Understand the numbers, learn the terms, and know what to ask at each step.
Published by HomeBuyersPath · Budgeting and closing-review next steps checked October 30, 2026
The three numbers to understand first
01
Set a payment you can live with
Start with take-home pay. Subtract debts, everyday spending, utilities, repairs, and the savings you want to keep. A lender's approval amount may be more than you want to spend.
Bring take-home pay, planned spending, and a rough housing estimate; review the tool’s sample housing figures before relying on them. Need an example first? Follow the comfortable-budget example. In the household-budget check, choose “Use this limit to explore home prices” to apply your limit.
02
Understand the monthly costs
Principal repays the money you borrow; interest is the cost of borrowing. Add property tax, homeowners insurance, any association dues, and mortgage insurance. Utilities and maintenance are extra.
Your savings cover the down payment and closing costs, plus moving and an emergency cushion. A deposit already paid is part of your purchase money. Cash to close is the amount still due on closing day.
To follow the money paid before and at closing, visit the Homebuyer Education Resource Center for a free lesson, worked-example video, and two printable handouts.
Your homebuying checklist
Timing varies by contract, lender, and location. Some steps overlap. Keep your agent, lender, and closing agent involved.
Step 1
Review your budget and credit
Set your comfort budget, check your credit reports, and avoid new debt while preparing for a mortgage.
Your next move: Write down a monthly limit and a savings target.
Step 2
Talk to lenders about preapproval
Preapproval is a lender's initial assessment of what you may be able to borrow. It is not final approval. Ask about loan programs, down-payment options, and required documents.
Your next move: Compare lenders and ask what could change your approval.
Step 3
Find a home and understand your offer
Consider taxes, repairs, insurance, and association rules. An offer may include contingencies: contract conditions that can protect you if financing or inspections do not work out.
Your next move: Ask your agent to explain deadlines and when your deposit could be at risk.
Step 4
Compare formal Loan Estimates
A Loan Estimate is a standardized outline of a proposed loan's rate, payment, and closing costs. A formal application generally needs six pieces of information, including the property address; a signed purchase contract is not required.
Your next move: Compare estimates for the same loan type, term, and timing. Ask about rates and points.
Have two fixed-rate offers? Compare two Loan Estimates to understand their monthly payments, upfront costs, and questions to ask your lenders.
Step 5
Complete inspection and appraisal
An inspection checks the home's condition. An appraisal estimates its value for the lender. They serve different purposes and neither guarantees a trouble-free home.
Your next move: Review findings and any repair or financing decisions before your contract deadlines.
Step 6
Review the Closing Disclosure
This document shows the final loan terms and closing costs. For most mortgages, you must receive it at least three business days before closing.
Your next move: Compare it with your Loan Estimate and resolve unexpected changes with your lender.
Start with the full document. Keep your most recent Loan Estimate beside your Closing Disclosure. Use the CFPB Closing Disclosure explainer to review the terms, payment, costs, and other details. Ask your lender about anything unexpected.
Check the tool’s supported-case conditions before entering figures. It does not compare two separate Loan Estimates or two Closing Disclosures. Matching arithmetic does not verify the rest of your documents or tell you what to send.
Use the free 10 Numbers to Double-Check handout to collect questions. If the document or amount is unclear, ask your lender or settlement professional to explain it and confirm the amount due.
Step 7
Walk through, close, and collect the keys
Confirm the property's condition, final amount due, signing arrangements, and when you can take possession. Independently verify any payment instructions with your closing agent using a trusted phone number.
Your next move: Keep your documents, confirm when keys are released, and protect your remaining savings.
Unfamiliar words, explained
Debt-to-income ratio (DTI)
The share of before-tax monthly income used for debt payments, including the proposed housing payment. It is not the same as your take-home budget.
Private mortgage insurance (PMI)
Insurance that protects a conventional lender if a borrower stops paying. It is often required below 20% down; your actual cost depends on your loan and credit profile.
Homeowners association (HOA)
An organization that manages shared property or services. Dues and rules vary; check the association documents before buying.
Escrow and prepaids
A mortgage escrow account holds money for tax and insurance bills. Prepaids are costs paid ahead, such as insurance or interest. A purchase deposit may also be held in escrow until closing.
Earnest money
A deposit made under your purchase contract. It is usually credited toward your purchase costs at closing; whether it is refundable depends on the contract.
Points and APR
Points are upfront charges that may lower your interest rate. APR (annual percentage rate) includes interest and certain loan costs, helping compare borrowing costs. Enter the interest rate, not APR, in the payment tool.
Questions worth asking your lender
Which loan programs and down-payment options might fit my situation?
What is included in this payment, and what might increase?
Which closing costs are included, and which can change?
How much seller credit can I use, and what happens to any excess?
How much money should I keep available after closing?
