and understand the true monthly cost of homeownership. The purchase price is just the beginning — taxes, insurance, maintenance, and repairs can add 30-50% on top of your mortgage payment.
12-Step Pre-Purchase Checklist
| # | Action | Why It Matters |
|---|---|---|
| 1 | Check your credit score and reports | Determines your rate and loan options |
| 2 | Pay down existing debt | Lowers your DTI ratio for better approval |
| 3 | Save for down payment + closing costs + emergency fund | You need all three, not just the down payment |
| 4 | Get pre-approved with 2-3 lenders | Know your true budget and compare rates |
| 5 | Calculate the full monthly cost (PITI + maintenance) | Mortgage + taxes + insurance + repairs |
| 6 | Research neighborhoods, not just houses | Schools, commute, flood zones, HOA rules |
| 7 | Understand your loan options | FHA, conventional, VA, USDA have different requirements |
| 8 | Budget for moving and immediate expenses | Moving costs, new furniture, repairs |
| 9 | Don’t make big financial changes | No new debt, job changes, or large deposits during the process |
| 10 | Get a home inspection (non-negotiable) | Saves you from buying a money pit |
| 11 | Review the seller’s disclosure carefully | Required in most states — reveals known issues |
| 12 | Understand what you can walk away from | Contingencies protect your earnest money |
True Monthly Cost of Homeownership
| Cost Component | Typical Amount ($350K Home) | Notes |
|---|---|---|
| Mortgage payment (P&I) | $1,800-$2,200 | Varies by rate and down payment |
| Property taxes | $290-$730/month | Varies dramatically by state (0.3%-2.5%) |
| Homeowners insurance | $125-$250/month | Higher in disaster-prone areas |
| PMI (if under 20% down) | $100-$250/month | Drops off at 80% LTV |
| HOA fees | $0-$500/month | If applicable |
| Maintenance and repairs | $290-$580/month | Budget 1-2% of home value per year |
| Utilities | $200-$400/month | Often higher than renting |
| Total | $2,805-$4,910/month |
How Much House Can You Afford?
| Gross Annual Income | Max Monthly Housing (28% Rule) | Max Home Price (Estimated) |
|---|---|---|
| $50,000 | $1,167 | $180,000-$220,000 |
| $75,000 | $1,750 | $280,000-$340,000 |
| $100,000 | $2,333 | $370,000-$450,000 |
| $125,000 | $2,917 | $460,000-$560,000 |
| $150,000 | $3,500 | $550,000-$670,000 |
Based on 28% DTI rule, 6.5% rate, 30-year term, 10% down. Actual amounts vary by taxes, insurance, and other debts.
Down Payment by Loan Type
| Loan Type | Minimum Down | PMI? | Key Requirements |
|---|---|---|---|
| Conventional | 3-5% | Yes (until 80% LTV) | 620+ credit score |
| Conventional (20% down) | 20% | No | 620+ credit score |
| FHA | 3.5% | Yes (for life of loan) | 580+ credit (500+ with 10% down) |
| VA | 0% | No | Active/veteran military |
| USDA | 0% | Guarantee fee | Rural areas, income limits |
Upfront Costs Beyond Down Payment
| Cost | Typical Amount | When You Pay |
|---|---|---|
| Closing costs | 2-5% of purchase price | At closing |
| Home inspection | $300-$600 | Before closing |
| Appraisal | $300-$500 | During underwriting |
| Earnest money deposit | 1-3% of purchase price | With offer (credited at closing) |
| Moving costs | $1,000-$5,000+ | Move-in day |
| Immediate repairs/updates | $1,000-$10,000+ | First month |
Red Flags During the Process
| Red Flag | What It Means |
|---|---|
| Seller won’t allow inspection | Likely hiding problems |
| Home priced well below market | Foundation, flood, or legal issues |
| Multiple price reductions | May be hard to sell — investigate why |
| High days on market | Possible undisclosed issues or overpricing |
| Seller’s disclosure is vague or incomplete | Ask specific questions and get answers in writing |
| HOA with pending lawsuits or low reserves | Future special assessments likely |
The Bottom Line
The best time to prepare for buying a house is 6-12 months before you start looking. Get your credit above 700, save at least 10% for a down payment plus 3-5% for closing costs, build a 3-6 month emergency fund, and get pre-approved with multiple lenders. The 28% rule (housing costs under 28% of gross income) is a reliable guide — stretching beyond that puts you at risk when unexpected costs hit.
The content on Wealthvieu is for informational purposes only and should not be considered financial, tax, or investment advice. Consult a qualified professional before making financial decisions. Full disclaimer · Editorial policy