---
title: What Should I Do Before I Buy a Home?
description: Before you start looking for a home to buy, it's important to get your finances in order, check your credit, and get pre-approved for a loan.
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published: '2014-05-27T16:21:24.000Z'
modified: '2024-04-14T08:55:15.000Z'
section: Housing
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  - real estate
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![What Should I Do Before I Buy a Home?](https://money.com/img/logo-social.png)

Before you even think about hitting open houses, the first thing to do is [get your finances in order](https://money.com/collection-post/financial-priorities/).

Six to 12 months before you start house hunting, order your [free credit reports](https://money.com/collection-post/what-is-credit-report-when-used/) from the three big credit bureaus at [annualcreditreport.com](http://www.annualcreditreport.com). Check them carefully; lenders use them to determine whether they’ll lend to you and at what rate. Fix any mistakes. You may also want to pay to get your [credit score](https://money.com/collection-post/what-is-my-credit-score/) (available at [myfico.com](http://www.myfico.com)) to see if it needs boosting. You’ll need a score of at least 620 to get a [mortgage](https://money.com/collection-post/what-mortgage-is-right-for-me/); the best rates require a score of 740 or above, says Keith Gumbinger, vice president of mortgage information company HSH.

Next, [set a budget](https://money.com/collection-post/sticking-to-budget/). The standard rule is to aim for a home that costs no more than 2.5 times your gross annual salary, For a $100,000 salary, that’s a $250,000 home. See "How much house can I afford?"

Talk to a lender about your loan options. Most likely you will choose between a *fixed-rate loan*, with an interest rate and payment that stays the same for the life of the loan (usually 15 or 30 years), and an *adjustable-rate mortgage,* or ARM, with an initial fixed interest rate that adjusts after a set period. A 5/1 ARM, for example, has a fixed rate for the first five years, then adjusts annually.

Lenders typically require a 20 percent down payment, but if you can’t scrape together that much cash, you may qualify for a low-down payment FHA or VA loan.

Ready to start shopping? Choose a lender and get preapproved. Preapproval is not to be confused with prequalification, which is a lender’s cursory assessment of how much [mortgage you can afford](https://money.com/collection-post/pay-off-mortgage/). Preapproval is based on your actual income, debt and credit history.

If your market is particularly competitive, you may want to go a step further into pre-underwriting, a thorough review of all the documentation required for a formal approval. Doing that work ahead of time will strengthen your offer by showing the seller you mean business—and can close the deal.

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