Your pre-approval letter says $520,000. Your savings account says $61,000. Those two numbers are about to have a long, awkward conversation, and the next few months will decide which one wins.
Nobody hands you a manual at the open house. So here’s the version I wish someone had given me the first time: what to check, what to question, and where the money actually goes.
Start With the Numbers, Not the Listings
Browsing listings is free. Regret is not. Before you tour a single property, get clear on two separate figures: what a lender will approve and what you can genuinely afford month to month.
Approval is not affordability
Most conventional lenders cap your total debt at 43% of gross monthly income, and some will stretch to 50%. A household earning $8,000 a month could qualify for a payment near $3,400. That leaves roughly $1,500 for food, insurance, car repairs, and the water heater that quits on a Sunday. Underwriters don’t factor in the water heater. You should.
A useful gut check: keep your housing payment under 28% of gross income. On $96,000 a year, that’s about $2,240 a month including taxes and insurance.
The costs that never make the brochure
- Down payment: 20% avoids private mortgage insurance, but plenty of first-time buyers close with 5% to 10% down.
- Closing costs: 2% to 6% of the purchase price. On a $400,000 home, that’s $8,000 to $24,000.
- Home inspection: $300 to $600, more for large or older houses.
- Appraisal: $500 to $800, typically paid before closing.
- Moving and setup: truck rental, utility deposits, a locksmith, blinds nobody warned you about. Budget $1,500 minimum.
- Maintenance: plan on 1% of the purchase price each year. A $400,000 house means $4,000 set aside annually.
Add the first-year total up before you shop. If it stings now, it will not sting less in June.
Build Your Team Before You Fall for a House
Emotional decisions get made at open houses. Good teams prevent them.
The buyer’s agent
Interview two or three. Ask how many transactions they closed in the past year and whether they’ve negotiated in your specific price band. Since 2024, buyer-agent compensation is often negotiated separately from the seller’s side, so get the fee in writing before you tour anything.
The lender
Get at least two Loan Estimates. Rate shopping inside a 14-day window typically counts as one credit inquiry, which means you can compare without wrecking your score. Ask about points, origination fees, and whether the rate is locked and for how long.
Tour Houses With a Checklist, Not a Feeling
The staging is designed to make you imagine your life there. Your job is to imagine your bank account there. Walk in asking about the roof, the HVAC, and the age of the electrical panel. Those three items run $8,000 to $20,000 combined when they fail.
Reasons to walk away
- Foundation cracks wider than a quarter inch, or doors that stick in every room.
- A roof over 20 years old with no recent inspection paperwork.
- Water stains on basement walls or ceilings, freshly painted over.
- Neighbours with obvious drainage problems that will become yours.
- A seller who refuses to allow an inspection. That answer tells you plenty.
Reasons to slow down rather than leave
Old windows, dated kitchens, and worn carpet are cosmetic. They’re negotiable, and they’re often where the value hides.
Writing an Offer That Wins Without Overpaying
Price gets the attention, but terms close deals. In a competitive situation, sellers weigh three things: how much, how certain, and how fast.
Earnest money usually runs 1% to 3% of the purchase price and sits in escrow. It signals you’re serious. An escalation clause can raise your bid automatically up to a cap, though some sellers dislike them. Covering an appraisal gap, promising to pay a set amount if the appraisal comes in low, is powerful and risky. Cap that number at what you can actually cover in cash.
Keep your inspection contingency. Waiving it feels bold until you discover the sewer line needs $12,000 of work.
The Inspection Is Where You Get Your Leverage
Attend the inspection in person. Two hours of walking the property with the inspector teaches you more about the house than any listing ever will. Ask what’s urgent, what’s routine maintenance, and what’s purely cosmetic.
Once you have the report, request repairs rather than a price cut when the issue is safety or structural. Sellers will fix a gas leak; they’re less eager to hand over cash. For smaller items, a credit at closing works fine.
Under Contract: The Quiet, Expensive Middle
This stretch feels like waiting in an airport. Use it.
- Don’t open new credit cards, finance a car, or change jobs if you can help it.
- Get homeowner’s insurance quotes early. Roof age and flood zones change the price dramatically.
- Read the HOA documents. Rules, reserves, and pending assessments all live in those pages.
- Confirm your rate lock expiration date and what happens if closing slips.
Closing Day and the First Ninety Days
Verify the wire instructions by phone with a number you looked up yourself, not the one in the email. Wire fraud on real estate transactions is common, and once the money leaves, it’s gone. Many buyers now use a cashier’s check for that reason. Never wire funds on a Friday.
Then the keys are yours. Change the locks, locate the main water shutoff, and label your electrical panel. Hang on to every receipt for improvements. They raise your cost basis and reduce taxes when you eventually sell.
Introduce yourself to the neighbours within the first week. They’ll tell you which contractor is good, when the bins actually get collected, and which corner floods. That’s information no inspection report contains, and it’s worth more than most of what you paid for.