Buyer FAQ

Common Buyer Questions

Real estate is full of jargon, hidden costs, and unwritten rules that nobody explains until you’re already deep into a transaction. These are the questions we get asked most often — with honest, specific answers.

How much money do I actually need to buy a house?

More than you think but less than most people assume. The down payment gets all the attention, but closing costs (2-5% of the purchase price), moving expenses ($1,200-$8,000), and immediate home repairs/furnishing add up fast. For a $350,000 home with 5% down, you need roughly $17,500 down + $10,000-$15,000 in closing costs + $3,000-$5,000 cash reserves = $30,000-$37,000 minimum. FHA loans let you go as low as 3.5% down, and VA/USDA loans offer 0% down if you qualify. But even zero-down programs have closing costs.

What credit score do I need to buy a home?

Minimum scores: 620 for conventional loans, 580 for FHA with 3.5% down (500 with 10% down), no minimum for VA (though lenders impose 580-620 overlays). But minimums get you the worst rates. A 680 score gets you decent rates. 740+ gets you the best available rates. The difference between 680 and 740 on a $300,000 30-year mortgage is roughly $50-$80/month — that’s $18,000-$28,000 over the life of the loan. If your score is close to 740, it’s worth spending 3-6 months improving it before you buy.

Should I get pre-approved before house hunting?

Yes, and a pre-approval is not the same as a pre-qualification. Pre-qualification is a quick estimate based on self-reported numbers. Pre-approval means a lender has pulled your credit, verified your income and assets, and issued a conditional commitment to lend. In competitive markets, sellers won’t even look at offers without a pre-approval letter. Get pre-approved with 2-3 lenders — multiple hard inquiries within a 14-45 day window (depending on scoring model) count as a single inquiry on your credit report.

How long does it take to buy a house?

From first search to closing: 3-6 months is typical. The search phase varies wildly — some people find a home in 2 weeks, others look for 8 months. Once you’re under contract, closing takes 30-45 days for conventional loans, 45-60 days for FHA/VA. Cash purchases can close in 7-14 days. The biggest delay? Appraisal and underwriting issues. If the appraisal comes in low or the underwriter finds a problem with your file, add 1-3 weeks.

What are closing costs and who pays them?

Closing costs are the fees to finalize the transaction: lender fees (origination, underwriting), third-party fees (appraisal, title insurance, escrow), government fees (recording, transfer tax), and prepaid items (homeowner’s insurance, property tax escrow). Buyers typically pay 2-5% of the purchase price. Sellers pay 1-3% plus the real estate commission (5-6% of sale price). You can negotiate seller concessions — where the seller credits you money toward closing costs — but there are limits: 3% for conventional with <10% down, 6% for FHA, 4% for VA.

Is it better to buy or rent right now?

There’s no universal answer because it depends entirely on your local market, how long you’ll stay, and your financial situation. The general rule: if you’ll stay 5+ years, buying usually wins. Under 3 years, renting almost always wins because closing costs and selling costs eat your equity. Between 3-5 years, run the numbers with a rent vs. buy calculator using your specific market’s rent prices, home prices, and property tax rates. In some markets (San Francisco, New York), renting is cheaper until you plan to stay 7+ years. In others (Dallas, Phoenix), buying beats renting at year 3.

Do I need a buyer’s agent?

Legally, no. Practically, yes — especially for first-time buyers. A good buyer’s agent knows local market conditions, identifies overpriced properties, manages negotiations, coordinates inspections, and navigates contract contingencies. Since the NAR settlement in 2024, buyer’s agent compensation is no longer automatically offered by sellers, so you’ll need to negotiate and potentially pay your agent’s fee directly. Typical buyer’s agent fee: 2-3% of the purchase price, which may be negotiated as part of the purchase agreement.

What’s earnest money and can I lose it?

Earnest money is a good-faith deposit you submit with your offer, typically 1-3% of the purchase price. It’s held in escrow and applied to your down payment at closing. You can lose it if you back out of the deal without a valid contingency. Standard contingencies that protect your earnest money: inspection contingency (you can walk if the inspection reveals major issues), financing contingency (if your loan falls through), and appraisal contingency (if the home appraises below the purchase price). Waiving contingencies makes your offer stronger but puts your deposit at risk.

What’s the difference between a fixed and adjustable rate mortgage?

Fixed rate stays the same for the entire loan term. A 30-year fixed at 6.5% stays at 6.5% for all 30 years — payment predictability forever. Adjustable rate (ARM) starts with a lower rate for 5-10 years, then adjusts periodically based on a market index. A 7/1 ARM is fixed for 7 years, then adjusts annually. ARMs typically start 0.5-1.0% lower than fixed rates, saving $100-$200/month initially. The risk: when the fixed period ends, your rate could increase by 2-5%, spiking your payment. ARMs make sense if you’re confident you’ll sell or refinance within the fixed period. Otherwise, take the fixed rate and sleep better.

How much house can I actually afford?

Forget the bank’s number — they’ll approve you for the maximum, not what’s comfortable. The 28/36 rule is a decent starting point: total housing payment (mortgage + taxes + insurance + HOA) should be under 28% of gross monthly income, and total debt payments (housing + car + student loans + credit cards) should be under 36%. On $100,000 household income, that’s $2,333/month for housing and $3,000/month total debt. But “afford” also means still being able to save for retirement, handle emergencies, and enjoy life. Many financial advisors suggest keeping housing at 25% of take-home pay for actual financial comfort.

For more detail on any of these topics, explore our complete buying guide, mortgage calculator, and pre-approval walkthrough.