I Want to Buy a House. Where Do I Start?

You want to buy a home.

So naturally, you open Zillow.

I'd actually start somewhere else.

One of the biggest mistakes I see buyers make is falling in love with a house before they understand what buying it would actually mean for their finances.

Before we look at houses, I want to answer a few much more important questions:

What are you trying to accomplish?

What monthly payment actually feels comfortable?

How much money should you put down?

And what financing strategy gives you the best chance of reaching those goals?

That's where I believe the homebuying process should begin.

Step 1: Start With Your Goals

Before talking about mortgage rates or purchase prices, I want to understand why you're buying.

Are you:

• Buying your first home?

• Tired of renting?

• Planning to start a family?

• Looking for more space?

• Relocating?

• Trying to build long-term wealth?

• Buying an investment property?

• Planning to stay for three years—or twenty?

Those answers matter.

A mortgage isn't the goal.

The home and what it allows you to do with your life is the goal.

The financing should be built around that.

Step 2: Decide What Payment Feels Comfortable

There's an important distinction buyers don't hear enough:

What you qualify for and what you should spend are not the same number.

A lender evaluates things like your income, debts, credit and assets to determine how much you may qualify to borrow.

But a lender doesn't live your life.

Maybe you love traveling.

Maybe childcare is coming.

Maybe you want to continue investing aggressively.

Maybe eating out, skiing, golf or simply having financial breathing room is important to you.

Those things may not appear on a mortgage application, but they absolutely matter to your budget.

I don't want to start with your maximum approval. I want to start with your comfortable payment.

Then we work backward.

Step 3: Find Out What You're Working With

Now we look at the financial picture.

That generally includes:

• Income

• Credit

• Current monthly debts

• Savings and investments

• Available down payment

• Expected closing costs

• Emergency reserves

And don't assume you need 20% down.

Depending on your circumstances, there may be conventional, FHA, VA or other financing options with significantly smaller down payments.

Down payment assistance programs may also be available to qualified buyers.

Sometimes buyers discover they're financially ready much sooner than they thought.

Other times, we uncover something we should improve first.

Both outcomes are valuable.

Step 4: Build the Financing Strategy

This is where I believe a good mortgage professional earns their keep.

Getting someone approved is only the beginning.

There may be several ways to finance the exact same house.

For example:

Should you put 5%, 10% or 20% down?

Should you keep more cash invested?

Does paying mortgage insurance make sense?

Should you pay points to lower the interest rate?

Could a seller concession help with closing costs or an interest-rate buydown?

Could you qualify for down payment assistance?

Would FHA, VA or conventional financing be the better fit?

There isn't one mortgage that's best for everybody.

The right mortgage is the one that best supports your overall financial goals.

Step 5: Get Preapproved

Once we understand the strategy, it's time to get preapproved.

But here's another distinction that matters:

Not every preapproval is created equal.

Some preapprovals are based primarily on information entered into an online application.

I prefer to identify potential problems before you have thousands of dollars of earnest money at risk and a moving truck scheduled.

Depending on the situation, that means reviewing income, assets, credit and documentation upfront and determining whether anything needs additional attention.

A preapproval isn't a guaranteed loan offer, but getting preapproved early can help uncover potential issues while there's still time to address them.

The goal isn't simply getting a letter.

It's creating confidence that the financing behind that letter is solid.

Step 6: Now Go Look at Homes

Now we can open Zillow.

Better yet, this is where a great real estate agent becomes incredibly valuable.

You know:

• Your comfortable payment

• Your target price range

• Your financing options

• Approximately how much cash you'll need

• What your preapproval looks like

Now you're shopping with a plan instead of guessing.

And when the right house appears, you're in a much better position to act confidently.

Current CFPB guidance similarly recommends preparing your finances and budget before shopping seriously and exploring your mortgage choices before finding the home.

What If I'm Not Ready Yet?

Then we've still accomplished something important.

Maybe you need six months.

Maybe you want to improve your credit.

Maybe you'd benefit from paying off a particular debt.

Maybe we need to build additional savings.

Maybe buying right now simply doesn't make financial sense.

I'd much rather tell you that today than after you've fallen in love with a house.

Then instead of wondering, “Will I ever be able to buy?” we can create a roadmap.

Here's where you are.

Here's where you want to go.

And here are the steps between the two.

Dave's Take

After more than 26 years in mortgage lending, I've learned that buying a home doesn't need to feel nearly as complicated as people make it.

The problem is that buyers often start in the middle of the process.

They start looking at homes.

Then they start worrying about rates.

Then they try a mortgage calculator.

Then they wonder how much money they need.

Then someone tells them they need 20% down.

Then someone else tells them something completely different.

No wonder it feels overwhelming.

Start with the plan.

My preferred order is simple:

Goals → Comfortable payment → Financial picture → Financing strategy → Preapproval → Home search

Once those pieces are in the right order, everything gets easier.

The Bottom Line

If you're thinking about buying a home, you don't need to know everything before talking to someone.

In fact, that's the whole point.

You don't need all the answers. You need a plan for getting the answers.

And you don't have to be ready to buy next month.

If homeownership is six months, a year or even two years away, starting the conversation early gives you something incredibly valuable:

time.

Time to improve your finances if necessary.

Time to save.

Time to understand your options.

And time to make decisions without pressure.

So if buying a home is somewhere on your radar, don't start by asking:

“What houses can I buy?”

Start by asking:

“What would a smart homebuying plan look like for me?”

That's a much better place to begin.

About the Author

Dave Cook | Branch Manager & Loan Officer

Dave Cook is the founder of Denver Mortgage Lounge, a Division of Luminate Bank. For more than 26 years, he's helped individuals and families navigate mortgage financing and make smarter real estate decisions.

Dave's approach goes beyond getting a loan approved. He believes mortgage financing should support a client's broader financial goals and long-term wealth-building strategy.

Dave Cook
Branch Manager | Loan Officer
Denver Mortgage Lounge, a Division of Luminate Bank
201 Columbine Street, Suite 300
Denver, CO 80206
Phone: 303-226-8735
Email: dave@denvermortgagelounge.com
Website: denvermortgagelounge.com

Dave Cook NMLS #274175
Luminate Bank NMLS #1281698
Equal Housing Lender

This article is for educational purposes only and is not legal, tax or financial advice. Loan programs, guidelines and eligibility requirements are subject to change. All loans are subject to credit approval and program eligibility.