Quick answer
Buying a home with a mortgage means getting pre-approved, saving a down payment of 3% to 20% (or nothing with VA and USDA loans), and budgeting $2–$5 per $100 of price for closing costs. On the US median home value of $360,600 with 10% down at the 7.24% weekly average rate, the full monthly payment comes to about $2,789 including taxes, insurance and PMI.
Key facts
7.24%
30-year fixed average (Freddie Mac)
Freddie Mac Primary Mortgage Market Survey · Week of Oct 29, 2026
$360,600
US median home value
US Census Bureau, American Community Survey 2024 1-year · 2024 ACS 1-year
The home-buying process in eight steps
Most purchases follow the same order. Lenders, agents and title companies each handle a slice, but the decisions are yours, and the numbers you lock in early — credit score, down payment, rate — shape everything after.
Check your budget and credit
Pull your credit reports, list every monthly debt and work out how much of your gross income a housing payment would take. Our mortgage payment calculator shows the full monthly cost, not just principal and interest.
Get pre-approved
A lender verifies income, assets and credit and states how much it is willing to lend. A pre-approval letter makes your offer credible; see mortgage pre-approval.
Choose a loan type
Conventional, FHA, VA and USDA loans differ in down payment, mortgage insurance and credit rules. The loan types hub compares them.
Shop rates and request Loan Estimates
Each lender must send a Loan Estimate within 3 business days of your application, on a standard form that makes offers easy to compare.
Make an offer and put down earnest money
Your agent writes the contract, usually with inspection, appraisal and financing contingencies that protect your deposit.
Inspection, appraisal and underwriting
The inspector checks the house, the appraiser checks the price, and the underwriter re-checks you. Don’t open new credit or change jobs during this stage.
Lock your rate and review the Closing Disclosure
You receive the Closing Disclosure at least 3 business days before closing. Compare it line by line with your Loan Estimate.
Close and get the keys
Bring the cash to close (down payment plus closing costs), sign the note and deed of trust or mortgage, and the home is yours.
How much house can you afford?
Lenders start from your gross monthly income and two ratios. The housing ratio compares the full housing payment — principal, interest, property tax, insurance, mortgage insurance and any HOA dues — with income. The debt-to-income ratio (DTI) adds car loans, student loans, card minimums and other debts.
Freddie Mac’s consumer guidance suggests keeping housing below 30% of gross income and all debts below 45%. Those are comfort targets, not hard limits: Fannie Mae’s Desktop Underwriter can approve loans with a DTI up to 50%, while manually underwritten loans start at 36%.
| Gross income | Housing budget | Home price | 10% down payment |
|---|---|---|---|
| $50,000 | $1,250 | $162,000 | $16,200 |
| $75,000 | $1,875 | $242,000 | $24,200 |
| $100,000 | $2,500 | $323,000 | $32,300 |
| $150,000 | $3,750 | $485,000 | $48,500 |
The table assumes no other debts. Every $100 of monthly debt you carry trims the price you can afford by roughly the amount that $100 a month would have borrowed. Our article on how much house you can afford on $75,000 works through debts, down payment and rate changes in detail.
Down payment: how much do you really need?
Twenty percent is a target, not a requirement. Conventional loans backed by Fannie Mae or Freddie Mac can start at 3% down, FHA loans at 3.5% with a 580 or higher credit score, and VA and USDA loans at 0% for eligible buyers.
| Loan type | Minimum down payment | Mortgage insurance |
|---|---|---|
| Conventional | 3% | PMI below 20% down; cancellable |
| FHA | 3.5% | Upfront 1.75% plus annual MIP (often 0.55%) |
| VA | 0% | None; a one-time funding fee may apply |
| USDA | 0% | Guarantee fees; income up to 115% of area median |
A bigger down payment lowers the loan, the monthly payment and often the rate, and at 20% it removes PMI on a conventional loan. On the median-value home, going from 10% to 20% down cuts the monthly cost from $2,789 to $2,381. The trade-off is cash: money in the house is money not available for repairs or emergencies. Many state housing finance agencies offer down-payment assistance — Texas programs, for example, cover 2%–5% of the loan amount.
Private mortgage insurance (PMI)
PMI protects the lender, not you, when you put less than 20% down on a conventional loan. Freddie Mac puts the typical cost at about $30 to $70 a month for every $100,000 borrowed — on the $324,540 example loan that is roughly $97 to $227 a month, depending mostly on credit score and down payment.
FHA loans charge an upfront premium of 1.75% of the loan plus an annual premium; for a typical 30-year FHA loan with less than 5% down the annual rate is 0.55%, and it lasts for the life of the loan. That difference is why buyers with good credit often compare FHA and conventional quotes side by side — see PMI explained.
Closing costs
The CFPB estimates closing costs at $2 to $5 for every $100 of the purchase price, paid at closing on top of the down payment. They cover lender fees, the appraisal, title insurance, recording fees, prepaid interest and the first deposits into your escrow account for taxes and insurance.
Closing costs on the US median home value
At $360,600, the CFPB’s range works out to $7,200 at the low end and $18,000 at the high end. State taxes make a big difference: Texas has no real estate transfer tax, while other states charge one at recording. The Texas guide shows the state-specific items.
You can negotiate some costs: lender fees, the title company (in many states), and seller credits toward your costs. Compare the Loan Estimate and the Closing Disclosure; certain fees cannot rise at all between the two, and others only within limits.
Credit score requirements
Minimums depend on the loan type. FHA requires a decision score of at least 580 for maximum financing; scores from 500 to 579 are capped at 90% loan-to-value, which means at least 10% down. Fannie Mae requires 620 for manually underwritten fixed-rate loans. Since November 2025 its Desktop Underwriter no longer applies a minimum score, assessing the whole file instead — but a higher score still buys a lower rate and cheaper PMI.
Debt-to-income ratio
DTI is total monthly debt payments, including the new housing payment, divided by gross monthly income. A household earning $100,000 a year has $8,333 a month of gross income; at Fannie Mae’s 36% manual-underwriting limit, all debts including housing must stay under $3,000. That limit rises to 45% with strong credit and reserves, and 50% through Desktop Underwriter. Paying off a small loan before applying can move you across a threshold.
Rates, points and the Loan Estimate
Freddie Mac’s survey is the benchmark: the 30-year fixed averaged 7.24% and the 15-year 6.6% in the latest week. Your quote can sit above or below that depending on credit, down payment, loan type, occupancy and whether you pay discount points to buy the rate down. Request Loan Estimates from at least three lenders on the same day, and compare section A (origination charges), the rate, the APR and the cash to close.
The monthly payment on a typical home
US median home value, 10% down, 30-year fixed at 7.24%
| Part of the payment | Monthly |
|---|---|
| Principal and interest on $324,540 | $2,212 |
| Property tax at 0.89% a year | $267 |
| Homeowners insurance at $4.90 per $1,000 of value | $147 |
| PMI (midpoint of Freddie Mac’s range) | $162 |
| Total | $2,789 |
Tax uses the national ratio of median taxes paid to median home value from the Census Bureau; insurance uses Freddie Mac’s 2023 average per $1,000 of value. Your state and quotes will differ.
Mistakes first-time buyers make
- Shopping before pre-approval. Without it, sellers discount your offer and you may fall for a house the lender won’t finance.
- Draining savings for the down payment. Keep reserves for repairs, moving and the first months of ownership; lenders like to see them too.
- Comparing rates, not costs. A lower rate with two points can cost more over the years you actually keep the loan.
- Ignoring taxes and insurance. In high-tax or high-insurance states they can add hundreds a month; check the state guides.
- Skipping the inspection. Appraisals check value, not condition.
All buying a home guides
Frequently asked questions
How much do I need to save to buy a house?
Plan for the down payment plus closing costs plus a cushion. With 10% down on a $300,000 home, that is $30,000 down and $6,000–$15,000 in closing costs at the CFPB’s typical 2–5% range, before moving costs and reserves.
Is 20% down required to buy a house?
No. Conventional loans start at 3% down, FHA at 3.5% and VA and USDA at zero for eligible buyers. Below 20% on a conventional loan you pay PMI until your balance reaches 78% of the original value.
How long does pre-approval last?
Every pre-approval letter carries an expiry date set by the lender, because your credit, income and assets must still be current when you close. Ask for the date up front and get the letter refreshed if your search runs past it.
What credit score do I need to buy a house?
FHA allows 580 and up with 3.5% down, or 500–579 with 10% down. Fannie Mae requires 620 for manually underwritten fixed-rate loans; automated approvals have no set minimum but price for risk.
How much are closing costs on a house?
Typically 2% to 5% of the purchase price according to the CFPB. They include lender fees, appraisal, title insurance, recording fees and prepaid taxes, insurance and interest.
What is a good debt-to-income ratio for a mortgage?
Freddie Mac suggests total debts under 45% of gross income and housing under 30%. Fannie Mae can approve up to 50% through its automated system, but a lower ratio leaves more room in your budget.
When do I get the Closing Disclosure?
At least 3 business days before closing. Compare it with your Loan Estimate; if the APR rises beyond set tolerances or the loan product changes, a new waiting period applies.
Sources
- Freddie Mac Primary Mortgage Market Survey — 30-year fixed rate, national weekly average; 15-year fixed rate, national weekly average (Week of Oct 29, 2026)
- US Census Bureau, American Community Survey 2024 1-year — Median value of owner-occupied homes (2024 ACS 1-year)
- US Census Bureau, American Community Survey 2024 1-year — Effective property tax rate (median taxes ÷ median home value) (2024 ACS 1-year)
- Freddie Mac Research — Average homeowners insurance premium per $1,000 of home value (2023 data)
- Freddie Mac My Home — Typical PMI cost, low end; Typical PMI cost, high end (Oct 28, 2026)
- CFPB — Typical closing costs, low end (share of purchase price); Typical closing costs, high end (share of purchase price); Minimum down payment on some conventional loans (Oct 28, 2026)
- Freddie Mac My Home — Freddie Mac guidance: housing costs below this share of gross income; Freddie Mac guidance: total debt payments below this share of gross income (Jan 22, 2026)
- Fannie Mae Selling Guide B3-6-02 — Fannie Mae maximum DTI, manually underwritten loans; Fannie Mae maximum DTI, Desktop Underwriter loans; Fannie Mae maximum DTI, manual underwriting with strong credit and reserves (Apr 2, 2025)
- CFPB — Lender must send the Loan Estimate within this many business days of your application (Oct 28, 2026)
- CFPB — You receive the Closing Disclosure at least this many business days before closing (Oct 28, 2026)
- U.S. Department of Veterans Affairs — VA purchase loan down payment (price at or below appraised value) (Jan 7, 2026)
- HUD Mortgagee Letter 2023-05 — FHA upfront mortgage insurance premium; FHA annual MIP, 30-year loan, more than 95% LTV (Feb 22, 2023)
- USDA Rural Development — USDA guaranteed loan down payment; USDA guaranteed loan income limit (share of area median income) (Oct 28, 2026)
- Texas Department of Housing and Community Affairs — TDHCA My First Texas Home assistance, low end (share of loan); TDHCA My First Texas Home assistance, high end (share of loan) (Program matrix Aug 17, 2026)
- CFPB — Ask your servicer to cancel PMI at this share of original value; PMI ends automatically at this share of original value (Oct 28, 2026)
- HUD Mortgagee Letter 2026-11 — FHA minimum score for maximum financing; FHA minimum decision credit score (90% LTV cap from 500 to 579) (Oct 8, 2026)
- Fannie Mae Selling Guide B3-5.1-01 — Fannie Mae minimum score, manually underwritten fixed-rate loans (Apr 22, 2026)
- HUD — 2026 FHA loan limit floor (one-unit, low-cost areas) (2026 limit)
- FHFA — 2026 baseline conforming loan limit (one-unit) (2026 limit)
- Fannie Mae Selling Guide Announcement SEL-2025-09 (minimum credit score removed for DU loans)
- CFPB: Can my final mortgage costs increase from what was on my Loan Estimate?
Last reviewed Figures are checked against the sources above. Read our editorial policy. This page is general information, not financial advice — see the disclaimer.