How to Buy a House: Your Guide for 2025

Sara Malone
How to Buy a House: Your Guide for 2025

Now that the holidays have passed, many Americans are wondering whether now is the time to buy. While the housing market is not expected to boom in 2025, there are promising new opportunities on the horizon. Inventory is expected to grow by more than eleven percent this year, due to new construction, which will help balance two lingering obstacles from last year: rising mortgage rates and slow turnover.

Even though interest rates fell last year, mortgage rates are tied to yield from treasury bonds, which increased rather than fell - an unexpected development that surprised many analysts. At the same time, many existing homeowners have been reluctant to put their house on the market because they purchased or refinanced their home in 2020-2021, when interest rates were under three percent. Selling now would lock them into higher rates than they’re currently paying, so naturally they prefer to wait for rates to fall before putting their house up for sale.

The good news is that looking back over the past four years, it’s clear that while rates aren't going to revert back to the historic lows we saw five years ago, they have stabilized at 6-8 percent. For first-time homebuyers, this might seem frustrating, but in reality, a stable real estate market is generally good for buyers. Prices are easier to predict and there’s less competition, which means fewer bidding wars. Stable rates make lenders more confident, allowing borrowers to negotiate for better terms. Properties tend to stay on the market longer as well, giving you more time to compare options before making a final decision.

Because the home buying process can be a bit intimidating, it's important to understand how it works and what to expect along the way. In order to help you make the best possible decision for you and your family, here is a short guide on how to buy a house.

Determine What Type of Home You Want

The first step on your homebuying journey is to sit down and decide what you’re looking for. How many bedrooms do you need? How many bathrooms? What size kitchen? What kind of amenities (air conditioning, walk-in closets, modern fixtures, backyard patio, attached garage, EV parking station, etc.)? Because most new homes won’t contain every feature on your list, determine which items you need to have and which are nice to have, to help you sort through available properties.

Keep in mind that house hunting isn’t just about choosing a home, but a community. Take a moment to consider the type of neighborhood you’d like to live in. Are schools a priority? Freeway access? Public transportation? Good restaurants? Community centers? Once you have a good idea of what you’re looking for and where you’d like to settle down, you’ll be able to narrow your choices and arrive at a decision that meets your budget and expectations.

Create a Housing Budget

In addition to the down payment, buying a home also requires several additional expenses. These include closing costs, property taxes, earnest money, origination fees, credit report fees, homeowner’s insurance, and homeowners’ association (HOA) fees. Though the exact amount varies between markets, expect to pay 2-5 percent of the loan amount. If you hire a home inspector to assess the property before the sale, you’ll need to set aside an additional $300-$500. In addition, it is wise to consider a budget for after you own the home, for any repairs, maintenance or upgrades you may want to make.

Check Your Credit Score

Lenders use credit history to gauge risk. It’s important to note that your score is only one aspect of loan approval, as credit history, loan product, debt-to-income ratio and loan-to-value ratio are also important factors.

There are several different scoring systems, and standards vary between lenders. The top range of scores are 740-850. Lenders typically require a score of at least 620, but there are different loan products that can accept a lower credit score. Your mortgage consultant can review and discuss different loan options after reviewing your credit history with you.

Late or missed payments are the main reason for low credit scores. To raise yours, stick to your payment schedule and pay down your outstanding debt as quickly as possible. If you have any old credit accounts, keep them active with small monthly charges. A long credit history demonstrates that you understand how to handle credit responsibly. Managing different types of credit (e.g. auto loans, student loans, credit cards) also boosts your score.

If there is an incorrect entry in your report (due to identity theft or clerical error, for example), contact the credit bureau by phone, mail, or online. Submit any supporting documentation you may have, such as receipts, payment records, or police reports, to help correct the mistake as quickly as possible.

Save for a Down Payment

A down payment is a sum of money paid upfront, usually a percentage of the home’s purchase price. All conventional loans require a down payment, but to avoid paying for PMI (private mortgage insurance - a policy that protects the lender in case the borrower defaults on the mortgage), the minimum down payment is 20 percent.

Other loan products can provide lower down payment options, such as FHA (Federal Housing Administration). Veterans and active-duty military personnel, as well as their spouses, may be able to secure a VA (Veterans Affairs) loan without a down payment. Buyers purchasing a home in a rural area may qualify for a USDA (United States Department of Agriculture) loan, which doesn't require a down payment. There are also state and federal down payment assistance programs designed to help first-time buyers.

Review Your Job History

Lenders will review your employment and request a two-year work history. A gap in employment doesn’t mean your application will be rejected, but you may be asked to explain why you were out of work.

Get Pre-Approved

Before you start looking at houses, get pre-approved by an established lender such as Sirva Mortgage. You’ll be required to present several financial documents, so the lender can evaluate your finances. These include:

  • Bank Statements and other asset documentation
  • Pay Stubs
  • Tax Returns
  • W-2s

A pre-approval letter is not a guaranteed loan offer, but it provides a clear understanding of how much house you can afford. It also demonstrates that you are a credible buyer, often a serious advantage in a competitive market.

You aren’t obligated to stick with the lender who pre-approved you, so compare rates from several different banks, credit unions, and mortgage companies before making your final decision.

Hire a Real Estate Agent

Real Estate Agents have in-depth knowledge of the real estate market, including current housing trends, up-and-coming neighborhoods, and off-market properties you might not be able to visit on your own. They’re also up-to-date on property values and can help determine whether a home is fairly priced based on its size, location, condition, and amenities. They’re a great resource, especially when the local market contains a lot of motivated buyers searching for homes in your price range.

Go House Shopping

This is the fun part of the home buying process. No matter how much detail is included in the property listing, you won’t know whether a home suits you until you go see it for yourself. Remember to be flexible. It’s unlikely that any single home will contain everything you’re looking for, so decide which features are absolutely essential and which you can forgo if necessary.

Make An Offer

Once you’ve found a home you like, ask your agent to make an offer. In a competitive market, homes will likely receive multiple offers, but a good agent will help yours stand out. This might mean going above the sale price, making a larger earnest money deposit, or covering the seller’s closing costs. You can even authorize them to forgo some contingencies (such as a home inspection) and buy the home “as is,” without any repairs - though this strategy carries considerable risk.

Conduct Due Diligence

No matter how nice a home appears, it is recommended to have an expert review the property to ensure it meets your expectations. Remember that once you’ve finalized the sale, you are responsible for any and all underlying issues, as well as their associated costs. Protect yourself by:

  • Hiring a Home Inspector. They'll help identify any problems with the foundation and structure of the house, while also examining its plumbing, electrical, and HVAC systems to ensure they’re working properly. The inspector will also alert you to environmental hazards, such as radon and asbestos. Specialized inspectors may be required for certain environmental hazards.
  • Conducting a Home Appraisal. This confirms that the home’s value aligns with the offer price and determines if there are any repairs required for your mortgage loan.
  • Performing a Title Search. This ensures that the seller has the right to sell the property and that there are no liens, disputes, or ownership issues that could affect the sale.
  • Reviewing Seller Disclosures. This lists known issues with the property, such as roof leaks, plumbing repairs or pest problems.
  • Surveying the Property Lines. This makes certain there are no boundary disputes with neighboring homeowners.

If you discover any serious legal or structural problems during this process, it provides you with grounds to renegotiate or back out of the deal. In most cases, sellers will agree to repairs or lower their price so you can make them yourself. If you want repairs completed before the sale, make sure you add them to the purchase contract. Otherwise, the seller isn’t obligated to make any improvements and you may suffer financial penalties if you try to terminate the agreement before closing.

Get Final Approval

After your offer is accepted by the seller, your lender will go through your financial documents to determine whether you’re eligible for the requested loan. If you’ve been pre-approved, most of the underwriting will be done already.

To avoid unnecessary delays, respond quickly to any questions from your lender and keep your paperwork organized, in case you need to submit additional documentation. Finally, before signing, carefully review the loan conditions to make sure all the details are correct and align with previous estimates.

Keep in mind that mortgage companies base their decision on your current debt-to-income ratio. Any changes to your financial situation could cause a problem, even if you’ve already been approved. To ensure you qualify for the loan, it’s best to avoid taking out new credit or making any major purchases until after you’ve closed.

Final Walkthrough

Schedule a visit one or two days before your closing date, to verify the property is in the same condition as when you first made the offer. Walkthroughs are only attended by the buyer and the buyer’s agent. They’ll bring a copy of the inspection report, the seller’s disclosure form, and receipts for any repairs or improvements the seller agreed to perform. After you arrive, take your time. This is not a cursory inspection. Make sure all your bases are covered before completing the sale. This means:

  • Checking rooms, closets, and storage spaces to make sure all the seller’s belongings have been removed.
  • Confirming all appliances, faucets, and fixtures are working properly.
  • Opening and closing all doors and windows, to ensure there are no impediments.
  • Making sure the yard has been swept and cleaned.
  • Activating the HVAC systems and checking air flow through the vents.
  • Locating the manuals and instructions for all appliances in the home.
  • Testing lights, switches, and fans, including ceiling fans and exhaust fans.
  • Trying the garage door openers.
  • ●Examining the walls, floors, and ceilings for holes, scuff marks, and other damage.
  • ●Following up on all repair projects, to make sure they’ve been completed to your satisfaction.

Point out any problems you find to your agent. It’s still possible to back out of a deal at this stage, but only if there has been a major change to the property. Review the terms of your real estate contract to determine what conditions will allow you to exit the agreement.

Close on the Property

Once all contingencies have been met and your lender has declared your loan “clear to close,” it’s time to wrap things up and transfer the property to your name. At least three days before your closing date, you’ll receive a Closing Disclosure, which will outline the final terms and costs of the sale, such as the loan amount, interest rate, monthly payment, and all associated closing costs - so you know exactly how much you’ll pay when you sign the final paperwork.

If everything is in order, sign the disclosure. This does not mean the sale is final, just that you’ve agreed to the final loan terms. The lender needs your permission to go ahead with the loan, so review and sign the documents the day they arrive.

Once you have your final figure for closing, you can authorize your bank to wire the down payment and closing costs to the title agent or attorney.

The final step is closing, also known as the settlement. You’ll meet with the closing agent, who may be a representative from the escrow or title company or a real estate attorney, to sign the final documents. Depending on the state and local customs, you may receive the keys as soon as you sign, or a designated time after closing.

The Smart Choice for Financing

Sirva Mortgage works with home buyers in all fifty states. We not only offer competitive rates, but our team of experts will guide you through the process, so you can be certain you’re making the best decision for you and your family. Ready to take the next step? Reach out and talk to a Sirva Mortgage consultant today!