The question I get more than any other, right after “how much do I need to make,” is this one: where do I even start?
Here’s the order. It matters. Do it in this order and you don’t waste weekends touring houses you can’t buy. Do it backwards and you fall in love with a house before you know your number — and that’s how people get hurt.
1. Get your finances in order first
Before you talk to a lender, before you work with a real estate agent, before you go find your dream home — set your own budget. Understand what you’re currently spending and what you’re paying for housing now, and add in an emergency fund. You’re on the hook to repair and fix your own home — you are your own landlord — so make sure you can afford to take care of problems when they come up.
That dollar amount becomes very important when you talk to a lender. Just because you were approved for a certain amount doesn’t mean that’s how much you want to be paying.
Get your financial documents ready, ideally as PDFs in one organized place on your computer so they’re easy to upload or email. The typical list:
- Last 2 pay stubs
- W-2s from the last 2 years
- Taxes from the last 2 years
- Last 2 bank statements
- Any legal documents you have, such as divorce decrees or bankruptcy documents
- If you have cash, get it into your bank account now — not in a safe in your house. You may have to wait 60+ days before you can use it as part of your home-buying process.
And know your credit. I suggest going to myFico.com and paying to get all three reports. Look at the mortgage numbers — the middle score of the three is what gets used. Make sure there isn’t anything inaccurate on the report. If you’re below 620, you’ll likely need to work on your credit first.
One thing that surprises people: don’t expect a huge difference in rates because of your credit score. It’s not like buying a car — you don’t get 2% with an 800 credit score (FICO — the scoring system lenders use) and 10% with a 600. More often, a lower score limits which programs you qualify for and means a higher down payment.
2. Find a lender first
Not a realtor. Not Zillow. A lender. Step one is a person who can tell you your real number — what you can actually borrow, and what the payment looks like. Everything else in this process depends on that number, so get it before you do anything else.
There’s some debate about talking to a lender first or a real estate agent first. If you already have a trusted real estate agent, talk to them about referring you to a lender they’ve done multiple deals with — and most agents won’t want to work with you until you’ve shown the commitment of working with a lender or are already pre-approved. Either way, the lender comes before the touring.
The lender will take your application over the phone, in person, or through an online application. They’ll ask for the documents above, and then, based on your income and expenses, issue you a pre-approval letter.
3. Get pre-approved
I can do a pre-approval in 5 to 20 minutes with 2 pay stubs and 2 bank statements. That’s it. That’s the whole list to start.
Pre-approval is not pre-qualification. Pre-qualified means a website ran a rough guess. Sellers don’t care about that. Pre-approved means a lender actually looked at your income and your documents. That’s the one that counts when you make an offer.
Two things to know: a pre-approval letter isn’t a guarantee you’ll get the loan — not until you have an offer accepted will the lender have all the information they need to confirm you meet every requirement. And your real estate agent will usually need the pre-approval letter to get you into private home showings. Open houses are open to the public and typically don’t require any representation or a pre-approval letter.
Be honest with me upfront. If something in your file is messy — a gap in employment, a debt you forgot about, a credit hit — I’d rather know now than find out in underwriting when there’s a deadline and a seller waiting.
4. Find a full-time local realtor
Now you bring in the agent. Full-time. Local. Someone who knows your neighborhoods and does this every day. If you don’t know any agents you trust, ask your lender if they have any they can refer — they often work with a few regularly. You can also post on Facebook to your network for a realtor referral, or do an online search for agents in your area. Want to get connected with a vetted agent right away? The site’s agent finder (Find Your Agent) connects you with a qualified local agent.
I go deep on how to pick one in Choosing a Real Estate Agent — the short version is: interview them like it matters, because it does.
Once you’ve talked to an agent and feel comfortable with them, they’ll help you search. Be very honest about what’s most important to you, what’s important but not a deal breaker, and what would just be a bonus in a home.
5. Shop inside your budget
Not the max you qualify for. Your budget. The approval number is a ceiling, not a target — I tell my buyers to keep housing around 25% of pre-tax income, and I explain why in How to Budget for Buying a House.
Here’s what the payment actually looks like, so you know what “budget” means. A $700,000 house on FHA — 3.5% down, 30-year fixed at 6.94% — is $5,881 a month, all in: principal and interest, property tax, insurance, and mortgage insurance. In plain dollars: for every $100 you bring home before taxes, FHA lets up to $56 go to your debts, house payment included. With no other debts, that takes about $126,000 a year. At my 25% rule, it’s $282,300. That’s the gap between “the bank will approve you” and “you can live with it.” Run your own number in the Home Affordability Calculator before you start touring.
Property tax at 1.25% and insurance at about 0.5% of the home’s value a year in that math are estimates — your county and your quote will differ. No HOA or closing costs included.
6. Then you offer, and the process runs
Offer. Earnest money within 24 hours — and call escrow to verify the wire instructions before you send a cent. Inspections, appraisal, underwriting, closing. Done. Keys.
The appraisal is the one that surprises people. Say you offer $300,000 and it appraises at $290,000. That $10,000 gap is real money. You renegotiate, you pay the difference, or you walk. The bank won’t lend on a house that isn’t worth it.
I walk through every step in The Basics of Buying a Home — From Start to Finish.
My Take
Don’t fall in love with a house before you know your number.
What to do with this
- Run your numbers in the Home Affordability Calculator — put in your actual debts, not the ones you wish you had.
- If the cash is the problem, read Down Payment Assistance in California: Every Program Worth Knowing in 2026.
- If your credit is under 680, read FHA Loan in 2026 — it might be your lane.
- Then start your pre-approval and I’ll run your exact numbers.
Hear me walk through this on the podcast: Episode 1 — The Basics of Buying a Home from Start to Finish. Start here: Start Here hub.
Rates move. Your actual payment depends on your rate, your credit, your county’s tax rate, and your insurance. This is education, not a rate quote or a loan approval.