To properly pay for a home purchase, follow these steps: save for a down payment (typically 20% to avoid private mortgage insurance), secure pre-approval for a mortgage, compare loan options, and budget for closing costs (2-5% of the loan amount). Make a competitive offer with a certified check and ensure the seller provides a clear title.

The process begins with a down payment to reduce loan risk and interest costs. A 20% down payment minimizes private mortgage insurance (PMI), which averages $30 monthly per $100,000 borrowed, according to the Federal Housing Administration. Pre-approval from a lender increases offer acceptance chances by 50%, per the National Association of Realtors. Closing costs, averaging $5,000-$15,000 for a $300,000 loan, are often overlooked but critical for budgeting. A fixed-rate mortgage suits long-term stability, while adjustable-rate mortgages offer lower initial rates. Lenders like Fannie Mae and Freddie Mac offer programs for smaller down payments (as low as 3%), but these may require mortgage insurance.

Data from the U.S. Census Bureau shows 68% of homebuyers finance purchases with mortgages, emphasizing pre-approval’s importance. Saving for even a 10% down payment can take years for median-income buyers, highlighting the need for financial planning. mortgage pre-approval home purchase financing