How to Buy a House in Six Months

I think homeownership is lagging among millennials and Gen Z because every aspect of the process – is daunting. Saving up 20% of an ever-escalating median home price — in this economy — feels insurmountable. To say nothing of the steep learning curve that comes with being a first time home buyer. But is isn't impossible. As a full-time agent now, I have also seen buyers get really, really serious about buying a home in as little as six months. If I were doing it, below are the financial actions I'd complete if I wanted to learn how to buy a house in six months or less.

For the purposes of this article, let's assume you just had the idea that you'd like to become a homeowner by the end of the year. If you've spoken with a lender and gotten your financing in order, you can be closing on a new home in as little as 30 days (*in most cases.) In this guide, we will explore the step-by-step process of purchasing a house within a six-month timeframe. From setting a budget to finding the perfect property, we will cover everything you need to know to make your dream of homeownership a reality in just half a year.

How do I buy a house in six months?

To buy a house in six months, you will need to start by setting a budget and saving for a down payment. I've got a great post on how to save for a home in six months that's a nice companion to this one. But to buy a house in six months, here are the broad strokes.

• Set a budget and start saving for the downpayment and closing costs
• Next, you should research the housing market in your desired area and get pre-approved for a mortgage.
• Then, work with a real estate agent to find potential properties and make offers.
• Once your offer is accepted, you will need to complete inspections, finalize your mortgage, and close on the property.

It's important to stay organized and proactive throughout the process to ensure a smooth and successful home purchase within the six-month timeframe.

How to Buy a House in Six Months – Six Steps

Step #1 – Prep Your Credit

Everyone knows good credit is needed in order to qualify for a mortgage, but preparing your credit also encompasses an important component of financially preparing for home ownership — debt payoff.

Paying off debt, especially student loans and high-interest credit cards, not only frees up money in the budget for down payment savings, it also raises your credit score by lowering your overall debt. Debt payoff is also important for lenders when determining your debt-to-income (DTI) ratio (total monthly debt payments divided by gross monthly income), the primary number lenders look at to determine how much home you’ll qualify for.

Lenders can qualify an individual with up to 43% debt-to-income ratio, though lenders are more likely to make a loan if it’s lower. The debt-to-income number is important for first-time buyers to know as many are struggling with five-figure student loan burdens, which can severely impact their DTI ratio.

Step #2 – Secure a Down Payment

If you opt for a conventional mortgage and want to avoid private mortgage insurance (PMI), you’d typically need to put down 20% of the purchase price. It could take years to save up the proper funds for a home down payment. This is why many buyers opt for putting down less than 20% — or prefer an FHA loan, where a down payment as low as 3.5% of the purchase price is possible depending on your credit.

You’ll still need money in the bank no matter which type of loan you think you’ll go with, so it’s important to begin saving as early as possible and speaking with your lender about how much you can afford ASAP. Paying off debt will make saving easier over time as you’ll have more money to allocate to your down payment fund.

You may also want to consider:

• An expense audit, where you cut subscription services and negotiate with your utility providers to lower your costs. Then you automatically put the money saved into your down payment savings account. You’ll never miss it.
• Halting retirement savings for a period in order to contribute more to your down payment funds, but only if you feel comfortable doing so for the short term.
• Funneling any “found” money, such as work bonuses or holiday cash, into your down payment fund. The temptation not to spend is real, but once in your new home, you’ll be glad you sacrificed.
• Getting a side hustle. Putting even $100 extra away each month can make saving for a home much faster (and easier).

Step #3 – Get Pre-Approved for a Mortgage (and Shop Your Rate!)

Rate shopping for a mortgage is an important step, so don’t go with the first-rate you’re offered (unless it ends up being the most competitive, of course). Shopping for the most competitive interest rate is one of the few ways to actually save money on a home, because the lower the interest rate, the less money you’ll pay over the life of the loan.

Rate shopping is now super quick (thanks, Internet!) and doesn’t impact your credit score, so the few minutes you spend rate shopping will pay off big time for your future self … to the tune of tens of thousands of dollars.

Step #4 – Shop for a Home

When you are about 90 days out from your ideal time to move, you should engage with a reputable real estate agent to begin shopping in your area. I say 90 days because sometimes home shopping can take months — or it can take a mere matter of weeks. It largely varies by area, which is why it is good to talk to an agent before you shop about your plans, timelines, goals and objectives and allow them to advise.

Step #5 – Make an Offer

Once you've found a home you'd like to buy, you then make an offer. Upon successful offer acceptance, this kicks off the actual process of buying a home: due diligence, loan underwriting, and transferring of title/ownership by a closing attorney.

Step #6 – Close

Most often, “possession” or taking ownership of your new home happens on closing day. You'll go to the closing attorneys office, sign paperwork, and get the keys to your new place.

Don’t get blindsided by closing costs — you’ll need to save for these too. Typically, you can multiply the purchase price of the home by 3% to 5% and get a rough estimate of how much you’ll need to bring to closing. Even if the seller offers to pay some (or all) of the closing costs as part of the sale, having this money in the bank – just in case – will assure the lender you’re ready to take on the responsibility of a mortgage. You can use this closing cost calculator.