To successfully purchase a home in the United States, prioritize maintaining a credit score above 620, secure a mortgage pre-approval, save for a down payment of at least 5-20%, and conduct thorough market research. These steps ensure competitive loan terms, avoid delays, and strengthen negotiation power.

A credit score is critical because lenders use it to assess default risk. Scores above 620 qualify for conventional loans, while those below 580 often require government-backed mortgages with higher rates. For example, a FICO score of 740+ typically secures the best 30-year fixed rates (around 4.5-5.0% as of 2023), whereas scores between 620-639 may face interest rates 0.5-1.5% higher, costing thousands extra over loan terms. The Consumer Financial Protection Bureau reports that 28% of rejected mortgage applications in 2022 were due to insufficient credit scores.

A down payment impacts loan type and costs. A 20% down payment eliminates private mortgage insurance (PMI), saving 0.5-1% annually. The Federal Reserve notes that first-time buyers average a 13% down payment, but higher savings reduce interest burdens. Pre-approval, obtained through lenders, provides a budget and speeds up offers, as 68% of sellers prioritize pre-approved buyers (Zillow 2023). Market research is vital due to fluctuating inventory and prices. In 2023, U.S. home prices rose 4.2% year-over-year, while inventory dropped to a 1.3-month supply, prompting 22% of buyers to expand search areas (National Association of Realtors). Combining these factors ensures financial readiness and maximizes purchasing power.