Buying a house takes most buyers two to four months from preapproval to keys, and 30 – 45 days of that is the under-contract stretch between an accepted offer and closing day. You do not need 20% down to get there: conventional loans start at 3% down, FHA loans at 3.5% with a 580 credit score, and VA and USDA loans allow 0% down for buyers who qualify.

Plan on closing costs of 2% – 5% of the purchase price on top of your down payment, and expect most conventional lenders to look for a credit score of 620 or higher. Those four numbers, timeline, down payment, closing costs, and credit score, shape nearly every decision you’ll make.

Learn how home buying works from your first budget conversation to closing day, including what you need to qualify, how the offer-to-closing process actually unfolds, which strategies win in competitive markets, and what Michigan buyers should know about MSHDA assistance.

Key takeaways:

• Typical timeline: Most buyers spend two to four months from preapproval to keys, and 30 – 45 days of that is the under-contract phase covering inspection, appraisal, underwriting, and closing.
• Cash you actually need: A 20% down payment is not required, conventional loans start at 3% down and FHA loans at 3.5%, but budget another 2% – 5% of the purchase price for closing costs.
• Where to start: Get preapproved before you tour a single home, then compare pricing from more than one lender. As an independent broker, Align Lending shops your file across a network of more than 75 wholesale lenders so one application produces competing offers.

What do you need to buy a home?

To buy a home you generally need four things: a down payment of 0% – 3.5% depending on the loan program, a credit score of at least 580 – 620, a debt-to-income ratio that leaves room for the new payment, and enough cash left over to cover closing costs of 2% – 5% of the purchase price. Nothing about that list requires a perfect financial history. It requires a documented one.

Here’s what each requirement means in practice:

• Credit score: Most conventional loans start at a 620 score, FHA loans at 580 with 3.5% down (or 500 – 579 with 10% down). Higher scores generally earn better pricing, and the jump from 680 to 740 is often worth real money over 30 years.
• Down payment: The 20% rule is a myth. Conventional programs go as low as 3% for qualified buyers, and there are several paths to buying a home with a low down payment without wrecking your monthly budget.
• Debt-to-income (DTI) ratio: Your DTI is your total monthly debt payments divided by your gross monthly income. Many lenders will approve DTIs in the 45% – 50% range with strong credit or reserves, though the classic guideline keeps housing at or under 28% of gross income and total debt under 36%.
• Cash to close: Beyond the down payment, closing costs typically run 2% – 5% of the purchase price and cover the appraisal, title work, lender fees, prepaid taxes, and insurance escrows.
• Documented, stable income: Underwriters want two years of income history they can verify. Self-employment, commission, and bonus income all qualify, they just require more paperwork.

If you’re still weighing whether now is the right time at all, the honest comparison between renting and buying depends on how long you plan to stay, not on what the market did last quarter. Holding off a year to build savings and credit is always a legitimate option.

Home buying requirements by loan type

Requirements shift meaningfully by program, and the right program is usually the one that matches your down payment and credit profile rather than the one your neighbor used.

Requirement	Conventional	FHA	VA	USDA
Minimum down payment	3%	3.5% (580+ score)	0%	0%
Typical minimum credit score	620	580 (500 – 579 with 10% down)	No program minimum; lenders often set 580 – 620	640 at most lenders
Mortgage insurance	PMI until you reach 20% equity	Upfront plus annual MIP, often for the life of the loan	No monthly mortgage insurance; one-time funding fee	Upfront plus annual guarantee fee
Main eligibility limit	Conforming loan limits	County FHA loan limits	Qualifying military service	Eligible rural area and household income caps

Because Align Lending is a broker rather than a direct lender, we can place all four of these programs through partner lenders including USDA loans that many retail banks quietly stopped offering. Align Lending is not acting on behalf of or at the direction of FHA or HUD, and is not endorsed or sponsored by the Department of Veterans Affairs or any government agency.

Now that you know what qualifying takes, here’s how to get your finances into shape before you shop.

Step 1: Get your money and your credit ready

Give yourself three to six months of preparation before you make an offer, that’s usually enough time to raise a credit score, document deposits, and build the cash cushion lenders want to see. Everything in the preparing to buy stage exists to make the later steps boring, which is exactly what you want.

• Set a real payment budget: Start with the monthly payment you can live with, then work backward to a price. Budgeting for your first home means accounting for principal, interest, taxes, insurance, mortgage insurance, and any HOA dues, not just the loan payment.
• Build the down payment on a schedule: On a $300,000 home in Waterford, 3% is $9,000 and 5% is $15,000. Setting a monthly target and automating it is the whole trick to saving for a down payment without derailing the rest of your life.
• Budget for closing costs separately: On that same $300,000 purchase, 2% – 5% works out to roughly $6,000 – $15,000. Learning how to budget for closing costs early keeps you from being $8,000 short three days before signing.
• Document gift money correctly: Family help is allowed on most programs, but financing a home purchase with gift funds requires a signed gift letter and a clean paper trail from the donor’s account to yours. Undocumented deposits are one of the most common underwriting delays.
• Clean up credit early: Pull your reports, dispute errors, and pay revolving balances below 30% of their limits. Then stop opening new accounts. A new car loan between preapproval and closing can undo the approval.

The last step in this phase is preapproval. The importance of mortgage preapproval is hard to overstate: it converts a guess about your budget into a lender-verified number, and in most markets a listing agent won’t present your offer without a preapproval letter attached. The CFPB’s home buying tools walk through the same shopping sequence from the regulator’s side.

Step 2: Know the programs built for first-time buyers

First-time buyers get access to assistance money that repeat buyers usually don’t. Down payment grants, forgivable second loans, reduced mortgage insurance, and lender credits that can cut cash to close by thousands. You typically count as a first-time buyer if you haven’t owned a primary residence in the past three years, which surprises a lot of people who owned a home a decade ago.

Start at the first-time home buyers hub, then work through the pieces that apply to you:

• Assistance and grants: State and local first-time home buyer grants and programs can cover part or all of a down payment, and many stack with conventional or FHA financing rather than replacing it.
• Program eligibility rules: Most assistance carries income caps, purchase price limits, and a homebuyer education requirement. Comparing the current first-time buyer programs side by side is how you find the one you actually qualify for.
• Tax considerations: There is no universal federal first-time buyer tax credit today, but Mortgage Credit Certificates and state-level benefits still exist in some markets. Read up on first-time home buyer tax credits, and talk with a tax professional about your specific situation before you count on any of it.
• Avoidable first-purchase mistakes: Skipping the inspection, maxing out the approval amount, and shopping with only one lender are the three that cost the most. These first-time home buyer tips cover the rest.
• The full walkthrough: If you want the whole arc in one place, purchasing your first house covers the emotional and logistical parts this guide compresses.

Once your financing plan is set, the process itself takes over.

Step 3: How the home buying process works, from offer to keys

Once your offer is accepted, expect 30 – 45 days of parallel work: inspection, appraisal, title search, and underwriting all run at the same time, and closing happens when the slowest one finishes. The home buying process is far less mysterious once you can see the phases laid out.

Phase	What happens	Typical duration
Preparation	Budget, credit cleanup, down payment savings, preapproval	1 – 6 months
House hunting	Touring homes, comparing neighborhoods, writing offers	2 weeks – 6 months
Under contract	Inspection, appraisal, title work, underwriting, conditions	30 – 45 days
Closing week	Closing Disclosure review, final walk-through, signing, funding	3 – 7 days

The stages inside that under-contract window follow a reliable order:

• Find the home and build your team: Finding a home goes faster with a buyer’s agent who knows the inventory, and their commission arrangement should be in writing before you tour.
• Write the offer: Your offer names a price, an earnest money deposit (commonly 1% – 3% of the purchase price), a closing date, and the contingencies in home offers that let you walk away if the inspection, appraisal, or financing goes sideways.
• Inspect the property: A general home inspection usually costs $300 – $600 and takes two to four hours. Working through a home inspection checklist tells you which findings are negotiating points and which are deal breakers.
• Clear the appraisal: Your lender orders the appraisal, which typically costs $400 – $700 and takes one to three weeks to come back. The home appraisal process protects the lender’s collateral, and a low value means renegotiating, bringing cash, or walking.
• Close the loan: Your Closing Disclosure must arrive at least three business days before signing so you can compare it against your Loan Estimate. The home closing process ends with a final walk-through, a stack of signatures, wired funds, and the deed recording with the county.

One rule governs this entire window: don’t change anything financially. No new credit cards, no financed furniture, no job changes, no large unexplained deposits. Underwriters re-verify credit and employment shortly before closing, and buyers lose approvals at the finish line for exactly these reasons.

Step 4: Buying strategies for competitive markets and unusual homes

Strategy matters most in two situations: when you’re competing against other offers, and when the property itself is unusual. In both cases the buyers who win are the ones who decided their limits before the emotion started. The buying strategies hub collects the tactics for each scenario.

• Write a stronger offer without overpaying: Price is only one lever. Flexible closing dates, a larger earnest deposit, and a clean, verified preapproval all help you create a competitive offer that a seller takes seriously.
• Negotiate on the things that matter: Repairs, closing cost credits, and possession dates are often easier wins than price. Negotiating a home purchase works best when you know which concessions actually cost the seller something.
• Handle multiple offers calmly: Set your ceiling in writing before you bid. Knowing how to handle a bidding war mostly means knowing when to stop, because the appraisal still has to support the price you agree to.
• Adjust to the market you’re in: Inventory drives leverage. Navigating a seller’s market as a buyer calls for speed and clean terms; a buyer’s market lets you ask for credits and repairs that would be laughed at a year earlier.
• Consider homes other buyers skip: Cosmetic problems scare off competition. The advantages of buying a fixer-upper include a lower entry price and renovation loan options that finance the repairs into the mortgage.

After the strategy pays off and you’re under contract, the last stretch is logistics.

Step 5: Move in and settle into the new house

Budget four to six weeks for the moving phase and roughly $1,500 – $5,000 for a local professional move, depending on home size and how much you pack yourself. The moving and settling in hub covers the part of home buying nobody schedules and everybody underestimates.

• Build a moving timeline: Start eight weeks out with decluttering and utility transfers. These moving tips sequence the tasks so closing week isn’t also packing week.
• Vet your movers: Get at least three written estimates and verify the company’s federal registration before you pay a deposit. Hiring movers is one of the easiest places to get scammed in the entire transaction.
• Ask the right questions first: Binding versus non-binding estimates, valuation coverage, and extra fees for stairs or long carries all change the final bill. Run through the questions to ask movers before signing anything.
• Give the goodbye its due: The emotional side of leaving an old home is real, especially for kids and for long-tenured owners. Naming it helps more than ignoring it.

What Michigan buyers should know

Michigan buyers get one of the strongest state assistance programs in the Midwest and a few local cost quirks worth planning for. Align Lending is based in Waterford, and these are the four items that come up on nearly every Michigan purchase file.

• MSHDA down payment assistance: The Michigan State Housing Development Authority pairs a 30-year fixed MI Home Loan with down payment assistance of up to $10,000 in eligible areas, generally requiring a 640 credit score and completion of homebuyer education. Confirm current eligibility and funding availability through MSHDA’s homeownership programs.
• Transfer tax: Michigan charges $8.60 per $1,000 of sale price. $7.50 state plus $1.10 county, and it is customarily paid by the seller. On a $300,000 sale that’s roughly $2,580, and it is negotiable like any other term.
• Principal residence exemption: Filing a PRE affidavit with your local assessor exempts your primary home from up to 18 mills of local school operating tax. Miss the filing and you pay a materially higher tax bill for the year.
• Summer and winter tax bills: Michigan bills property taxes twice a year, and proration at closing frequently confuses buyers who moved from a single-bill state. Rules like these are why state-specific home buying regulations deserve a look before you write an offer.

Michigan’s slower winter market is also a genuine opportunity: fewer listings come out between November and February, but there are fewer competing buyers, and sellers who list in January usually need to move.

FAQ: Buying a home

Here are answers to common questions about buying a home.

Can I buy a house with no money down?

Yes, if you qualify for a VA or USDA loan, both of which allow 0% down. Outside those programs, down payment assistance can cover most or all of the required down payment for eligible buyers, and gift funds from family are permitted on nearly every loan type. Buyers with tight budgets should start with the options for buying a home with low income, since income limits often unlock the best assistance.

Should I get preapproved before I start looking at homes?

Yes. Preapproval defines your real price range and tells listing agents your offer is backed by a lender’s review of your credit, income, and assets. Prequalification is a lighter estimate based on numbers you report yourself. The difference between being prequalified and preapproved matters most in competitive markets, where many sellers won’t consider an offer without a preapproval letter attached.

How much are closing costs when you buy a house?

Closing costs typically run 2% – 5% of the purchase price, so $6,000 – $15,000 on a $300,000 home. They cover lender fees, the appraisal, title insurance and search, recording fees, and prepaid property taxes and insurance. You can often negotiate seller-paid closing costs into the purchase agreement, which is one of the most underused ways to reduce cash to close.

Can I back out of buying a house after my offer is accepted?

It depends on your contingencies. If your purchase agreement includes inspection, appraisal, and financing contingencies and you cancel within those deadlines, you generally recover your earnest money deposit. Waive them or miss a deadline and the deposit is usually at risk. Read up on home purchase contingencies before you sign, because they are the only formal exits you get.

How many mortgage lenders should I compare before choosing one?

At least three. Pricing on the same borrower profile varies between lenders because their costs, appetites, and overlays differ, and the gap shows up in both the rate and the fees. Compare quotes against current market rates in the weekly Freddie Mac Primary Mortgage Market Survey, and note that the benefits of mortgage pre-qualification include seeing that spread early. A broker does the comparison for you from one application instead of five.

What happens if the appraisal comes in below the purchase price?

The lender lends against the appraised value, not the contract price, so a low appraisal creates a gap someone has to cover. Your options are to renegotiate the price, bring the difference in cash, split it with the seller, or walk away if your contract has an appraisal contingency. Our walkthrough of the home appraisal process covers how to dispute a value.

How long does closing take after my offer is accepted?

Plan on 30 – 45 days for a financed purchase, and 1 – 2 weeks for a cash sale. Inspection and appraisal run in the first two weeks, underwriting takes the middle stretch, and the final week covers the clear-to-close, the closing disclosure, and the walkthrough. Our guide to the home closing process breaks down each step and what delays it.

The bottom line on buying a home

Buying a home takes most buyers two to four months from preapproval to keys, with 30 – 45 days of that spent under contract while the inspection, appraisal, and underwriting run. You do not need 20% down. Conventional loans start at 3%, FHA at 3.5%, and VA and USDA at 0% for qualified buyers, but you do need closing costs of 2% – 5% of the purchase price, a credit score of roughly 580 – 620 or better, and a documented income history. Prepare your file first, get preapproved before you shop, and compare more than one lender’s pricing before you commit.

If you’re ready to buy a home, talk to Align Lending, we’ll shop your scenario across our lender network and show you the numbers side by side. Call 248-506-5727 or start online today.

This article is for informational purposes only and is not intended to provide legal, financial, or tax advice. Consult a qualified professional about your situation. Program terms and figures shown are illustrative, are not a rate quote or an offer of credit, and are subject to change. Align Lending works with FHA- and VA-approved lenders and is not acting on behalf of, endorsed by, or sponsored by FHA, HUD, the Department of Veterans Affairs, or USDA.