Want to learn how to buy your first home in 2025?
Look no further. In this complete home buying guide, I’ll walk you through the entire process, step-by-step.
In 2025, it’s tougher than ever to buy a home. Mortgage rates are around 6.7% and the median sales price hit a record high of $443,462.
That’s why so many Americans feel hopeless about ever affording a home of their own. According to the latest survey, nearly 47% of Americans can’t afford to buy a home in 2025.
Don’t lose hope though.
The home buying process is not impossible, if you follow the right steps. By understanding the market and preparing ahead of time, you can still make a smooth purchase — even in this difficult environment.
Ready to start buying a home?
Table of Contents
In this guide you’ll learn:
- How to understand today’s real estate market
- Pre-purchase steps to take before house hunting
- How to search for homes effectively
- The steps to close the deal like a pro
Step 1: Understand the Real Estate Market
Before you start looking at houses, it’s important to understand today’s real estate environment.
The 2025 market is nothing like we’ve seen in previous years. Home prices are still rising, up 1.4% year-over-year. Home sales have fallen 2.3% as buyers hold off.
The reason for this is simple. Most homeowners with low mortgage rates won’t budge. Over 80% of today’s mortgage borrowers are locked into rates far below current levels.
This is called the “lock-in effect” and it’s a big reason many homeowners can’t afford to move.
For homebuyers like yourself, that means low inventory and a lot of competition. However, there is some good news on the horizon…
Inventory levels have started to rise. Right now, there are over 2 million homes for sale nationwide, up 8% from last year.
Step 2: Prepare to Buy a Home
Buyers tend to make one crucial mistake. They search for houses before they are financially ready to buy.
Don’t be this person. Before you even look at your first home, make sure you take care of these important financial steps:
- Get pre-approved for a mortgage
- Save for a down payment
- Consider a fair cash offer from an investor
Get Pre-Approved for a Mortgage
Getting pre-approved for a mortgage is the very first step.
Why? Pre-approval tells you exactly how much home you can afford. It also signals to sellers that you are a serious buyer with financing in place.
You will need good credit and a stable income to get pre-approved, especially with the 2025 mortgage rates around 6.7%. Expect lenders to want to see the following:
- Credit score of at least 620
- Debt-to-income ratio below 43%
- Steady employment history
- Down payment savings
Save for Your Down Payment
First-time home buyer put down an average of 6% of a home’s purchase price. On a $400,000 home, that means a $24,000 down payment.
Don’t forget the other costs. You will also need money for:
- Closing costs (2-5% of home price)
- Home inspection ($300-500)
- Moving expenses
- Emergency repairs
Start saving early. 12-18 months before you plan to buy is best. The more money you have saved, the better off you’ll be.
Get a Fair Cash Offer
Not everyone needs a mortgage. If you’re in a bidding war or short on time, a fair cash offer from a reputable buyer can make the whole process easy and stress-free.
Step 3: Search for Homes to Buy
OK, now it’s time to do some house hunting.
Here’s what you need to know: The average homebuyer spends 10 weeks searching for the right home, viewing an average of 7 properties.
Let’s walk through the steps for searching for homes to buy.
Start Your Search Online
Most buyers begin their home search online. 43% of buyers report starting online.
Use real estate websites like Zillow, Realtor.com, and Redfin to research and familiarize yourself with different neighborhoods, price points, and styles.
Make a list of non-negotiable features your home must-have, including:
- Location (near work, family, etc.)
- Number of bedrooms and bathrooms
- Yard size, if desired
- School districts, even if you don’t have children
Hire a Real Estate Agent
You will be hard-pressed to find a buyer that isn’t using an agent. 86% of homebuyers use a real estate agent for advice and support.
Good reasons. Agents know the local market, can spot potential red flags and negotiate on your behalf. Don’t try to go it alone.
Look for an agent that has:
- Experience in your desired neighborhoods
- Good communication and prompt responses
- Understands your budget and needs
- Good reviews from other recent clients
Be Willing to Compromise
Here’s the truth. You likely won’t find “your dream home” on the market today.
In fact, recent survey found 43% of buyers ended up looking in different neighborhoods and 42% considered smaller or older homes.
You may have to compromise on:
- Exact location (bigger radius)
- Home size or number of rooms
- Move-in ready condition
- Certain amenities/features
Think about what you can live with and what you can’t. You can always renovate later. Location and structure of the home is most important.
Step 4: Close the Deal
Congrats, you found a home you love. Now for the fun part — closing the deal and getting your offer accepted!
This stage requires some finesse. Let’s discuss the key steps for finalizing your home purchase.
Make a Competitive Offer
This is a critical step. Your offer must stand out. You need a strategy. Bidding wars aren’t as crazy as 2022, but most good homes will get multiple offers.
Nearly half of buyers say they were willing to offer $20,000+ over asking price on the right home.
Your offer should include:
- Competitive purchase price (talk with your agent)
- Reasonable contingencies (inspection, etc.)
- Flexible closing timeline
- Personal letter to the seller, if appropriate
Negotiate Seller Concessions
Here’s some good news. Most recent buyers were able to get seller concessions. 73% to be exact.
Seller concessions are things like:
- Seller pays part of closing costs
- Seller credits for repairs
- Rate buydowns to lower your monthly payment
- Appliances or furniture included in sale
Negotiate now. You won’t get a second chance later.
Get a Home Inspection
A home inspection is non-negotiable. Even if you are in a bidding war, try to include an inspection contingency.
Home inspectors check things like:
- Structural issues
- HVAC, plumbing, electrical
- Roof condition
- Safety concerns
If major problems are found, you can renegotiate repairs or even back out of the deal.
Prepare for Closing
Closing day is the final step in the home buying process. You’ll sign a bunch of paperwork and get the keys.
Before closing, be sure to:
- Do a final walk-through
- Get homeowner’s insurance
- Transfer utilities to your name
- Bring certified check for closing costs
Wrapping Up the Home Buying Process
Buying a home in 2025 is no small task. It requires work, research, and preparation.
But it can be done. The key is to prepare in advance. Get your finances and credit in order before house hunting. Educate yourself on the market and work with experienced professionals to help you along the way.
Remember, you don’t have to find the perfect home, just one that meets your needs and will become a home.
Despite 57% of first-time buyers saying they worry they won’t be able to afford their monthly mortgage payments, most homeowners agree that the benefits of home ownership outweigh the negatives.
Get started today by getting pre-approved, saving for a down payment, and doing your research on houses to buy. With some patience and diligence, you will find a home that works for you.
It’s true that the home buying process can seem daunting, but you are not alone. Thousands of homebuyers successfully close on new homes every month. By following this guide, you can too.
