How to buy a house: Steps to purchasing a home in 2025

Discover® Home Loans doesn’t offer purchase mortgages, but home equity loans and cash out refinances are options to keep in mind when you have home equity to tap into. 

Buying a home doesn't have to be stressful. Following the 10 steps below may make things seem more manageable and help you make better decisions for your personal and financial situation.

Steps to buying a home

Here are 10 steps to follow during the homebuying process:

Step 1: Research the market

Start reading real estate listings as soon as you can. Make a note of homes you are interested in and how long they stay on the market. Documenting any changes in asking prices may give you a sense of housing trends in neighborhoods where you’re interested in purchasing a home.

Also, pay attention to current events in the home financing industry. Changes in interest rates or legal requirements related to buying a home may impact how you conduct your property search.

Step 2: Determine affordability

How much house you can afford may depend on your income, any debt obligations you currently have, and other factors. 

If financing a home purchase, calculating your debt-to-income (DTI) ratio can help you get an idea of the monthly mortgage payment you may be able to afford. You can determine this ratio by adding up the total of your current monthly debt payments and dividing that number by your monthly income. The result will show you what percentage of your monthly income goes toward paying debts. 

When taking out a conventional home loan with a downpayment of less than 20% of a property's purchase price, you may need to pay private mortgage insurance (PMI). The cost of PMI may vary by lender. Typically, you pay this type of insurance until you reach 20% equity in the home. 

Try using an online affordability calculator to see how much house you may be able to afford.

Step 3: Select a lender

If you go down the financing route, spend some time comparing lenders. There may be key differences between the mortgage products they offer.

Also, ask plenty of questions about the financing options that may be available to you. For example, inquire with a lender about potential loan closing costs and other fees.

Every homebuyer has their own objectives when choosing a mortgage. For instance, some people want to ensure that their payments stay consistent during the life of the loan. The right lender may help you achieve your unique financial goals.

Step 4: Get prequalified and/or preapproved for a mortgage

Getting prequalified and/or preapproved for a mortgage by your chosen lender lets you know how much you may be able to borrow. 

For prequalification, you generally need to provide some financial information to the lender, such as your income and employment details. The lender will review this information and tell you how much loan you may qualify for.

Preapproval is typically a more thorough process than prequalification. Your lender may ask for financial documents such as W-2s, tax returns, and bank statements so they can verify your income and other information.

Step 5: Find a real estate agent

Real estate agents are typically involved in the homebuying process. One of these professionals may help you find a property, negotiate an offer, and assist you with other tasks. 

A real estate agent's knowledge, negotiation skills, and familiarity with the area you want to live in may be valuable.

Step 6: Tour homes and make an offer on a property

Start touring homes in your price range to see what's on the market. Taking notes, pictures, and videos at all the properties you visit may help you remember each one. 

Make sure to check out the small details in each home. For example:

• Run the shower to see how strong the water pressure is and how long it takes to get hot water.
• Test the electrical system by turning switches on and off.
• Open and close windows and doors to see if they work properly.

When evaluating a neighborhood, ask yourself the following questions:

• Are homes well-maintained?
• How much traffic does the area get?
• Is there enough street parking for family and visitors?
• Are places of interest, such as schools and parks, nearby?

Take as much time as you need to find the right home. You can then work with a real estate agent to negotiate a fair offer based on the value of comparable homes in the same neighborhood and other factors.

If the home's seller accepts your offer, you will both sign a purchase agreement defining the terms and conditions of the sale. 

Step 7: Review the home inspector’s findings

Typically, a home sale is dependent on an inspection of the property to check for signs of any damage and things that may need fixing. Purchase agreements often include a home inspection contingency. If yours does, you may be able to withdraw your offer if there are issues with the home. 

Both you and the seller will receive a report on the home inspector's findings. You can then decide if you want to ask the seller to fix anything on the property before closing the sale. Your purchase agreement may allow you to have a final walk-through of the home prior to closing to confirm that any agreed-upon repairs have been made.

Step 8: Complete the appraisal process

A lender typically requires an independent appraisal report to estimate the current market value of the home you are buying. 

Appraisers consider various factors when compiling this report, such as the property's location, size, age, and condition. 

Step 9: Await the results of the title search

As you can imagine, a lot of due diligence is involved in purchasing a home, including ensuring the property has a clear title. A title search confirms ownership of the home you are buying and uncovers any liens or other problems.