How Much Money Do I Need to Buy a House?

Figuring out how much money you need to buy a house—or if you should buy a house, period—requires some self-reflection and budgeting. Here are some of the costs that come with buying a house:

• Down payment: The amount you pay upfront when you buy a home.
• Closing costs: Includes appraisal fees, title fees, and sometimes loan application fees.
• Escrow: A prepaid expense that your mortgage lender puts in an account for you to pay for property taxes and interest.
• Mortgage payments: The monthly payment toward your loan.

How Much Is a Down Payment on a House?

The average down payment first-timers pay is about 6% of the home price, typically between $10,000 and $15,000, according to the National Association of Realtors Research Group.

Overall, the down payment depends on the type of mortgage loan you get approved for.

What Credit Score Is Needed to Buy a House?

The higher the credit score, the lower the interest rate on a loan.

Can You Buy a House With Bad Credit?

First, let’s look at the credit score model from Fair Isaac Corporation, or FICO, to determine what a “bad” score is:

• Poor: <580
• Fair: 580 to 669
• Good: 670 to 739
• Very good: 740 to 799
• Excellent: 800+

If your credit score falls somewhere in the 500s, you still have options; they’re just a bit more limited. One of these options is the Federal Housing Administration loan, a government-issued home mortgage that requires a lower minimum down payment. The FHA loan is designed to help low- to moderate-income families and first-time homebuyers.

This overview from the U.S. Department of Housing and Urban Development provides more details on the FHA loan.

How Long Does It Take to Buy a House?

Buying a house isn’t something you can knock out in one day. It depends on the housing market and what you’re looking for. The National Association of Realtors identifies these six key steps to buying a home:

1. Get ready: Save, build credit, and get preapproved for a mortgage.
2. Find an agent.
3. Hunt for a house.
4. Lock in your mortgage and financing.
5. Make an offer.
6. Close on your new property.

When Is the Best Time to Buy a House?

You’ve probably seen a case made for each season or any time of year. But really, the best time to buy a house is when you’re ready. There will always be real estate agents and news headlines telling buyers that prices will go up and that the time is now. Yet, it’s important to think about the long-term before you buy a house. Ask yourself: Is this where I want to live, and is this a mortgage I can afford?

If buying a home is one of your financial goals, learn how it can fit into your plans:

Not sure yet if you can, or even want to, buy a house? Remember, your financial plan and goals are based on what you want to do, not what everyone else is doing. Explore these perspectives from other Morningstar contributors: