A pre-approval is an in-depth review where a lender verifies your financial documents to determine exactly how much they will lend you. This step is essential because many real estate agents will not show homes to buyers without a pre-approval letter, and sellers often won't consider offers without one. How to start the home buying process in 2026
: Typically range from 2% to 5% of the home's purchase price.
Before looking at listings, you must determine what you can realistically afford.
: Use a home affordability calculator to factor in your income, existing debts, and a potential down payment. Experts suggest keeping total housing costs—including principal, interest, taxes, and insurance—below 28% of your gross monthly income . Save for Upfront Costs :
: While 20% avoids private mortgage insurance (PMI), many programs allow as little as 3% to 3.5% down .