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Tag: First time homebuyer

  • What Won’t Pass An FHA Inspection: FHA Appraisal Red Flags

    With easier credit requirements, lower down payments, and flexible guidelines, FHA loans are a popular entry point for many first-time buyers. But they come with one extra step that can impact your purchase: the FHA inspection, technically known as the FHA appraisal.

    Most buyers will get a standard home inspection to understand a home’s condition and uncover any underlying problems. But an FHA appraisal inspection serves two distinct purposes, meant to protect both the lender and future occupant: It verifies the home’s value and confirms the property meets federal Housing and Development (HUD) Minimum Property Requirements (MPRs). 

    In other words, if you’re buying with an FHA loan, the home must be safe, structurally sound, and free of hazards that could affect an occupant’s health. Does that mean your dream home is off-limits? Not necessarily.

    Whether you’re buying your first home in Atlanta, GA or looking at houses for sale in Riverside, CA, make sure you know won’t pass an FHA inspection — before it comes time for the appraisal.

    >>See more: FHA Inspection Requirements

    In this article:
    How FHA inspections work
    Why would a house not pass FHA inspection?
    FHA appraisal red flags
    What happens if a home doesn’t pass
    Is it hard to pass an FHA appraisal?
    FAQs

    How FHA inspections work

    Before jumping into FHA appraisal red flags, it’s helpful to understand how the process itself works. The FHA inspection goes hand-in-hand with the FHA appraisal, taking place when an FHA-approved appraiser visits the property. During this visit, the appraiser is verifying two things:

    1. The home’s fair market value

    They assess comparable sales, the home and property condition, and features to make sure the lender isn’t financing more than what the home is worth.

    2. The home meets HUD’s Minimum Property Requirements

    This is the “inspection” part. The appraiser checks for:

    • Safety hazards like exposed wiring, missing railings, broken windows.
    • Structural soundness such as major foundation issues or wood rot.
    • Livability: working heat, running water, available appliances, and functional plumbing and electric.

    The property needs to be considered livable, safe, and free of any potential hazards in or around the home to meet the Minimum Property Requirements.

    Your FHA lender uses the appraiser’s findings to determine whether the home qualifies. If the appraiser flags any issues, you’ll receive a list of required repairs. These must be completed before the loan can close; otherwise, you may need to walk away from the home or switch to different financing.

    Why would a house not pass an FHA inspection?

    When an FHA appraisal flags a property, it’s usually not because of cosmetic quirks or avocado-green countertops. A house fails an FHA inspection when something about it is considered a safety, security, or structural risk.

    This could include:

    1. Defective or non-functional appliances and systems

    • Major appliances included in the sale must work: If built-in or included appliances like oven/range, water heater, or refrigerator are present and contribute value, they need to be operational. If not, the appraiser may mark them as “deferred maintenance,” which can become a required repair.
    • HVAC, water heater, and utility systems must be functional and safe: A broken furnace, non-working water heater, or non-functional plumbing/electrical systems are common fail points.

    2. Attic, crawl space, and insulation / ventilation issues

    • Attic or crawl spaces must be accessible and safe: If the attic or crawl space is blocked, filled with junk, has exposed wiring, or if there’s insufficient ventilation or insulation, the appraiser will flag it.
    • Signs of water damage, leaks, or prior fire damage in attic or roof sheathing: Damage or rot here can indicate structural or long-term water intrusion risk, which FHA will not accept without repairs.

    3. Poor drainage or lot/yard issues that compromise the structure

    • Negative grading or poor drainage toward the foundation: Water pooling, downspouts dumping near the foundation, or bare soil sloping toward the house can cause long-term foundation or moisture issues.
    • Detached structures, outbuildings, or garages in disrepair: Even non-living structures must be safe and structurally safe. Deteriorated sheds, barns, or garages will probably be flagged.

    4. Lot access and property access issues

    • Year-round vehicular and pedestrian access is a must: If access is blocked, seasonal (like a driveway prone to flooding or being blocked by snow), or not maintained, that can fail an FHA inspection.
    • Unsafe or inadequate entry/exit pathways: Sketchy stairs, missing handrails, uneven walkways, or broken steps are common hazards flagged by appraisers.

    5. Basement, foundation, and structural integrity issues (beyond major cracks)

    • Settlement, shifting, or uneven floors: Not just obvious foundation cracks, but sagging floors, sloping surfaces, or soft spots underfoot can mean structural issues FHA won’t accept and need further review.
    • Moisture intrusion or dampness in basements or crawl spaces: Even if there’s no visible major crack, history or signs of moisture, dampness, or poor drainage in these spaces can be noted on the report.

    6. Environmental, health, and hazard issues

    • Lead-based paint hazards (in pre-1978 homes): Peeling or chipping paint must be addressed to avoid lead risk before an FHA loan can close.
    • Mold, mildew, or persistent dampness: Visible mold, water stains, or signs of ongoing moisture problems can disqualify a property.
    • Pest or termite damage: Evidence of active infestation or damage caused by pests is often a deal-breaker unless remediated. 
    • Old, unsafe materials: Asbestos, hazardous storage tanks, or abandoned wells can derail FHA approval.

    7. Code compliance, safety devices, and egress/safety standards

    • Missing or broken windows/doors, unsecured exterior doors: Windows or doors that don’t open, don’t lock properly, have broken glass, or are blocked can violate safety or egress standards.
    • Missing handrails, guardrails, stair hazards: Especially for stairs with three or more steps or elevated porches, missing railings is a frequent FHA fail item.
    • Non-functional smoke detectors / carbon monoxide detectors: Also poor ventilation in bathrooms or kitchens. Essentially, basic life-safety devices and ventilation standards need to be met.

    8. Incomplete or missing utilities and major systems

    • Water, electricity, heating, and sewer/septic must all work properly: A home without running water, functioning septic or sewer, or no safe/sealed well (if needed) is almost always disqualified.
    • Old, unpermitted renovations or additions / unsafe conversions: A converted attic, basement, or garage that doesn’t have the proper permits, egress, or safe wiring/plumbing/structural compliance can fail FHA standards. 

    FHA appraisal red flags buyers might not expect

    A lot of what fails an FHA inspection is generally pretty logical: older, unmaintained roofs, broken windows, exposed or faulty electrical, potential lead paint hazards, unsafe steps, barely working heat. But there are other, less obvious red flags that might come up during the appraisal that might also cause the home to fail the inspection.

    Vacant homes

    • Utilities turned off can be an instant fail, since the appraiser can’t test the systems.
    • Moisture or early-stage mold from lack of ventilation.
    • Frozen or burst plumbing in cold climates.
    • Pests or rodents moving in during vacancy.
    • Water heaters left drained or powered off, which can leave them temporarily nonfunctional.

    Seller-caused setbacks

    • Pets blocking access to certain rooms or areas.
    • Rooms piled with storage, preventing inspection.
    • Locked doors with no key available.
    • No access to attic or crawlspace.
    • Unsafe walkways or trip hazards on inspection day.

    Appraisers need to see every accessible and functional space. If they can’t, FHA can’t confirm the space is fit and safe for living.

    Older homes

    Newer homes (within the last 40-50 years) tend to perform best with FHA inspections, since older homes can come with the kind of aging materials FHA’s MPRs frown on:

    • Knob-and-tube wiring or cloth-covered wiring.
    • Asbestos is in bad condition, especially around ductwork or old flooring.
    • Lead-based paint hazards (anything chipping or flaking in pre-1978 homes).
    • Antiquated electrical panels known for safety issues, like Federal Pacific or Zinsco.
    • Uneven settling or sloping floors that might mean bigger structural problems.

    Rural properties

    Not all FHA surprises come from the house itself. In rural areas, the site can also be the cause of issues:

    • Private wells too close to septic systems.
    • Well water that fails quality or pressure tests.
    • Soft, seasonal, or unmaintained access roads.
    • No year-round access for emergency services.
    • Outbuildings in dangerous disrepair, like collapsing barns or unsafe sheds.

    Unpermitted or unconventional spaces

    That attic studio or garage-turned-bedroom might look great on a listing, but FHA appraisers have to look at whether it’s:

    • Properly permitted.
    • Safely built.
    • Wired and plumbed correctly.
    • Meeting egress requirements.

    If it doesn’t check all those boxes, FHA may exclude the room from square footage, or require the additions to be up-to-code before closing.

    Layout and livability 

    HUD expects a home to function like a home. That means buyers are sometimes surprised when the appraisal flags:

    • Bedrooms without legal egress (like tiny windows, sealed windows, or no escape route).
    • No permanent heat source in a living area.
    • Kitchens or bathrooms missing essential fixtures.
    • A listed “bedroom” that’s really just an unheated alcove.

    Water management and drainage 

    Even without active water damage, poor drainage means future risk — and FHA is all about preventing future expense.

    • Negative grading that directs water toward the foundation.
    • Downspouts emptying directly at the base of the home.
    • Improperly installed gutters.
    • Erosion or failing retaining walls.

    Outbuildings and detached structures

    If a structure is unsafe, FHA wants it repaired or removed, even if you never plan to use it.

    • Leaning sheds.
    • Rotting garage roofs.
    • Old barns that aren’t structurally sound.
    • Detached additions wired unsafely.

    What happens if a home doesn’t pass an FHA inspection?

    Just because an FHA appraisal finds things that need to be fixed, it doesn’t automatically mean the sale won’t go through. Usually, it just means there are a few extra steps:

    1. The appraiser issues a “subject to” appraisal

    The appraiser marks the valuation as subject to required repairs, or conditional approval. This means the home can qualify for FHA financing, but only after the noted issues are fixed.

    2. The seller is usually asked to make the repairs

    Because FHA loans require the property to meet HUD’s guidelines before closing, sellers are usually responsible for repairs. Depending on the market and negotiation power, the seller will either agree to complete the work, or say no to the repairs (more on what happens if the seller says no later).

    3. A re-inspection is scheduled

    Once the required repairs are finished, the original FHA appraiser returns to verify that everything was completed properly. This re-inspection confirms the property now meets FHA standards. It’s usually quick, but it can delay closing if the appraiser is booked or repairs take longer than expected.

    4. If repairs aren’t made, the loan can’t close

    Lenders can’t approve an FHA loan on a non-compliant property. If the seller says no to repairs, or if the fixes are done incorrectly, the lender will decline financing. At this point, the buyer may have to cancel the contract unless another loan program or creative workaround is found.

    5. Buyers might choose alternate financing

    If the home needs more work than a standard FHA loan allows, or the seller won’t make larger repairs, an FHA 203(k) rehab loan can be another option. This program lets buyers roll the purchase price and renovation costs into one mortgage.

    In other cases, qualified buyers might pivot to conventional financing to avoid FHA repair requirements altogether. Conventional loans are often more lenient when it comes to property conditions, so minor issues that FHA flags may not be a problem.

    Is it hard to pass an FHA appraisal?

    While FHA appraisals have a reputation for being strict, if the home is in relatively good condition and well-maintained, it’s more likely to be approved. If major systems work as they should and there aren’t any big safety concerns, recommended fixes are often inexpensive and easy to complete before closing.

    Older homes, vacant properties, or homes that need TLC are more likely to come with flagged problems, and depending on a seller’s willingness to fix issues, might not qualify for FHA financing. If that’s the case, rehab loans, conventional financing, or finding a different home altogether might be the next step for a buyer.

    In the end, passing an FHA appraisal inspection isn’t “hard” as much as it is condition-dependent. Working with a real estate agent familiar with FHA financing can help increase your chances of choosing a home that will pass the inspection—and that your offer protects you if it doesn’t.

    FAQs: What won’t pass an FHA inspection?

    Can I buy a fixer-upper with an FHA loan?
    Buyers can purchase a fixer-upper using an FHA 203(k) rehab loan, which finances both the home purchase and the cost of necessary repairs or renovations. A standard FHA loan can be used on a home that needs minor fixes, but all HUD-required repairs must be completed before closing. For homes needing larger repairs, the 203(k) program is usually the FHA-friendly path.

    Can I waive repairs and still close with FHA financing?
    Not usually, since issues noted during the FHA appraisal—anything related to safety, structural soundness, or basic livability—must be completed before the lender can approve the loan. Buyers cannot ignore certain fixes or repairs the way they might in a conventional or cash deal. The only workaround is switching to a different loan type or using an FHA 203(k) loan if the needed repairs qualify.

    How long do I have to complete required FHA repairs?
    Repairs need to be completed before closing, because the FHA appraiser needs to verify the property meets HUD standards prior to approving the loan. If certain repairs are extensive or weather-dependent, lenders might allow a holdback or escrow account, but this is the exception, not the norm. Most standard FHA transactions expect all required work to be finished and reinspected before the buyer can close.

    Ashley Cotter

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  • What Makes a Mobile Home Inspection Different—And Why You Need One

    Whether you’re downsizing, buying your first place, or looking for a budget-friendly option in a competitive market, a mobile or manufactured home can be a great fit. But because these homes are built and installed differently than traditional houses, a mobile home inspection is a crucial step in the buying process. 

    Manufactured homes need to follow the federal Housing and Development (HUD) construction standards, like sitting on steel frames and using anchored or permanent foundation systems to stay level and secure.

    A mobile home inspection is often required if you’re using FHA, VA, or USDA financing. Lenders might ask for both an inspection and a HUD-compliant permanent foundation certification before approving the loan, since the home’s safety and installation directly affect financing eligibility. 

    For buyers, that makes understanding how the mobile home inspection process works a key component of the purchase—whether you’re buying a mobile home near Portland, OR or looking at manufactured houses in Nashville, TN.

    Mobile home vs. manufactured home: What’s the difference?

    • A mobile home is any factory-built home constructed before June 15, 1976, which is when HUD standards were introduced.
    • A manufactured home is also a factory-built home, but constructed after June 15,1976, and meets federal HUD Code requirements for safety, installation, and construction quality.
    • Many people use “mobile home” to describe both, but most of these houses on the market today are technically manufactured homes.

    What does a mobile home inspection include?

    A mobile home inspection often focuses on areas that differ from site-built construction. Inspectors will still look for safety concerns, signs of damage, and issues that could affect the home’s long-term stability or financing eligibility, but pay special attention to components that are specific to manufactured homes. 

    Most mobile home inspections will look at:

    Structural support and foundation

    • Steel chassis and frame
    • Piers, blocks, and footings
    • Anchoring or tie-down system
    • Condition of the vapor barrier and underbelly
    • Whether the home appears to be installed on a permanent foundation*

    *Permanent foundations must meet HUD guidelines, so inspectors note whether the installation looks compliant.

    Roof and exterior

    • Roof covering and sealants
    • Siding, skirting, and under-home ventilation
    • Gutters, flashing, and drainage
    • Signs of moisture intrusion

    Plumbing

    • Pipe materials (PEX, CPVC, or older polybutylene)
    • Water pressure and drainage
    • Hot water heater condition
    • Leaks under sinks, around fixtures, or beneath the home

    Electrical

    • Service panel condition
    • Proper grounding
    • GFCI protection
    • Safe wiring materials

    Heating and cooling

    • Furnace operation and age
    • Air conditioning function
    • Ductwork and airflow

    Interior systems

    • Soft or uneven floors
    • Window and door operation
    • Ceiling stains, wall cracks, or signs of leaks

    Basically, a mobile home inspection helps you, the buyer, understand the condition of the home and any repairs to plan for before or after closing.

    How does a mobile home inspection differ from a regular home inspection?

    Mobile homes are built under the federal HUD Code rather than local building codes, so inspectors will look at different components than they would in a site-built home. That’s why it’s important to get an experienced inspector that is qualified to inspect your type of home.

    Manufactured homes also are built using different materials, supplies, and processes, and things can shift during transport, which affect what inspectors look for. The main differences between a mobile home inspection and a regular home inspection are:

    HUD-code construction

    Mobile homes use unique materials and construction methods, including:

    • Steel chassis.
    • Factory-built floor, wall, and roof systems.
    • Different plumbing and electrical layouts.

    Inspectors must understand these systems to identify potential issues.

    Foundation and anchoring

    Instead of a traditional concrete foundation, mobile homes might rely on:

    • Pier-and-beam systems.
    • Anchors and tie-downs.
    • Permanent engineered foundations.

    Inspectors check that the support system is level, properly spaced, and securely fastened, which is necessary for safety and loan qualification.

    Ventilation and moisture control

    Manufactured homes are more vulnerable to moisture, especially in the enclosed underbelly. Inspectors look closely at:

    • Ventilation.
    • Vapor barriers.
    • Under-home insulation.
    • Signs of mold or rot.

    Because the home was delivered to the site, the inspector checks for:

    • Frame stress.
    • Settlement.
    • Cracks in walls or ceilings.
    • Improper installation.

    How much does a mobile home inspection cost?

    A mobile home inspection often costs less than a full inspection on a traditional single-family home, but pricing can depend on size, location, and any add-on services. Other times, inspectors might charge a flat fee for mobile homes. A mobile home inspection will take between 2-4 hours if no additional testing is needed.

    Average mobile home inspection costs:

    • Single-wide: $200-$400
    • Double-wide: $250-$500
    • Triple-wide: $300-$600

    You may also need:

    • HUD foundation certification: $300–$600
    • Pest inspection: $50–$200
    • Mold or air-quality testing: $300-$650

    A HUD foundation certification is separate from the home inspection and usually required for government-backed loans to confirm the home sits on a safe and permanent foundation.

    Is a mobile home inspection required?

    A mobile home inspection isn’t technically required in most states, but many lenders and insurers do require certain inspections or certifications before approving financing for a manufactured home.

    Loan requirements

    Government-backed loans (FHA, VA, USDA) generally require:

    • A full mobile home inspection.
    • Verification that the home is safely installed.
    • A HUD-compliant permanent foundation certification.
    • Safe electrical, plumbing, and HVAC systems.

    If the home is on temporary or non-engineered piers, it will likely need foundation upgrades before it can qualify.

    Insurance requirements

    Some insurers require:

    • A roof inspection or certification.
    • Updated electrical systems.
    • Proof of anchoring.
    • Adequate under-home ventilation.

    Common problems found during mobile home inspections

    Mobile homes can develop issues not typically found (or are more pronounced than) those in traditional homes. While not all issues are cause for concern, some can affect safety, financing, insurance, and overall repair costs. Common problems manufactured home inspectors might find include:

    Moisture and water damage

    • Roof leaks
    • Soft or sagging floors
    • Damp insulation
    • Damaged or missing vapor barriers

    Foundation or anchoring issues

    • Settling or uneven support
    • Cracked or missing piers
    • Outdated or improperly installed tie-downs
    • Issues affecting HUD-compliant permanent foundation standards

    Electrical concerns

    • Outdated panels
    • Aluminum wiring in older homes
    • Missing GFCI protection

    Roof and exterior wear

    • Rust on metal roofs
    • Worn or damaged shingles
    • Failed sealants

    Plumbing issues

    • Older polybutylene pipes
    • Leaks beneath the home
    • Improper drainage

    Bottom line

    As with any home purchase, a mobile home inspection acts as critical buyer protection. Not only  does it help you understand how well the home has been maintained, but the inspection results can allow you to plan for future maintenance, and verify that it meets HUD safety and installation standards—especially if you’re using FHA, VA, or USDA financing. 

    >> Mobile Homes For Sale Near Me

    Ashley Cotter

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  • How Do You Know if a Condo Is FHA Approved?

    If you’re planning to buy a condo with an FHA loan, one of the first steps is confirming whether the condo is FHA approved. FHA loans offer flexible credit requirements, competitive rates, and low down payments—but the condo project must meet specific FHA standards. Whether you’re exploring homes for sale in San Diego, CA, or browsing homes for sale in Chicago, IL, knowing how to verify FHA approval can help you move forward with confidence.

    In this Redfin article, you’ll learn how to check a condo’s FHA approval status, key eligibility requirements, what to do if the condo isn’t approved, and how approval may impact your financing and closing timeline.

    What it means for a condo to be FHA approved

    Before you start checking approval status, it helps to understand what FHA approval actually covers.

    An FHA-approved condo means the entire condominium project has been reviewed and accepted by the FHA. FHA approval applies to the whole project—not just the unit you’re buying.This protects lenders and borrowers by ensuring the condo property is:

    • Financially stable (well-funded reserves, low delinquency rates)
    • Properly insured (including hazard and sometimes flood insurance)
    • Compliant with ownership and occupancy standards

    Because FHA loans are government-backed, the agency requires these conditions to protect buyers and reduce default risk, ensuring the property is a safe, marketable investment.

    Newly constructed or newly converted condo projects may have additional requirements, such as completion thresholds and minimum pre-sale percentages.

    How to check if a condo is FHA approved (step-by-step)

    You can verify FHA eligibility in a few ways:

    1. Search the HUD FHA approved condo list

    The U.S. Department of Housing and Urban Development (HUD) maintains a public database where you can search by:

    • Condo name
    • City, state, or ZIP code
    • Condo ID (if known)

    This is the most reliable source because it shows:

    • Approval status
    • Approval expiration date
    • Notes on suspended or rejected status

    2. Ask your real estate agent or lender

    Experienced real estate agents and FHA-approved lenders often know which condo communities are eligible and can guide you through verification.

    3. Contact the condo association or management company

    They can confirm:

    • Whether the project is approved
    • Whether approval is expired or being renewed
    • Whether a single-unit approval (spot approval) may be possible

    If the approval recently expired, the HOA may already be working on renewal—ask whether an application is underway.

    FHA condo approval requirements

    To qualify, FHA reviews the condo project as a whole, including:

    FHA requirement What it means
    Commercial use limit Commercial space must be 35% or less of total floor area
    Owner-occupancy ratio Generally, at least 50% of units owner-occupied
    Single owner concentration Typically, no single owner or entity can own more than 50% of the units (with some exceptions for smaller or newly converted projects)
    HOA fee delinquency rate No more than 15% of units are 60+ days delinquent
    Reserve funding HOA must have adequate reserves and a current budget
    Insurance coverage Includes hazard, liability, and flood (if applicable)

    What to do if the condo is not FHA approved

    If the condo project doesn’t show up on the HUD list or it’s expired, you still have options:

    1. Try for single-unit approval (spot approval)

    FHA allows financing on individual units within certain non-approved condo projects if they meet specific criteria, including:

    • Adequate reserves and insurance
    • No FHA-restricted status
    • No safety, structural, or financial red flags
    • No litigation affecting marketability or safety

    2. Ask the HOA to pursue full FHA approval

    The association or management company might be willing to submit documentation to regain approval.

    3. Consider alternative loan options

    If FHA financing won’t work, alternatives include:

    • Conventional loans
    • VA loans (if eligible and condo is VA approved)
    • USDA loans (for rural eligible areas)
    • Portfolio loans from select lenders

    >>Read: Types of Home Loans

    Benefits of buying an FHA-approved condo

    • Minimum 3.5% down payment
    • More flexible credit score requirements
    • Potentially easier resale since future FHA buyers can purchase
    • Competitive interest rates and accessible qualification standards

    Potential challenges

    • Limited supply of FHA-approved condo projects
    • HOAs may avoid approval due to cost and paperwork
    • Closing timelines may be longer if issues surface late in escrow

    Tips for buying a condo with an FHA loan

    • Verify approval early, ideally before submitting an offer
    • Work with a real estate agent familiar with FHA projects
    • Request HOA docs early in escrow (budget, insurance, litigation info)
    • Check the approval expiration date
    • Have a backup plan (spot approval or alternative loans)

    Frequently asked questions about FHA condo approval

    1. Can you use an FHA loan for any condo?

    No. The condo must be FHA approved or qualify for single-unit approval.

    2. How long does FHA condo approval last?

    Approval is generally valid for three years before renewal is required, but the HOA must reapply to maintain approval.

    3. Do I need an FHA appraisal if the condo is already FHA approved?

    Yes. FHA condo approval applies to the entire project, but an FHA appraisal is still required to confirm the unit’s value and condition.

    4. What causes a condo to lose FHA approval?

    Common reasons include reserve shortfalls, inadequate insurance, or high HOA delinquency rates.

    5. Do townhomes need FHA condo approval?

    Only if the property is legally designated as a condominium. Fee-simple townhomes do not require condo project approval.

    Marissa Crum

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  • First-Time Land Buyer? What You Should Know Before Buying Land

    Whether you’re considering buying your first house or are looking for a new place to call home, you may be wondering if buying land is right for you. As a first-time land buyer, there are several key differences to know before embarking on your search, from zoning and utilities to financing and site conditions.

    In this Redfin article, we’ll outline what you need to know about being a first-time land buyer from loan options to due diligence. That way, whether you’re considering buying land outside of Boise, ID, looking for land for sale in Raleigh, NC, or anywhere else in the U.S., you know what to expect from the process. 

    Key takeaways

    • If you plan to build, learn about the land’s terrain, access points, utilities, and water. 
    • Understand if you need a land loan, a construction loan, or both. 
    • Budget for surveys, environmental testing, and additional upfront due-diligence costs.

    How do you plan to use the land?

    As a first-time land buyer, you’ll want to determine how you plan to use the land. Are you buying land to build a home? Or are you planning to make it a recreational area? Zoning requirements will differ depending on how you use the land. For example, you’ll need to consider the property’s access and zoning if you’re building a home. Some areas also have HOA rules or CC&Rs that limit what you can build and how you can use the land.

    Knowing what you intend to build on the land or not can also help determine how much acreage you should look for. You’ll want to consider the land’s condition, whether it’s suitable to build on, and isn’t prone to flooding. Checking FEMA flood maps or county floodplain data can give you a clearer picture.

    First-time land buyer loans

    Getting a mortgage loan for land is a little different than buying a traditional home. Lenders often distinguish between raw land, unimproved land, and improved lots, and loan terms vary depending on how developed the land is. Most land loans require at least 20% down and can be as high as 50% down. Interest rates are typically different, and often, are 1-2% higher than a conventional mortgage rate. Repayment terms are often shorter, from 5-15 years. Although you may be able to find some as long as 30 years. 

    Land loans only finance the purchase of land and don’t cover building a house. Therefore, you may need a construction loan as well. Construction loans cover the cost of building a home and may convert into a traditional mortgage once construction is complete (a construction-to-perm loan). It’s likely you’ll need both loans if you plan to build a home on the land you buy.

    Due diligence for a first-time land buyer

    When buying land, there’s additional due diligence and factors to consider. Here are some of the top things to cover as a first-time land buyer. 

    Work with an experienced real estate agent

    Choosing an agent who specializes in working with first-time land buyers can be important to finding the right area and addressing any special circumstances. Some agents focus specifically on rural, off-grid, or recreational land, which can involve extra steps and local knowledge. A real estate agent with knowledge of land can help ensure you ask the right questions, schedule inspections, and know if you should walk away from a piece of land. 

    Survey and title searches

    Land surveys establish the legal boundaries of a property. If the land you’re considering buying doesn’t already have a land survey, consider having one completed. Some lenders may also require a land survey to determine the exact acreage, any easements or encroachments, and to determine flood zones. If you’re planning to build on the land, a topographic or elevation survey may also be needed for drainage planning and permitting. 

    It’s also important to do a title search, just as you would if you were buying a home. A title search will uncover any ownership issues, liens, deed problems, or unaddressed claims to ownership. If the property was recently subdivided, confirm that the plat was legally recorded.

    Environmental testing

    If you’re planning to build any structure on the land, you’ll likely need environmental testing. A soil percolation test will show if the land is viable for a septic system. Well water can also impact your ability to live on the land, so you may need groundwater testing. Groundwater testing can show chemical, bacterial, and mineral contamination that may impact water quality on the land.

    In some areas, you may also need:

    • A geotechnical or soil stability test to evaluate landslide or erosion risks
    • A wetlands delineation if the land could include protected wetlands
    • Wildlife habitat reviews, which are required in some regions for protected species

    Access rights

    Is there legal access to the property? If there isn’t a private or public road leading to the home, it can impact property values. You may need to factor in the costs associated with building a road and establishing deeded easements if there is no accessible road. Shared access roads may also require a road maintenance agreement, which some lenders require before approving the loan.

    Availability of utilities

    Regardless of how you use the land, utilities will be important. Be sure to ask whether the property already has utilities and water. If not, how much will it cost to add? Running electricity to a site can be costly depending on how far the nearest power source is, and some areas have limited access to high-speed internet or cell service.

    Inspections during different seasons

    It’s important to note that the time of year you have the land inspected can determine what you’ll learn. For example, winter and spring months may show flood risks and potential drainage issues, while summer months may show drought problems. 

    Understanding future developments

    While it’s not always possible to know what an area will look like years down the line, it’s important to check if there are plans for future developments in the area. It’s likely that the county planning department will have information on potential subdivisions, infrastructure projects, commercial developments, and proposed highway or major road expansions. These can all change the land’s value or lead to loud noise disruptions and increased traffic. 

    Red flags to consider when buying land

    Like buying a home, there are some red flags to consider when buying land. Some issues to look out for include:

    • Failed percolation tests that prevent building a septic tank
    • Water contamination that causes costly remediation 
    • No established utilities
    • No deeded access to the property
    • Unclear title of ownership
    • Excessive costs for development on the land
    • Protected areas that eliminate the areas where you can build 
    • Marshlands or flooding problems
    • Soil instability, erosion concerns, or landslide zones
    • Easements that limit where you can build
    • Strict zoning that doesn’t allow the use you intend

    Property taxes when buying land 

    Owning land can come with some property tax differences. If you’re using the property for farming or ranching, you may be eligible for agricultural tax exemptions. There are similar tax exemptions available if you’re using the land for timber production. However, if you’re planning to buy land to build a home on, you likely won’t qualify. 

    Vacant land may have lower taxes than developed land, but rates vary widely by state and county. It’s best to speak with a tax professional if you think you may qualify for these exemptions. 

    Final takeaways for first-time land buyers

    Becoming a first-time land buyer is a big leap and requires extra due diligence, whether you’re planning to build a home on the land or use it for agricultural purposes. Working with an experienced agent, having the proper inspections and surveys, and choosing the right loan can help you through the process.

    Alison Bentley

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  • What Are The Inspection Requirements For Buying a Home With an FHA Loan?

    If you’re planning to buy a home with an FHA loan, you’ll need to pass an FHA inspection before you can close. An FHA loan is a government-backed mortgage that appeals to first-time homebuyers because it’s easier to qualify for and requires only a small down payment. In 2025, 15% of buyers financing their homes chose an FHA loan.

    The U.S. Department of Housing and Urban Development (HUD) sets the minimum property standards that homes need to meet before an FHA loan can be approved. These are meant to protect the buyer and the investment by ensuring the house is both priced correctly and free of problems that could compromise living conditions.

    That’s where the FHA appraisal inspection comes in. The appraiser checks that the home is safe to live in, structurally sound, and free from major health or safety hazards. While it’s not as detailed as a full home inspection, it notes certain issues—like roof problems, peeling paint, water damage, or faulty utilities—that may need to be fixed before closing. 

    Knowing what the FHA requires to pass an inspection can help you decide whether that home you have your eye on makes sense—and how to move forward if the appraiser flags repairs, whether buying a home in Kansas City or Madison, WI. 

    What is an FHA appraisal?

    An FHA appraisal works differently than a conventional home appraisal—not only is the appraiser assessing the value of the home, they’re also making sure the property meets basic HUD livability standards. When your lender sends out an FHA-approved appraiser, they’ll walk through the property and document any noteworthy features, but they’ll also draw up a report with remarks on the home’s safety, security, and livability. 

    An FHA appraisal inspection will cost more than a regular appraisal because it’s more in-depth and requires certain qualifications. Most buyers can expect to pay anywhere between $400-$700 for an FHA appraisal, depending on home size, location, and demand. While an FHA inspection looks at some parts of a home, it does not replace a buyer’s home inspection. We’ll cover this in more detail later.

    FHA loan inspection requirements

    Because FHA loans are designed to make homeownership more accessible, the HUD wants to be sure the home is safe and livable before approving the loan. The “inspection” portion of the FHA appraisal focuses on three big themes: 

    • Safety: no conditions that threaten the health or safety of occupants
    • Security: protected from unauthorized entry and the elements
    • Structural soundness: likely to remain in good condition for the foreseeable future 

    Most of the time, FHA loan appraisal inspections will be looking for these requirements:

    Safety and habitability

    • No exposed wiring or obviously unsafe electrical panels.
    • Working smoke detectors (and CO detectors if required locally).
    • Safe stairs with handrails; stable, even flooring; no major trip hazards.
    • No active roof/foundation leaks, major mold patches, or severely water-damaged areas.
    • For homes built before 1978: no peeling/chipping paint that could be a lead hazard.

    Structure and exterior

    • Foundation and exterior walls free of major cracking, bowing, or shifting.
    • Roof with no active leaks and typically at least 2 years of remaining useful life.
    • Siding, gutters, downspouts and grading need to direct water away from the home.
    • Windows and doors operate/lock properly and aren’t broken.

    Systems and utilities

    • A permanently installed heating system capable of keeping a livable temperature.
    • Functional plumbing: hot and cold running water, drains working, no major leaks.
    • Safe, grounded electrical system.
    • Public or approved water and sewer (or septic) systems connected and functioning; well systems must be safe.
    • If AC is installed, it should work, although AC isn’t always required.

    Interior livability

    • At least one full working bathroom (sink, toilet, bathtub/shower).
    • Kitchen sink and plumbing function; any appliances included are safe.
    • No large holes in walls/ceilings/floors exposing wiring or framing.
    • Doors and windows open/close properly; safe access from driveway/sidewalk into the home.

    Site and access

    • Safe, year-round access via public or approved private road/driveway.
    • Proper site grading, drainage, and no major soil issues or unsafe easements.
    • Property is suitable for residential use (no dominant commercial use or severe environmental hazard).

    Multi-unit properties (2–4 units)

    • All units must meet FHA safety and livability standards.
    • Each unit needs working heat, plumbing, and electrical systems.
    • Shared areas (hallways, stairs, laundry rooms) must be safe and well-lit.
    • Utilities must be safely configured and either separately metered or clearly identified.

    Manufactured homes

    • Must be built after June 15, 1976, with HUD certification labels.
    • Must be on a permanent, HUD-compliant foundation (not temporary blocks).
    • Must be classified as real property, not personal property.
    • All utility connections (water, sewer/septic, electric, heat) must be permanent and functioning.

    FHA appraisal and inspection vs. home inspection

    Many FHA buyers think they can skip a home inspection because the FHA appraisal includes a basic safety check. But the FHA appraisal is a surface-level review for lending purposes, and only notes if the home meets the HUD’s minimum property standards. While it might be tempting to pass on a home inspection due to money or time, the two inspections actually work best hand-in-hand.

    A buyer-ordered home inspection is optional, but it gives you a clear picture of the home’s condition. A licensed inspector will spend several hours checking the home in detail—they’ll test built-in appliances and the home’s systems, closely examine the roof, foundation, and plumbing, check attics and crawlspaces, and note any immediate or upcoming repairs and maintenance.

    Depending on what the inspection uncovers, you may be able to negotiate repairs or purchase price, address issues before the FHA appraisal, or walk away if dealbreakers are revealed.

    What happens after an FHA appraisal

    Once the FHA appraiser submits their report, your lender reviews the paperwork then advises on next steps.

    • If the value supports your loan: The appraisal comes in at or above the purchase price, and your loan moves into final underwriting.
    • If the appraiser notes repairs: The lender issues a conditional approval listing what must be fixed before closing—usually things like peeling paint, unsafe wiring, or missing handrails.
    • Decide how to move forward: Most of the time, sellers are responsible for FHA-required repairs to keep the sale on track.
    • Repairs get checked: Once the work is done, the lender orders a quick reinspection to confirm everything meets FHA standards.
    • You get cleared to close: After the lender signs off on the value and the repairs, your loan moves forward to the final closing steps.

    What would cause a home to fail an FHA inspection?

    The FHA inspection requirements need to be met in order for the lender to approve the loan. Some problems might trip up financing but can be resolved before closing; others might mean the house doesn’t qualify for FHA support and the sale won’t go through. 

    The most common issues that come up after an FHA appraisal are:

    • Repairs the seller won’t do, even if they’re small or inexpensive.
    • Signs of bigger underlying problems (sloping floors, moisture stains, aging mechanicals) that require specialist inspections.
    • Unpermitted additions or remodels, especially garage conversions or structural changes.
    • Major systems that function “just barely” (weak heating, borderline wells, roofs with very limited remaining life).
    • Property configuration issues, like missing HUD tags on manufactured homes or multi-unit buildings with unclear utilities.
    • Location-based concerns, such as high-risk flood zones, industrial proximity, or unusual easements.

    FHA inspection requirements: bottom line

    A home doesn’t need to be perfect in order to meet the FHA inspection requirements. As long as the property is structurally sound, the systems are working, and there aren’t any clear health or safety hazards, most homes can qualify.

    The biggest hurdles in the FHA loan inspection process usually come from sellers refusing to make repairs or signs that imply larger underlying problems. If you go into the appraisal knowing what they’re looking for, you’ll be better prepared to navigate buying a home with an FHA loan.

    Ashley Cotter

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  • Can You Break a Lease if You Buy a House?

    If you’re a renter and planning to buy your first home, it’s undoubtedly a big step in your life. It also raises an important question: what happens to your lease if the right home comes along before it ends? The short answer: you can break a lease when you buy a house, but purchasing a home doesn’t automatically let you leave without penalties. What happens depends on the terms in your lease and the laws in your state. 

    In this Redfin article, we’ll answer your questions about breaking a lease if you buy a house. Whether you’re in the process of buying a house in Cincinnati, OH, or beginning to look at homes for sale in Raleigh, NC, here’s what to consider if you need to end your lease. 

    Key takeaways

    • Buying a home alone typically isn’t a legally protected reason for early termination.
    • You can break a lease to buy a house, but there may be financial repercussions.
    • Read your lease agreement to understand any consequences of ending a lease early.
    • Consider negotiating with your landlord about fees, finding a new tenant, or subletting.

    Can you break a lease if you buy a house?

    Yes, you can technically break a lease if you’re buying a home, but there may be consequences. The outcome depends on the terms of your lease agreement and the steps you take to end your lease.

    Possible consequences

    A lease agreement is a legally binding contract between you and your landlord or property manager, with the expectation that both parties will abide by the terms and conditions outlined in the agreement. 

    If you break a lease early, you’re technically breaking the contract – unless you’re within your rights to do so as outlined in the agreement. One common consequence of breaking a lease early is financial penalties. These can be costly, which could impact your homebuying budget or your credit score. 

    Reasons you can break a lease

    There are several reasons you may be able to break a lease without repercussions – but buying a home is generally not one of them. Valid reasons often include:

    • You’re active duty military being deployed or reassigned
    • You’re a victim of domestic violence
    • Your lease agreement was illegal
    • Your landlord has not sufficiently maintained the property as outlined in your lease
    • Your landlord has broken the terms of the lease

    There are usually steps you need to follow, such as proper notice to vacate or submitting a letter to your landlord. Laws vary by state, so be sure to consult with an attorney.

    How to get out of your lease in order to buy a home

    There are several options you can take to better understand how to get out of your lease if you’re in the process of buying a home. Here are some of the things you can do:

    Review your lease agreement

    The first step is to review your lease agreement. This document will show what reasons you may be able to break your lease without penalty, what happens if you break a lease early, and possible other options. 

    You may find any of the following in your lease agreement:

    • Early termination fees: If you break your lease early, it’s likely you’ll owe an early termination fee. This is often a one-time payment, ranging from 2 to 4 months’ rent. You may also lose your security deposit or have additional fees associated with finding a new tenant. 
    • Lease buyout: You may have the option (or in some cases may need to) buy out the rest of your lease. This means paying all the remaining rent for your lease. If you have several months left in your lease, this could be costly. 
    • Mortgage clause: While uncommon, it’s possible that your lease has a home buying or mortgage clause. This clause may allow you to terminate the lease if you’re buying a house. These usually require additional proof and extended notice (often 30–60 days).

    Speak to your landlord

    Depending on the options outlined in your lease agreement, it’s time to speak with your landlord or property manager. It’s possible that they may be willing to negotiate with you. If there’s a high demand for rentals in your area, they may be willing to let you break the lease early. Some other options include asking for a reduction in the early termination fee, adjusting the notice period to vacate your unit, or offering to find a new tenant.  

    Change to a month-to-month agreement

    You can also ask if your landlord will switch your lease to a month-to-month agreement. A month-to-month rental agreement gives you more flexibility as you won’t be tied to a year-long lease. Usually, you only need to give 30 days’ notice before vacating. However, month-to-month agreements can be more expensive than a long-term lease agreement.

    Keep all records and documentation

    No matter how you end your lease, keep all communication with your landlord including emails, messages, any documents you’ve signed, previous and new rental agreements, current and past payments, etc. Any changes to your lease agreement should be in writing and signed by both parties. If there are any issues, you’ll have all the necessary documents.

    Pros and cons of breaking a lease to buy a home

    Pros of breaking a lease

    • Buying the right home: If you’ve been looking for a home and found one that meets your needs, budget, and long-term goals, then it may be right for you to break your lease early. 
    • Financial penalties may be manageable: Depending on what’s outlined in your lease agreement, it may not be as expensive as you anticipated to break your lease. For example, if you’re near the end of your lease the early termination fees may fit into your budget.
    • Building equity sooner: Buying a home lets you build equity. If you’re in a good financial position, buying a home now lets you start building equity sooner rather than paying rent for months to come. 

    Cons of breaking a lease

    • Financial penalties: It could be costly if you need to buy out our lease or pay for multiple months of rent as a penalty for breaking your lease early.
    • Potential credit score impact: Your landlord could report your broken lease to a credit bureau, which may impact your credit score. If you don’t make proper payments or stop paying your rent, this can also impact your credit score, and your landlord could send you to debt collections.
    • Impact on rental history: Breaking a lease is typically noted on your rental history report. This can make it difficult to rent in the future. Should you need a reference from your landlord in the future, they may not be willing to give you a good reference. 

    Alternatives to breaking a lease

    There are a few alternatives to breaking a lease, some of which we’ve covered above. 

    Negotiate a lease buyout

    Sometimes a lease buyout may be your best option. This avoids having a “broken lease” on your rental history and may cost less than an early-termination fee if you’re close to the end of your term.

    Sublet your apartment

    If your lease allows subletting, you can find a subtenant who pays you rent for the remainder of the term. Your landlord may still need to approve the tenant, and you remain responsible if they default on rent.

    Find a new tenant

    Also called “assigning the lease,” your landlord may let you find a new tenant who will sign a new lease for the apartment. Your landlord may allow you to break the lease with fewer consequences, as long as you have found a new tenant for the unit. 

    Negotiate a later closing date

    If you’re in the process of buying a home, consider negotiating a later closing date. This can be especially helpful to the seller if they are in the process of buying a new home, as it gives them more time to close the deal. 

    Should you break a lease to buy a house?

    Ultimately, breaking a lease if you’re buying a home depends on your finances and homebuying goals. If you don’t plan on renting again in the future and the early termination fees aren’t as costly as you anticipated, then it may make sense to break your lease. However, if you need to pay for multiple months of rent as a consequence of breaking the lease, it may make more sense to wait to buy a home.

    Alison Bentley

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  • When Is Earnest Money Due? Sooner Than You Might Expect

    • Earnest money is typically due 1–3 business days after offer acceptance.
    • Deposit deadlines are binding under “time is of the essence” clauses.
    • Funds should always be paid to a neutral third party (escrow, title, attorney).
    • Missing the deadline can allow the seller to cancel the contract.

    After your offer is accepted, your first real financial investment in the homebuying process is often the earnest money deposit. 

    “Earnest money is a good faith deposit that you pay soon after a seller has accepted your offer on a home,” explains Courtney King, Senior Manager of designated brokers at Redfin. “It really demonstrates your intent to buy the home and shows the seller that you’re committed to the purchase. It can also act as a safeguard just in case you breach the contract; then the seller might have an opportunity to retain that earnest money.”

    Earnest money differs from the down payment and other closing costs in that it’s paid earlier, usually due within 1-3 business days after the seller signs the purchase agreement. 

    To really show sellers you’re serious, signing the contract with earnest money in hand is most efficient. But, as it goes with real estate transactions, there’s a bit more to the process.

    In this article:
    When do you pay earnest money?
    How is earnest money paid and who gets it?
    What happens if earnest money isn’t paid on time?
    Tips for meeting your earnest money due date
    FAQs

    At what point do you pay earnest money?

    Earnest money is due shortly after your offer is accepted, and the standard payment timeline is 1-3 business days. The exact deadline will be laid out in your contract, and it’s important to be clear on the terms—do days refer to business days or calendar days? Is there a cut-off time on the final day for the payment?

    Usually, the timeline for paying earnest money is as follows:

    1. Offer accepted (day 0): The contract clock starts.
    2. Earnest money is due (1-3 business days): The buyer delivers the deposit, ideally to a neutral third party like an escrow agent. 
    3. Escrow deposit confirmed (1-2 business days): The funds are verified, and the inspection and contingency period begins.

    Contract wording is important: If the purchase agreement says “within three business days of acceptance,” weekends and holidays usually don’t count. But always double-check how your state or brokerage defines business days. Once the deposit is received and confirmed, your transaction officially moves forward into inspections, appraisal, and financing. 

    In some areas, like North Carolina, South Carolina, or Texas, you will pay a nonrefundable due diligence fee or option fee instead of or in addition to the earnest money deposit; be sure to check with your agent to understand the regulations for your location.

    How is earnest money paid and who gets it?

    In addition to when the earnest money is due, your contract will also specify where to send your earnest money and how to pay it. In most cases, you’ll deliver the deposit to a neutral third party like a title company, escrow agent, or an attorney, which, says King, is the most effective way of protecting your earnest money as there’s no inherent conflict of interest.

    How to pay earnest money

    A wire transfer is the most common and secure method of depositing funds into an escrow account, where the money is safely held until closing. A cashier’s check or certified check might be accepted if it is delivered in person to the third party fund holder.

    Never pay earnest money directly to the seller. This protects both parties from fraud, misdirected payments, and legal disputes if the money needs to be returned.

    Always verify payment instructions directly with your agent or escrow officer before sending funds. Wire fraud targeting real estate transactions is a real risk, so double-check details by phone using a verified number or in person before transferring money.

    Who gets the earnest money deposit?

    The escrow holder (listed in your contract) is responsible for managing the earnest money deposit. They’ll confirm they received the funds, provide appropriate documentation, and hold the money until one of two things happens:

    1. You close on the home: The earnest money deposit is applied toward your down payment or closing costs.
    2. The contract is terminated: The money is released based on the terms of your purchase agreement—typically refunded to the buyer if you cancel under a contingency, or kept by the seller if you breach the contract terms.

    What happens if earnest money isn’t paid on time?

    Most real estate contracts include a “time is of the essence” clause, which means that deadlines are binding.

    “Once you’ve signed, you have a duty to fulfill your obligations as a buyer,” King says. “Making sure you hit those deadlines is crucial.” And it should be clear what those deadlines are, because if you miss the earnest money payment window, a few things could happen.

    • Most notably, the seller can cancel the contract: In most transactions, the agreement isn’t fully in effect until the earnest money is paid. If you miss the deadline, the seller can move on to the next buyer without penalty. 
    • You could lose credibility as a buyer: Even if the seller doesn’t cancel the contract, missing the payment deadline could be seen as being unreliable as a buyer, putting unnecessary strain on the transaction and potentially affecting negotiations later.
    • The home purchase might be delayed: Without the earnest money deposit, the escrow process can’t officially begin—which might stall inspections, appraisals, or other deadlines that are tied to that starting date.

    Bottom line: Don’t miss your earnest money due date

    Missing your earnest money due date, even by accident, can have serious consequences. To keep your homebuying journey on track, make sure you start strong by:

    • Having funds ready early. Before you even make an offer, make sure your earnest money amount is accessible (not tied up in an investment account or slow-to-transfer savings).
    • Confirming the exact due date before signing. Ask your agent to point out the deposit clause in your contract. It will clarify how many days you have and whether they are business days or calendar days.
    • Planning around weekends and holidays. If your deadline lands on a Friday or before a holiday, start the transfer early so your escrow holder receives it in time.
    • Knowing who to pay. The escrow or title company is the safest place to send funds. Never wire money until you’ve verified instructions directly with your agent or escrow officer.
    • Getting written confirmation. Always request proof that your earnest money was received and deposited. It’ll protect you if questions come up later, and will also act as confirmation to continue the due diligence process.

    Meet your deadlines, verify your details, and your earnest money will do exactly what it’s meant to: move you one step closer to owning your new home.

    FAQs: When is earnest money due

    Can I pay earnest money at the same time I submit my offer?
    Usually, earnest money is paid after your offer is accepted. Never send funds until there’s a signed agreement and verified payment instructions from the escrow holder. In competitive markets, some buyers deposit the money immediately upon acceptance or show proof of funds upfront to strengthen their offer.

    What happens if the earnest money deadline falls on a weekend or holiday?
    Most contracts use business days, so weekends and holidays don’t count toward your deadline. For example, if your contract says “within three business days” and your offer is accepted on a Thursday, your earnest money would be due by Tuesday (assuming no holidays in between). Always check your agreement—it defines how “days” are counted in your transaction.

    Is earnest money paid before or after the inspection?
    Earnest money is typically paid before the inspection period begins. Once the deposit is received, your inspection and contingency timelines officially start. Earnest money deposits tend to “activate” the rest of the homebuying process—deposit first, then inspections, appraisal, and closing.

    Ashley Cotter

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  • Redfin Conversational Search: Say Hello to the Future of Real Estate

    Finding the perfect home just got easier. Here’s how to jump in.

    AI is quickly changing how people find homes and interact with the real estate market. More and more consumers are starting their searches on tools like ChatGPT and Gemini without ever interacting with traditional search platforms, preferring to find homes through conversation and questions. 

    With homebuyers also increasingly picky in today’s expensive market, Redfin wanted to make it easier and more enjoyable for people to find the home that fits them best. So, we did.

    Home searchers can now find homes on Redfin by describing what they want in their own words and engaging in a conversation to refine their search. Using our new conversational search feature, you can now comment on a suggested listing to say the kitchen should be more modern, or respond to follow-up questions about your preferred commute time or proximity to a school you identify, for example.

    How house hunters are using conversational search

    Whether you’re in the market for a home, just browsing a neighborhood, or want to find unique listings, conversational search is for you. Here are recent ways people have used it:

    • Finding a remodeled home: A user requested recently-renovated properties that were within 30 minutes to work during rush hour and in the user’s desired school district. After some back and forth, the tool showed them homes that met their criteria—all in three minutes.
    • Seeking a high-value home that will close quickly: A buyer wanted vacant homes under $1 million that were move-in ready. The tool returned 13 single-family homes that met their criteria.
    • Searching for a home with high-end lighting: One home searcher wanted to see homes with high-end lighting and smart features, such as small aperture architectural lighting. The tool let them know that sellers sometimes don’t list these specific features, but still found a listing that met their exact criteria. 
    • Looking for an investment property: Another user was looking for an investment property on a budget, with strict HOA limits, size requirements, and radius constraints. These are not filters available to consumers, but using conversational search, they found what they wanted through natural conversation.

    How to get started with conversational search

    Powered by Sierra, conversational search is built directly into the Redfin home search experience. Just describe what you’re looking for the same way you would when talking with a friend. 

    Here’s how to get started:

    1. Go to Redfin.com and sign in.
    2. Click on the search bar—you’ll then see an option to try conversational search.
    3. You can also access conversational search from the homepage, map view, listing pages, or directly at Redfin.com/chat.
    4. Start describing the type of home you want, and the tool will ask follow-up questions to help refine your search.

    As you look at listings, you can react in real time—for example, responding that you’d like a bigger backyard, or asking whether the home is close to a nearby park. The tool adjusts instantly, narrowing your results as the conversation continues.

    Then, when you find a home you love, you’re already in the right place to connect with an agent, set up a tour, get pre-approved for a mortgage, or take your next step in the homebuying process.

    How to get the most out of conversational search 

    Conversational search relies on your input to provide a response. Be as thorough as you can about the type of home you’re looking for—the more detail, the better. For example: 

    • Instead of: “Show me homes in Chicago with a pool,” say: “Show me homes in Chicago for less than $2 million, within 25 minutes of Willis Tower and near an L station, with a pool.” 
    • Instead of: “Find me a cheap, quiet home in Detroit,” say: “Find me a fixer-upper in the Burbank neighborhood of Detroit for less than $150,000, on a quiet street near a park and with no HOA dues.”
    • Instead of: “Show me eco-friendly homes in Seattle,” say: “Show me new or remodeled homes in Seattle for $1M with smart features, green technology, and modern interiors, near Magnuson Park.”

    After you get results, you can keep refining—ask follow-up questions, point out what you like or don’t like, or add new details as you think of them. The tool will adjust as you go.

    Importantly, conversational search cannot act as a licensed real estate agent, meaning it can’t provide substantive advice or tell you what you should or shouldn’t do. It simply makes the search easier and more intuitive, so you can spend less time sorting through listings and more time looking at homes that make sense for you.

    The future of home search is now

    Artificial intelligence is reshaping how people discover information online, and home search is no exception.

    With conversational search, Redfin is using AI to make the home search process smarter, more personal, and more accessible. We’re empowering you to find your needle in the haystack—looking across every haystack and providing detailed information about the type of needle you’re looking for. 

    Conversational search expands Redfin’s leadership in using AI to transform real estate, adding to a line of products like the Redfin Estimate (real-time home values), Ask Redfin (Q+A for housing questions), and Buying Power (personalized affordability calculator). Every innovation reflects Redfin’s commitment to making homebuying smarter, fairer, and more accessible.

    Try conversational search today at Redfin.com by simply searching for a home; it’s embedded into the search experience on the homepage, map, and listing pages. You can also head directly to Redfin.com/chat. Support for iOS and Android is coming in December.

    Jamie Forbes

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  • What Are the Inspection Requirements for a VA Loan?

    Buying a home with a VA loan comes with a few extra steps designed to protect veterans and active-duty service members, and the property inspection process is one that’s often misunderstood. A lot of buyers assume the Department of Veterans Affairs sends an inspector to go through the entirety of the home before closing. In reality, that’s not quite how it works.

    The VA doesn’t require a full home inspection. Instead, it requires a VA appraisal, which is a review of the home that verifies the property’s value. Unlike a normal home appraisal, VA appraisals will also check that homes meet Minimum Property Requirements for safety and livability, protecting veterans from unsafe conditions.

    That said, a private home inspection still plays an essential role. The VA appraisal ensures the property is safe enough for the loan, and a personal inspection reveals its condition and flags potential issues before the appraisal. Understanding how these two processes work together can save you time, money, and frustration as you move through the VA home-buying process, whether you’re buying a home in Virginia Beach or Colorado Springs.

    The difference between a VA appraisal vs home inspection

    Many buyers confuse the VA appraisal with a home inspection, often calling it a “VA inspection.” But in reality, they’re different and serve distinct purposes.

    An appraisal is required for a VA loan

    A VA loan appraisal is a broader assessment of the home that looks for visible issues that could affect livability and loan eligibility.

    A VA appraisal is ordered by the lender, not the buyer or seller, and needs to be completed by a VA-approved appraiser. These appraisers are specifically trained to follow VA guidelines and submit a report, known as the Notice of Value, that states the appraised value of the home and any repairs that need to be made to meet the VA minimum property requirements.

    What the VA appraisal looks for:

    • Roof and structure are intact
    • Utilities and plumbing are available
    • No major health or safety hazards
    • Proper access to the property (road or easement)
    • No visible signs of a pest infestation or severe water intrusion

    A home inspection is a private, buyer-ordered assessment of a home that goes far beyond what the VA requires. The home inspection is your chance to understand the true condition of the property, not just whether it meets the VA’s baseline standards. But it can also give you a heads up to issues in the home a VA appraisal might flag, before the actual appraisal happens.

    What a home inspector looks for:

    • Tests heating, cooling, plumbing, and electrical systems
    • Examines the roof, foundation, walls, and attics/basements for damage or wear
    • Identifies maintenance issues and estimates future repair costs
    • Reviews appliances, fixtures, windows, and doors
    • Checks for pests, mold, and water damage (often available as add-ons)

    Note: Some states do require a pest and termite inspection in addition to the appraisal to secure financing with a VA loan.

    What are the VA loan’s inspection requirements?

    The VA’s minimum property requirements (MPRs) are baseline standards that every home must meet to qualify for a VA loan, and are inspected during the appraisal. They cover important livability expectations like roof integrity, plumbing, heating, access, and structural soundness. The requirements are in place to make sure a home is in good enough condition to be safe and comfortable for the veteran, while also ensuring the VA’s investment is protected.

    While this is a general overview of the VA loan inspection requirements, working with a real estate agent that understands the scope of the VA loan process is key to ensure requirements are met.

    1. Safety

    The home must be free from conditions that could endanger the occupants:

    • No exposed or unsafe electrical wiring
    • Sturdy handrails on stairs and balconies
    • Proper egress (windows and doors) from bedrooms
    • Safe heating system (no space heaters as primary heat source)
    • No trip hazards or broken steps
    • Proper ventilation in bathrooms, kitchens, and attics
    • Working smoke and carbon monoxide detectors

    2. Structural soundness

    The property should have a solid structure and enough room for supporting typical residential use.

    • Roof is weather-tight and has reasonable remaining life
    • Foundation is stable, with no major cracks or settlement
    • Walls and ceilings show no severe damage or rot
    • Floors are level and secure
    • Crawl spaces and basements are dry and ventilated
    • Attics are free of moisture, mold, or sagging
    • No evidence of termites, wood rot, or dry rot

    3. Sanitation

    The home must provide safe, sanitary living conditions and functional utilities.

    • Continuous supply of potable (safe drinking) water
    • Approved sewage disposal system (public or private septic)
    • Functional plumbing with no active leaks
    • Operational electricity and lighting
    • Adequate heating and cooling (especially in colder regions)
    • Kitchens and bathrooms with working fixtures
    • Property free of debris, hazardous waste, or infestations

    4. Access and utilities

    Every home must have safe, legal, and permanent access from a public or private road, plus functioning utilities.

    • Year-round access by public road or recorded private easement
    • Utilities (water, electricity, gas, sewer) are available and safe
    • If private roads exist, a maintenance agreement must be recorded

    5. Site conditions and hazards

    The VA appraiser also evaluates the land and surrounding environment.

    • No active or potential sinkholes, landslides, or flooding issues
    • Site drains water away from the foundation
    • No nearby environmental hazards (e.g., oil tanks, toxic waste, high-voltage lines)
    • Home not built within high-risk flood zones unless properly insured

    6. Environmental hazards

    A home must be free from environmental or health hazards that could affect occupants.

    • No chipping, peeling, or otherwise deteriorating paint
    • Safe distance from industrial or hazardous sites
    • No evidence of radon, contaminated soil, asbestos, lead, or other known environmental hazards

    7. Additional requirements for multi-unit or unique properties

    If you’re buying a multi-family property, condo, or rural home, the VA adds extra considerations:

    • Each living unit must have independent access, utilities, and sanitary facilities.
    • Common areas must be maintained in good condition.
    • Wells and septic systems must meet local health authority standards.

    What would cause a home to fail a VA inspection?

    Most VA loan hiccups happen when major problems become evident during the appraisal. The appraiser is looking for issues that would make the property unsafe or uninhabitable. For that reason, fixer-upper homes will almost always be denied for a VA loan, but other common dealbreakers could be:

    • Roof that is leaking, severely damaged, or has very little life left.
    • Water intrusion, damp basements or crawlspaces.
    • Peeling paint, especially in older homes (risk of lead-based paint).
    • Termite/wood-destroying insect damage or infestations.
    • Unsafe electrical systems (exposed wiring, overloaded panels).
    • Poor or non-existent access road, or serious site issues (drainage, subsidence).
    • Plumbing/heating not operational.

    On the plus side, if smaller problems found during the appraisal are addressed before closing, the home purchase can still go through. Once repairs are made, the VA appraiser returns for a quick reinspection to make sure the home now meets the minimum property requirements. 

    On the other hand, if repairs are too big, expensive, or time consuming to fix before closing, financing likely won’t be approved and you’ll need to walk away and choose another home.

    Tips for passing a VA appraisal and inspection

    Your best chance at passing a VA loan appraisal inspection starts before you even put an offer in on a home. 

    • Do a quick visual check of the home’s exterior. Look for roof damage, peeling paint, or signs of water entering the home, as well as any safety hazards.
    • Ask your agent if the property has public utilities or an approved private well and septic system.
    • Request disclosures early. If the seller already knows about foundation, plumbing, or pest issues, you can address them up front.
    • Prioritize move-in ready homes or ask about the age of the roof, furnace, and water heater before you make an offer; or make sure they are checked during a home inspection.
    • Work with a VA-experienced agent and lender. They’ll know how to spot problem properties and guide you toward homes that meet VA standards.
    • Keep communication open. Once the appraisal report comes back, act quickly on any repair requests—some sellers will even negotiate on repairs to help the sale go through.
    • Plan your timeline. On average, VA appraisals take between 7-10 business days; build that into your closing schedule, as well as time to address potential repairs.
    • Use a Reconsideration of Value: If the appraisal comes in lower than the sale price, you can ask for a ROV that gives the lender additional market data that supports a higher valuation—or, walk away using the amendatory (escape) clause for VA loans.

    VA loan inspection requirements: Bottom line

    The VA loan process is designed to protect every party involved: veterans, lenders, and the long-term value of a home. While the VA appraisal is often seen as an inspection, it’s actually  looking at the livability of a property, rather than providing a thorough review of the home’s systems like a general home inspection.

    Serious buyers should still schedule a home inspection to uncover any hidden or long-term maintenance issues. Especially when combined with the VA appraisal, a home inspection should give buyers confidence that they are making a smart purchase.

    Thinking about buying a home with a VA loan? Learn more about your options through our partner Rocket Mortgage.

    Ashley Cotter

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  • Is Down Payment Included in Closing Costs?

    Key takeaways

    • Your down payment is not included in your closing costs; they’re two separate expenses you pay during the homebuying process.
    • The down payment goes toward your home’s purchase price and helps build equity from the very beginning.
    • Closing costs cover all the fees and services needed to finalize the sale, such as the appraisal, title insurance, and lender fees.
    • You’ll typically pay both the down payment and closing costs at the same time, but they serve different purposes.
    • Reviewing your closing disclosure carefully before signing helps you understand exactly where your money is going.

    If you’re buying a home, you’ve probably asked yourself this question. The short answer: No, your down payment isn’t included in your closing costs. They’re two separate expenses that come up at the same time in the homebuying process, which is why so many buyers confuse them.

    Think of it this way: your down payment is the money you contribute toward the home’s purchase price; it’s your personal investment in the property. Your closing costs, on the other hand, cover the fees and services needed to finalize the sale, such as the appraisal, title insurance, and lender fees.

    Both are major upfront costs, but they serve different purposes. Understanding the difference helps you budget more confidently.

    Closing costs vs. down payment

    So what’s the difference between closing costs and a down payment? Let’s break it down clearly.

    Down payment

    What it is: The down payment is the portion of the home’s purchase price that you pay out of pocket; it’s your personal investment in the property and typically a percentage of the total cost.

    Purpose: A down payment reduces the amount you need to borrow from your lender. Putting more money down can help you qualify for a smaller loan, potentially lower your interest rate, and even help you avoid private mortgage insurance (PMI) if you put down at least 20 percent.

    Where it goes: The money goes directly toward the home’s purchase price, helping you start building equity from day one.

    Closing costs

    What they are: Closing costs include the fees and expenses required to finalize a home sale; they’re essentially the cost of completing the transaction.

    Purpose: These fees cover the professional services and administrative work needed to process your loan and legally transfer ownership of the property.

    What’s included: The list can be lengthy, but common closing costs include:

    Where it goes: The money is distributed among all the different parties involved in the transaction, such as the lender, title company, and local government.

    While both your down payment and closing costs are paid around the same time at the closing table, it’s important to budget for them separately. Your lender will give you a closing disclosure at least three days before closing, which provides a detailed breakdown of these costs.

    Understanding the closing process

    Let’s walk through what happens as you move toward closing and what to expect at each step.

    What happens before closing day?

    Before your closing date, you and the seller will agree on a specific day to finalize the sale. Your lender will then provide a document called a closing disclosure; this outlines the final details of your mortgage, including your loan terms, interest rate, and all related fees and costs.

    Take the time to review this document carefully. If anything looks unclear, ask your lender or real estate agent to explain it. Understanding these details ensures there are no surprises when you sit down to sign.

    What happens on closing day?

    On closing day, you, the seller, and your real estate agents typically meet at a title company or an attorney’s office to complete the paperwork. If meeting in person isn’t an option, you can usually sign with a mobile notary who comes to you.

    Your agent can confirm if this option is available and help you schedule enough time to review everything before signing. Once all the documents are signed and the funds are transferred, you’ll receive the keys to your new home; congratulations, you’re officially a homeowner.

    Bottom line about down payments and closing costs

    To sum it up, your down payment and closing costs are two separate expenses that you pay at roughly the same time, but they serve very different purposes. The down payment is your personal investment in the home; closing costs cover the fees and services needed to make the transaction official.

    Understanding how both work helps you plan and avoid last-minute surprises at the closing table. When you know what to expect, you can budget more confidently and focus on finding the right home for your needs.

    If you’re ready to start your home search, connect with a Redfin real estate agent who can guide you through the buying process and help you find a property that fits your budget and lifestyle.

    Frequently asked questions

    1. Do closing costs include the down payment?
      No. Your down payment and closing costs are two separate expenses. The down payment goes toward your home’s purchase price, while closing costs cover the fees for processing the loan and transferring ownership.
    2. How much are closing costs on a home purchase?
      Closing costs typically range from 2% to 5% of the home’s purchase price. The exact amount depends on factors such as your loan type, lender fees, and local taxes.
    3. Can closing costs be included in the mortgage?
      In some cases, yes. You may be able to roll certain closing costs into your loan, but doing so increases your loan balance and interest over time. It’s best to talk with your lender about your options before closing.
    4. How much should I save for a down payment?
      A common goal is to save 20% of the purchase price to avoid private mortgage insurance (PMI). However, many loan programs allow down payments as low as 3%, depending on your credit score and eligibility.
    5. Who pays closing costs — the buyer or the seller?
      In most transactions, the buyer pays the majority of closing costs, but the seller may agree to cover part of them through a concession or negotiation. Your Redfin agent can help you understand what’s typical in your area.       

    Jasica Usman

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  • Your Guide to Starter Homes in Today’s Housing Market: Do They Still Exist?

    • A starter home is the most affordable type of house or living space a first-time buyer can purchase.
    • The median price of a starter home in September 2025 was $260,205.
    • What used to be a 3-to-7-year stay in a starter home is now stretching much longer as the market remains competitive and interest rates stay high.
    • Deciding whether to keep renting, buy a starter home, or go straight to a forever home depends on your personal financial and life goals.
    • While starter homes aren’t as widely available as they once were, they can still be found in certain markets.

    If you’re thinking about buying your first place, a starter home is your launchpad into real estate. Typically the most affordable option for first-time buyers, starter homes are smaller and come with a more manageable price tag than the broader market. 

    The concept took off after World War II, when small, affordable homes helped returning soldiers and their families step into homeownership, a key part of the American Dream.

    Today, things look different. Cheap land is harder to come by, and buyer expectations have also evolved. In cities and busy suburbs, starter homes might look like a condo in Miami, FL or a townhouse in Portland, OR rather than a quaint single-family home. Rising land costs, limited inventory, and changing buyer demographics all influence what qualifies as a starter home today.

    “Starter homes aren’t what they used to be,” says Redfin Senior Economist Elijah de la Campa.  “Today, a small fixer-upper condo is often all a first-time homebuyer can afford. The American Dream is changing; for many, it no longer involves a house and a white picket fence.”

    In this article:
    What is a starter home?
    How much does a starter home cost?
    How long should I stay in a starter home?
    Starter home vs forever home vs renting
    Where can I find affordable starter homes?
    How to buy a starter home
    Is it still possible to buy a starter home?
    FAQs

    So, what is a starter home?

    Historically, starter homes were smaller, more affordable houses designed to help first-time buyers enter the market. Often around 1,200 square feet with two bedrooms and one or two baths, these homes sometimes came with trade-offs like less desirable locations or fewer upgrades.

    Now, a home’s price is likely to define if it is a starter home—and what’s considered “entry-level” homeownership can vary widely by region. In high cost of living areas, homes that need TLC often sit at more approachable price points for first-time home buyers than turnkey homes. But with renovation costs on the rise, demand for move-in-ready homes is starting to outpace that of fixer-uppers.

    How much does a starter home cost?

    Generally, the cost of a starter home is priced below the average home in any given area. According to Redfin data, the median price of a starter home in September 2025 was about $260,205, and the average income needed to afford one was around $79,400.

    But the national average and the cost of houses for sale in your area can look drastically different. In many places, rising home prices have outpaced income growth, making affordability a big challenge. The overall median home price in the country, for instance, grew from $296,485 in December 2019 to $427,179 in December 2024, a jump of 44%. 

    High demand from first-time buyers and downsizers, combined with limited entry-level inventory, has created a competitive market. In fact, the average age of a first-time buyer in the US is now 38, up from 35 the previous year.

    “Starter home prices have climbed so much over the last decade that even with mortgage rates coming down from their peak, affordability is still a huge hurdle,” says David Palmer, a Redfin Premier agent in Seattle. 

    “At the same time, buyers who already own a home have more leverage—they can use the equity they’ve built to make stronger offers. That means entry-level buyers are often losing out to move-up buyers who have deeper pockets.” 

    Starter Home Affordability by Metro: 10 Most Populous Metros (September 2025)

    Metro Area Income needed to afford median priced starter home Median starter home sale price Estimated median household income % of starter homes affordable at median income
    New York City, NY $166,318 $471,847 $104,146 2.27%
    Los Angeles, CA $183,805 $641,624 $100,550 0.07%
    Chicago, IL $83,203 $230,458 $94,673 98.16%
    Houston, TX $83,264 $244,027 $84,918 97.61%
    Dallas, TX $102,048 $294,826 $96,721 79.98%
    Miami, FL $110,857 $347,950 $84,092 6.70%
    Atlanta, GA $87,353 $276,505 $96,315 71.50%
    Philadelphia, PA $52,834 $170,030 $94,757 96.31%
    Washington, DC $122,768 $390,711 $131,672 82.25%
    Phoenix, AZ $103,450 $350,000 $94,009 16.13%

    Redfin data as of September 2025

    How long should I stay in a starter home?

    In the past, many homeowners stayed in their starter homes for around three to seven years building equity. However, it’s now common to see homeowners stay put longer, averaging 12 years in many parts of the country. First-time buyers in particular are taking longer in their search for a home that meets their needs more long-term.

    How long you actually stay in a starter home often depends on your personal situation. Maybe your family grows, you get a new job that requires a move, or your financial situation changes, allowing you to look for a bigger or more permanent “forever home.” 

    For first-time buyers and seasoned homeowners alike, the decision to continue living in their current home helps avoid rising home prices and potentially higher interest rates—otherwise known as the “lock-in” effect.

    Starter home vs forever home vs renting

    So is buying a home better than renting in today’s economy? If you’re thinking about buying a starter home, it’s helpful to compare it to other options like continuing to rent, or jumping straight into  a “forever home” to choose what works best for your long term goals.

    Is renting or buying better long term?

    For many, deciding whether to rent or buy is not only about the numbers, but what kind of stability and flexibility you want in your life. 

    Buying a home can bring long-term financial and emotional rewards. Each mortgage payment helps you build equity, giving you something tangible for your money. Rent, on the other hand, can increase over time, while a fixed-rate mortgage offers predictable payments. Plus, homeowners might qualify for tax breaks on mortgage interest and property taxes.

    But if you’re saving up for a strong down payment, expect to move in a few years, or prefer fewer responsibilities, renting could be a smart choice over buying.

    Pros of buying a starter home over renting

    • The opportunity to build long-term wealth through home equity and appreciation. The payments you make on your mortgage go towards your personal wealth, rather than to a landlord. 
    • More stable: predictable and steady monthly payments and potential tax benefits help with long-term financial planning and budgeting.
    • The freedom to make it your own: paint, remodel, garden. You’re not limited by a lease or landlord permission.
    • Even if it’s not your forever home, a starter home can help you build equity, credit, and make it easier to move up later; and if you sell, that equity can go toward your next down payment.

    Cons of buying a starter home vs renting

    • Buying comes with higher upfront costs: the down payment, closing costs, inspections, and moving all add up—not to mention savings for emergencies. Renting is usually the first month’s rent and a deposit.
    • Maintenance and repairs fall to the homeowner: When you rent, the landlord or property management is responsible for any repairs; if you own your home, the cost and responsibility falls to you.
    • Less flexibility to move: Selling a home takes time and money. If life changes quickly, like a new job in another city, it can be harder to make the move than breaking a lease.
    • In higher cost of living cities, renting can actually be more affordable than owning a home.

    Should I buy a starter home or forever home?

    If you are ready to buy, what kind of home you should look for ultimately depends on your lifestyle, goals, and timeline.

    A forever home is designed for the long haul—usually, for those planning to stay around 10 years or longer. There’s space to indulge in projects or hobbies, host friends and family, and put down roots. But forever homes usually have higher price tags and ongoing expenses that can stretch the budgets of first-time buyers.

    Starter homes, on the other hand, can get you building wealth sooner and gain experience as a homeowner, even if it’s not your dream home yet.

    Pros of a starter home over a forever home

    • More affordable entry point: Starter homes usually have a lower purchase price, a smaller down payment, and more manageable monthly payments.
    • You build equity sooner: Each payment you make on your home grows your investment; and according to Redfin data, lower-priced starter homes are in high demand compared to houses at the top of the price tier.
    • Lower upkeep costs: Smaller, less-expensive homes often come with lower property taxes and less maintenance than larger houses.
    • A faster path to homeownership: A starter home might not have everything on your wishlist, but it helps get your foot in the door of real estate and learn what matters for you in a home.

    Cons of buying a starter home instead of a forever home

    • You might outgrow the space faster than you think, especially if you work from home, want to rent out rooms, or start a family.
    • Starter homes in many areas often need updates or repairs, especially if the home is older.
    • A starter home might not have all the features you want in a home long-term, or be in a less desirable area.
    • You’re more likely to move again, repeating the buying and selling process which can be expensive. If you don’t stay in the home long enough, you might even experience a loss in equity.

    In the long run, while the initial plan might be to move to a bigger place later, some people find that their starter home suits them perfectly and they choose to stay for many years, or even for good. Over time, with some updates, additions, and personal touches, a starter home can become the perfect forever home.

    Where can I find affordable starter homes?

    If you’re looking for affordable starter homes, there are some key locations to watch. Some areas in the Midwest, for instance, could actually see home prices rise due to more people moving to the Rust Belt.

    “Midwest cities have risen in popularity because they’re more affordable than cities in other parts of the country, but many buyers are now widening their search to the suburbs after being priced out of popular urban areas,” says Redfin Chief Economist Daryl Fairweather. 

    Heading south, Texas and Florida are known for having a decent number of starter homes generally priced below the national average, with home building rates and land availability being key factors. On the East Coast, cities like Harrisburg, PA; Rochester, NY; and Baltimore, MD, are looking promising for first-time buyers because they’re relatively affordable and have job opportunities. The Sun Belt region is also seeing growth, with builders drawn to lower land and labor costs. 

    >>See more: The 10 Cheapest States to Buy a House in the U.S.

    How to buy a starter home

    1. Check your finances and readiness

    • Make sure your income is stable, your credit score is in good shape, and you’ve started saving for a down payment and closing costs.
    • Factor in additional costs like property taxes, insurance, and maintenance. This comprehensive Redfin guide walks you through what to budget.
    • Ask yourself: am I ready to stay put for a few years? Owning makes most sense when you plan to stick around. 

    2. Know what you can afford and stick to a budget

    • With starter homes especially, the budget tends to be tighter: consider a smaller sized home, fewer amenities, and lower maintenance expectations so you don’t overextend yourself.

    3. Find your “must-haves” vs your “nice-to-haves”

    • Because you’re buying a starter home, it’s especially useful to write down what you absolutely need (location, commute, number of bedrooms) and what you can compromise on (yard size, high-end finishes). 
    • You’ll probably upgrade later: a lower upfront cost now can mean more flexibility later.

    4. Choose the right location (but expect trade-offs)

    • Location matters: a slightly smaller home closer to work or amenities might make more sense than a bigger home farther out. 
    • Also evaluate resale potential: since starter homes are often short-term stepping stones, you’ll want a neighborhood that remains desirable.

    5. Work with your team (agent, lender, inspector) and start searching

    • Pick a real estate agent who knows the “starter home” market in your area and can help you find realistic opportunities.
    • Start touring homes with your list in mind. For each property you visit, pay attention to  the condition, upkeep needs, how much work you’re willing to take on.

    6. Make an offer and be realistic

    • Don’t get into a bidding war for a home that puts you above your budget just because you feel you have to.
    • Think about what contingencies you’ll include (like inspection and appraisal) so you don’t walk into unexpected costs or issues.

    7. Inspect, appraise, and close the deal

    • Once you’ve secured an offer, you’ll move to the home inspection. As a first-time homebuyer, getting an inspection protects you from buying a money pit.
    • After everything checks out, you’ll get the home appraised, close, and move in. (This process can take 45-60 days after offer acceptance, but timelines vary.)

    8. Plan ahead for your time in the home

    • While starter homes are often thought of as the first of many homes, many people stay longer than planned. As you live there, treat it as both a home and an investment.
    • Be aware of resale costs: if you sell too soon you might not build enough equity. Staying at least two years ensures you won’t pay capital gains tax, but it could take even longer for your home value to grow enough to make sense to sell.

    >> See more: How to Calculate Home Equity

    Is it still possible to buy a starter home?

    While high demand, limited inventory, rising construction costs, and competition from investors and downsizers have made starter homes harder to find, buying one is still possible—especially with a bit of strategy and flexibility.

    One promising trend is the increase in housing inventory, particularly in the entry-level market. More available homes mean more options and, in many areas, less intense competition than in recent years.

    Smaller homes and multi-family options like duplexes and townhouses are also gaining popularity as buyers prioritize affordability. Though the path to homeownership may still involve compromise, rising supply and slowing price growth are opening more doors for first-time buyers. While the housing market is constantly changing, starter homes are still a viable solution to homeownership.

    FAQs about starter homes

    What does a starter home mean?
    A starter home is usually a homebuyer’s first step to homeownership: a smaller, more affordable place that helps you enter the housing market. While it might not immediately be your dream home, a starter home allows you to start building equity and gain experience as a homeowner. Over time, that equity can help you move up to a larger or more permanent “forever” home.

    What is a good starter home?
    A good starter home balances affordability, location, and potential. It’s a place that fits your budget today but still meets your basic needs: enough bedrooms, a manageable commute, and a space you can maintain financially. Whether it’s a condo, townhouse, or cozy single-family home, the best starter home is one that helps you start building stability and confidence as a homeowner while sticking within a reasonable budget.

    Is there such a thing as a starter home anymore?
    Starter homes still exist, they just look a little different in today’s market. Inventory availability and rising prices have redefined what a starter home looks like to include smaller homes, fixer-uppers, and even condos or townhomes. While the definition of a starter home has evolved, the idea of starting small and building equity over time is still very much alive.

    How long do people typically stay in a starter home?
    Many homeowners are extending their stay in their starter home for around 5-10 years, but there’s no hard and fast rule. Some people move sooner as their needs or situations change, and others stay longer and might even turn their first home into their forever one. What’s important is that your starter home helps you grow both personally and financially in a way that supports your next steps.

    Ashley Cotter

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  • Should You Get Radon Testing With A Home Inspection?

    When you’re buying a home, the last thing you want is a hidden health hazard waiting behind the front door. Most buyers are concerned with big-ticket items like roof leaks, bad wiring, or foundation cracks, but one of the most important things to test for is invisible: radon.

    Including radon testing during a home inspection is a simple step and inexpensive add-on that can protect your health and give you peace of mind before signing the dotted line — whether buying a home in Denver, CO or Portland, ME. 

    What is radon?

    Radon is a naturally occurring radioactive gas created when uranium present in soil, rock, or water breaks down. It moves upward through the ground and can enter homes through cracks in the foundation, gaps around pipes, sump pumps, or through crawl spaces.

    You can’t see, smell, or taste radon, but long-term exposure to higher levels can be dangerous. According to the U.S. Environmental Protection Agency (EPA), radon is the second leading cause of lung cancer in the U.S., responsible for thousands of deaths each year.

    Because radon levels can vary widely from one property to the next, even between neighboring houses, each home needs to be individually tested. Weather, climate, and temperature fluctuations can also affect radon levels, even if it wasn’t a problem in the past. This makes radon testing an essential part of the home inspection process for any buyer.

    What happens during a radon inspection?

    During a standard home inspection, your inspector checks parts of the home like the foundation, plumbing, HVAC, and electrical, but radon testing isn’t always included automatically. Usually, you’ll need to request it as an add-on service or hire a certified radon specialist separately.

    When you include radon testing in your home inspection, the inspector places a test device in the lowest livable area of the home, like a basement or first floor, to measure gas levels over a few days. To produce accurate results, “closed-house conditions” are required (like keeping windows and doors closed for at least 12 hours before and during testing).

    If a radon mitigation system is already installed, the inspector can also test whether it’s properly working.

    Different types of radon testing

    There are a few different ways to measure indoor radon levels. DIY radon tests and professional radon inspections both track how much radon gas accumulates in the home, but the process and testing times are different.

    Passive, or DIY, radon test kits
    Passive radon devices can be found at most home improvement stores. They rely on natural air diffusion to collect radon particles over a period of time, usually about a week. Charcoal canisters are the most commonly used in DIY radon tests and absorb radon over several days. Once the test is complete, the device is sent to a lab for analysis.

    Pros: Affordable, simple, and can be done yourself.
    Cons: If instructions and conditions are not precisely followed, the readings can be inaccurate.

    Active, or continuous, radon tests
    Active devices are what professional radon inspectors use. Continuous radon monitors (CRMs) record radon levels in real time. They log hourly readings and environmental factors like humidity and air pressure, giving a detailed picture of radon fluctuations and helping detect tampering or ventilation changes. Once the test is completed, usually after 48 hours, a report is ready to go.

    Pros: Fast, accurate, and ideal for real estate transactions.
    Cons: Higher cost and must be operated by certified professionals.

    For best results, a continuous radon test by a professional is recommended—and for real estate transactions, a professional test is a must.

    How much does radon testing cost?

    On average, buyers can expect to pay between $100 and $250 when a radon inspection is added to a home inspection package, or homeowners and sellers can expect to pay between $300–$600 if ordered as a standalone service.

    Even though costs can vary, radon testing is a small price to pay in the grand scheme of home ownership. If high levels are found, you’ll know before closing, and can negotiate mitigation or repairs rather than discovering the problem later and risking long-term health issues.

    How long does a home inspection radon test take?

    Most home buyers opt for a short-term test during the inspection period, but long-term testing can be valuable after moving in—especially if you plan basement renovations, finish a lower level, or live in an area with a higher risk of radon exposure.

    • Short-term tests: Most professional radon inspections are performed in a 48-hour, or 2-day, period. This timeframe aligns with standard inspection periods and gives quick, reliable results to help guide purchase decisions.
    • Long-term tests: These tests use alpha particle tracking to monitor radon levels over time, and run anywhere from 90 days to one year. Because radon levels fluctuate with weather and home ventilation patterns, long-term tests give the most accurate average.
    • Follow-up testing: If a short-term test result is close to the EPA action level (around 4.0 pCi/L), buyers or homeowners are often encouraged to conduct another test: either a second short-term test for confirmation or a long-term test for accuracy.

    What home inspection radon test results mean

    The EPA measures radon levels in picocuries per liter (pCi/L) of air. Anything above 4.0 pCi/L is considered a concerning amount of radon detected.

    • Below 2.0 pCi/L: Low levels; no immediate action needed.
    • 2.0–3.9 pCi/L: Moderate levels; consider retesting for accuracy.
    • 4.0 pCi/L or higher: Action (like remediation) is recommended

    If your test shows a reading above 4.0 pCi/L, the EPA suggests taking steps to lower the radon concentration before or soon after you move in. Even if levels are slightly below that threshold, many homebuyers choose to install mitigation systems proactively.

    What happens if the home inspection reveals high radon levels?

    Finding high radon levels doesn’t mean you should walk away from the home. In fact, radon issues are pretty common, and highly fixable, at a generally low cost. The solution is usually to install a radon mitigation system, which helps vent the gas safely outside. Most sellers are willing to cooperate since radon issues are fixable and disclosure laws require honesty about known problems. 

    Professional radon mitigation systems, like the pipe and fan system, typically cost $800 to $1,500, depending on the home’s size and foundation type. Once installed, they can reduce radon levels by up to 99%, and most systems are quiet, energy-efficient, and easy to maintain.

    After installation, a follow-up test is performed to make sure the system is working as it should. Ongoing retesting every two years is recommended, or sooner if you renovate the basement or change the HVAC system.

    Steps to reduce radon levels

    • Seal foundation cracks and gaps: Use caulk or polyurethane sealant to close openings around pipes, drains, and floor joints where radon can enter.
    • Improve ventilation: Increase airflow by using existing fans, adding air exchangers, or occasionally opening windows and doors to help dilute indoor radon levels.
    • Treat your water if needed: In rare cases where radon might enter the home through well water, installing a water filtration or aeration system can help.
    • Use radon-resistant techniques during renovations: If you’re remodeling or finishing a basement, preventively add vapor barriers, sub-slab venting, or sealed sump lids to prevent future buildup.
    • Install a radon mitigation system: A licensed contractor can add a vent pipe and fan system that draws radon from beneath the foundation and releases it safely outdoors.

    What houses are most at risk for radon?

    While radon can be found in any home, anywhere, certain factors make some properties more vulnerable than others. Radon enters through cracks in foundations, sump pumps, crawl spaces, and gaps around pipes, so the way a home is built and maintained plays a big role in how much gas accumulates indoors.

    Homes most at risk for high radon levels include:

    • Homes with basements or crawl spaces: Radon seeps up from the soil, so houses with dirt foundations, open-air crawlspaces, or other exposure of the ground to the living space might have higher levels than those built on slabs.
    • Older homes with foundation cracks: Settling over time can open small gaps that allow more radon to enter.
    • Tightly sealed, energy-efficient homes: Ironically, well-insulated newer homes can trap radon indoors because less air circulates naturally.
    • Homes in high-radon regions: The EPA notes higher-risk zones include the Midwest, Northeast, Appalachia, and the Rocky Mountain states, where uranium-rich soil releases more radon gas. But elevated radon levels have been found in every U.S. state.
    • Neighboring homes with known radon issues: Radon can vary significantly from one property to the next, even on the same street—but if your neighbor has high levels, the soil might be similar on your property.
    • Homes that rely on well water: Radon can seep through the groundwater, so if your home has a well, it’s important to get the well inspected and treated as necessary.

    No home is completely immune to radon, and even new homes can have high readings. Builders in many areas now include radon-resistant construction techniques, like vent pipes or vapor barriers, but testing is still recommended after move-in or as part of your new construction home inspection.

    Is radon testing really necessary?

    The short answer is yes: radon testing during a home inspection is absolutely worth it. Because radon is colorless and odorless, the only way to know if it’s present at unsafe levels is through testing. The EPA estimates that roughly one in 15 homes in the U.S. has elevated radon levels, and they can occur in any state, regardless of a home’s age or foundation type. 

    Weather, climate, and temperature changes can cause changes within the soil that allow radon to form and enter the home, so even if levels were fine in the past, testing every two years is recommended.

    That’s why including a radon test in your home inspection protects both your health and your home long term. If high levels are detected, you can negotiate mitigation with the seller or plan for improvements before moving in. Even if results come back low, you’re better off knowing your health is safe. For the small cost involved, a radon inspection is one of the smartest and simplest steps you can take when buying a home.

    Ashley Cotter

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  • How Can Buying a House Help You Build Wealth?

    Buying a home isn’t just about having a place to live; it’s one of the most reliable ways to build long-term wealth. While renting can offer flexibility, owning a home lets you build equity, benefit from potential appreciation, and access valuable tax advantages. Over the years, increasing equity and financial stability can turn your home into a valuable long-term asset.

    In this Redfin article, we’ll cover how buying a house can help you build wealth and how to make the most of your investment. Whether you’re buying a home in Detroit, MI, or a townhouse in Denver, CO, here’s what to know about building home equity through homeownership.

    Key takeaways 

    • Buying a home can build wealth through home equity, tax benefits, and more.
    • Your home may appreciate over time, helping you build wealth when you sell.
    • Buying a home you can afford, maintaining it, and making improvements can help protect your investment.

    4 ways owning a home helps build wealth 

    There are several ways that buying a home can help build wealth over time. Here are four of the main ways homeownership can achieve those benefits.

    1. Home equity

    One of the most well-known ways that homeownership helps build wealth is through home equity. Home equity is the percentage of the home you have paid off. For example, if you put 20% down, you’d own 20% of the home. As you pay off more of your mortgage, you’ll build more home equity.

    That growing equity can serve as a powerful financial tool. You can access it later by selling your home, refinancing, or borrowing against it for major expenses. For example:

    • A home equity loan uses your equity as collateral, allowing you to borrow from yourself. You borrow a lump sum of cash, which you can use for various expenses like home improvements, investing, or paying off debt. These loans typically have lower interest rates than personal loans. 
    • HELOC is a line of credit that lets you borrow as needed from your home equity. The line of credit is open for a set number of years, and you can borrow money as needed. You will need to repay what you borrowed, and interest rates are typically variable.

    2. Tax benefits

    Owning a home means there are tax benefits available each year, some of which you may qualify for. Four of those deductions include:

    • Mortgage interest tax deduction: This is the biggest ongoing tax benefit for homeowners. For those who itemize their taxes, you can deduct interest paid on your mortgage up to the IRS limits.
    • Property tax deduction: You may be able to deduct state and local property taxes paid on your primary residence (up to $10,000, $5,000 if married filing separately).
    • Home equity loan deduction: If you have a home equity loan, you may be able to deduct interest on the loan if you’re using it for home improvements.
    • Capital gains exclusion: If you decide to sell your home, you can exclude up to $250,000 ($500,000 if married filing jointly) in profit from capital gains tax. 

    These benefits vary by individual, so consult a tax professional to understand which apply to you.

    3. Potential for home appreciation

    Home appreciation is another way that owning a home can help you build wealth. Homes are typically considered an appreciating asset, meaning their value likely increases over time. This makes it a more reliable way to build generational wealth, especially if you plan to pass on your home to heirs. 

    For example, if your home’s value rises a little bit each year, that growth compounds over time. Combined with paying down your mortgage, you could have a significant profit when you sell. Regular maintenance and home improvements can also help your property appreciate faster.

    4. Passing down your home

    As mentioned above, owning a home allows you to build generational wealth by passing the home down to heirs. When someone inherits a home, they benefit from a stepped-up tax basis. This means the home’s cost basis is adjusted to the current market value. When selling an inherited home, heirs will likely pay capital gains on any additional profits that exceed the home’s current market value. 

    For example, you buy a home for $400,000 and it increases in value to $500,000 by the time it’s inherited. The inheritors sell the home for $525,000. With the stepped-up tax basis, they would only pay capital gains tax on $25,000. 

    How to make your home purchase worth it

    Building wealth through real estate doesn’t happen automatically. It takes smart choices and consistent maintenance. Here are key steps to make the most of your investment.

    Buy a home you can truly afford

    The first step to making homeownership worth it is buying a house you can truly afford. If you’re stretching your budget each month to pay for your mortgage, it may not leave you with enough for additional expenses, investing, and an emergency fund. You can use a home affordability calculator to estimate how much you can afford or a mortgage calculator to get an idea of your mortgage payments.

    When buying a home, it’s likely you’ll get a pre-approval. A mortgage pre-approval is an official letter from a lender certifying what loans you’re qualified for and how much you can borrow. A good tip is to buy a home that’s less expensive than what you’re pre-approved for. This can help keep you below budget and have room to increase your offer price if needed.

    While high-interest rates shouldn’t deter you from buying a home if you’re financially ready, a lower interest rate can help save you money in the long run. The lower the interest rate, the lower your mortgage payments are over time, leaving you with additional income to invest.

    As an example, you’re planning to buy a home that costs $500,000 with a 20% down payment.

    Interest rate Mortgage payment Loan term
    6.375% interest $3,216 per month 30-year fixed
    5.8% interest $3,068 per month 30-year fixed

    In this example, you’d save $148 per month or $1,776 per year. Over the lifetime of the loan, you may save up to $53,280. 

    Choose the right location

    Your home’s location is one factor that you can’t change. It can influence how much your home appreciates over time and whether you decide to stay in the area for years to come. Think about the neighborhood or city you’re planning to live in. See whether it meets your lifestyle and needs.  

    Consider some of the following factors when choosing a location:

    • Amenities, like shopping centers and restaurants
    • Proximity to public transit 
    • Access to major roads and highways
    • Nearby parks, trails, or outdoor spaces
    • School districts

    Talk to your real estate agent about neighborhood trends, including where home values have increased most over time.

    Maintain your home

    Keeping your home in great condition can help you protect your investment. Regular maintenance prevents costly issues and preserves your property’s value. Examples of seasonal maintenance include:

    • Servicing your HVAC
    • Clearing your roof and gutters of debris
    • Checking your smoke and carbon monoxide detectors
    • Pruning trees and clearing dead limbs
    • Inspecting your plumbing for leaks or drips

    Invest in high-ROI home improvements

    Choosing the right home improvement project not only improves your day-to-day life but may also increase your home’s value over time. There are many home improvement projects to consider, and some have a higher return on investment (ROI) than others. 

    According to a 2025 report by Angi, the projects with the highest ROIs include garage door replacements (194% ROI), entry door replacements (188% ROI), new siding (153% ROI), and interior painting (107% ROI). Choosing the right home improvement projects for your home will vary depending on your wants, needs, and budget. 

    >>Read: 8 Home Improvement Projects That Add Value to a Home

    Protect your investment

    Maintaining your home is one way to protect it, but there are other things you can do. Home insurance, which lenders require, helps protect you and your home in case of damage, including some natural disasters. Depending on where you live, you may also want to consider specialized insurance plans such as fire or flood insurance.

    Home warranty isn’t required, but it can help save you money if you have appliances that need repair. For example, a home warranty can cover electrical systems, major appliances like a refrigerator, and central heating. 

    Is owning a home the right way to build wealth for you?

    Homeownership can be a great way to build wealth over the long term, through home equity, tax benefits, and more. Buying a home you can truly afford, maintaining it, and making worthwhile investments can protect your investment over time. Speaking with a real estate agent or financial advisor can help you understand the benefits of building wealth through homeownership.

    Alison Bentley

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  • 11 First-Time Home Buying Myths Debunked

    As a first-time homebuyer, it can feel like there’s endless information about how to buy a home. You’ve probably heard advice about how much you need for a down payment, what credit score qualifies you for a mortgage, or whether it’s better to keep renting instead. It’s possible these home buying myths may be holding you back from becoming a homeowner.

    In this Redfin article, we’ll debunk 11 common first-time homebuying myths so you can see what’s really standing between you and homeownership. Whether you’re looking at homes in Nashville, TN, or a condo in Chicago, IL, here’s the truth about buying your first home. 

    Myth #1: You need a 20% down payment

    You don’t need a 20% down payment to buy a home. It’s a common myth that might be preventing you from becoming a homeowner. Many loan programs allow you to buy with little or no money down. 

    • FHA loans: As low as 3.5% down
    • VA loans: 0% down
    • USDA loans: 0% down
    • Conventional loans: 3 – 5% down, depending on the lender

    For conventional loans, keep in mind you’ll need to factor private mortgage insurance (PMI) into your budget. PMI is an additional cost your mortgage lender may require if your down payment is below 20% and the cost is factored into your monthly mortgage payment.

    There are also down payment assistance programs that offer loans or grants that can reduce your down payment amount or closing costs. Down payment assistance programs are offered at local, state, and federal levels, so there are plenty of programs available. 

    Myth #2: Renting is cheaper than buying a home

    Renting isn’t always cheaper than buying a home; however, it depends on several factors. In some cities, the average rent may be equal to or more than a mortgage payment. Mortgage payments are stable over time, whereas your rent may increase each year. 

    Additionally, if you plan to stay in a city for more than 5 years, buying a home can provide more stability and generate more equity in the long run. You can use a rent vs buy calculator to help estimate the difference in costs for your city.

    Myth #3: You only need to save for a down payment

    Even if you’re not putting down 20%, a down payment isn’t the only upfront cost to save for. You’ll need to account for additional expenses like closing costs, agent fees, inspections, and moving costs. 

    • Closing costs: 2 – 5% of the purchase price
    • Agent fees: 1.5 – 3% of the purchase price

    For example, the median sale price for a single-family home in September 2025 was $435,495. In that scenario, the average closing costs could range from $8,709 to $21,774. Agent fees could range from $6,532 to $13,064.

    Sometimes, the seller may cover a portion of the closing costs or the real estate agent’s fees, but that’s not guaranteed. Be sure to factor these additional costs into your budget.

    >>Read: How Much Money Do I Need to Buy a House?

    Myth #4: You need to pay off your student loans first

    You don’t have to pay off student loans before buying a home, it all depends on your debt-to-income ratio (DTI). DTI is your monthly debt payments divided by your gross income. It shows lenders what percentage of your monthly income is paid towards your debts.

    If your DTI is below 36%, you’re generally in a good position to buy a home even with student debt. Most lenders won’t approve a mortgage if your DTI is higher than 36%. So if you fall into that category, you may want to pay off your student loans first. 

    Myth #5: Your credit score needs to be perfect

    You don’t need an excellent credit score to buy a house. Having a higher credit score can help widen your loan options and possibly give you a lower interest rate and better loan terms. However, you don’t need a perfect credit score in order to buy your first home. 

    Here are some of the credit score guidelines for certain loan types:

    • Conventional loan: 620
    • FHA loan: 580 (or 500 with 10% down payment)
    • VA loan: No requirement, but some lenders prefer 620
    • USDA loan: 620 – 640

    If your score isn’t ideal yet, you can still work with a lender to find the best fit and create a plan to improve it over time.

    Myth #6: You shouldn’t buy when interest rates are high

    If now is the right time for you, a higher interest rate shouldn’t necessarily stop you from buying a home. Rates rise and fall, but home prices and inventory can change too.

    If you find the right home and you’re financially ready, it can still make sense to buy now. If interest rates drop in the future, you can always consider refinancing your mortgage. 

    Myth #7: All mortgage lenders offer the same rate

    It’s a common misconception that every mortgage lender offers the same rates and terms. In reality, each lender uses different criteria to determine your rate, and even small variations can have a big impact over time. When shopping for a mortgage, it’s always a good idea to get quotes from several lenders. That way, you can find the one that’s best suited for your finances and homeownership goals. 

    Myth #8: A pre-approval means your loan will be approved

    A mortgage pre-approval shows sellers you’re a serious buyer, but it doesn’t guarantee your loan will be approved. Lenders can still deny an application if something changes – like your income, credit score, or the home’s appraised value.

    Pre-approval is an important first step, but continue managing your finances carefully until you close on the home.

    Myth #9: You don’t need an agent

    Technically, you can buy a home without an agent. However, a great real estate agent can make the process smoother and help you avoid costly mistakes.

    From helping you find the right home to making an offer that stands out, a great real estate agent is your advocate throughout the entire process. They also know the local market and can spot potential issues early on, which is especially helpful for first-time buyers.

    Myth #10: Home inspections are optional

    It’s important to get a home inspection, regardless of whether you’re buying the home with a loan or with cash. More often than not, your mortgage lender will require a home inspection before you buy the home. Even if your lender doesn’t require a home inspection, it doesn’t mean you should skip it. 

    A licensed home inspector may uncover damage or issues with the house that you should be aware of before owning the property. If a home inspection does find significant damage, you may be able to negotiate with the seller to repair the issues, negotiate a lower asking price, or walk away if you have an inspection contingency.

    Myth #11: The listing price is non-negotiable

    The listing price is just a starting point. You can always negotiate an offer, whether it’s the home’s price or asking for seller concessions. In a competitive market, you may need to be prepared to spend more than the listing price, but your agent will know how to make your offer stand out. If it’s a slower market, you may be able to negotiate the price more easily. It’s important to keep in mind that the purchase price can rise or fall depending on market conditions, buyer interest in the home, and other factors.

    Next steps for first-time home buyers

    Don’t let home buying myths hold you back from buying your first home. If you still have questions about your finances or ability to buy a home, speak with a real estate agent, lender, or financial advisor who can help you start your home buying journey. You may find out you’re ready to buy a home sooner than you thought.

    Alison Bentley

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  • What Is a Financing Contingency, And How Does It Work?

    Contingencies are an essential part of any home purchase contract, protecting buyers from financial risk if things don’t go according to plan. The financing contingency, also known as a mortgage contingency, is especially important for buyers who need a loan to purchase a home.

    It gives you the right to cancel the sale and keep your earnest money if your financing falls through before closing. Without this clause, you could lose your deposit – or worse, be legally required to close on the home without financing. 

    Whether it’s your first time buying a home in Seattle, WA or you’re looking to invest in a condo in Austin, TX, understanding how a financing contingency works can help you navigate the process and avoid costly mistakes. In this Redfin article, we’ll break down exactly what a financing contingency is, why it’s important, and how it can protect you throughout the homebuying process.

    What is a financing contingency?

    A financing contingency, sometimes called a mortgage contingency, is a clause in a home purchase agreement that protects buyers who need a mortgage to complete the purchase. It gives the buyer the right to cancel the deal and keep their earnest money if the mortgage application is denied or they are unable to secure financing under the terms outlined in your contract.

    Even if you’re pre-approved for a mortgage, unexpected issues can prevent loan approval, such as a low appraisal, changes to your credit, or a change in employment. The financing contingency gives you a legal “out” if one of these issues prevents you from closing.

    How does the financing contingency work?

    Once the seller has accepted the buyer’s offer and both parties have signed the purchase agreement, the financing contingency period begins. It typically lasts 30 to 60 days, though the exact timeline is set by the terms agreed to in the contract.

    Here’s a step-by-step look at how it typically works:

    1. Apply for a mortgage
    Even if you have pre-approval, you must submit a formal loan application to your lender.

    2. Submit financial documents
    This usually includes tax returns, pay stubs, bank statements, and credit information. The lender uses these to verify your ability to repay the loan.

    3. Lender review and appraisal
    The lender reviews the application, conducts underwriting, and orders an appraisal to ensure the home’s value is equal to or more than the mortgage loan amount. The home appraisal typically occurs within 48 hours of the lender’s request.

    4. Loan decision and next steps
    Once underwriting is complete, the lender either approves or denies the mortgage.

    If the loan is approved:  The lender issues a clear-to-close mortgage commitment letter that the buyer will usually share with the seller. This letter confirms the loan is approved and ready to fund, and the sale moves toward closing.

    If the loan is denied or issues arise: If financing problems occur, like a low appraisal, credit changes, or employment changes, buyers have several options, provided the contingency is still active and all contract terms are met:

    • Request an extension: If more time is required to secure financing, the buyer can ask the seller for an extension. The seller may accept or reject the extension.
    • Seek alternative financing: The buyer may pursue different lenders or loan types.
    • Cancel the contract: The buyer may choose to walk away without losing their earnest money.

    Example scenario of the financing contingency

    You’re buying a $450,000 home with a 45-day financing contingency. During this period, your lender denies your mortgage because of a recent vehicle purchase that substantially increased your debt-to-income ratio. Because the contingency is active and all contract conditions were met, you can cancel the deal and retain your earnest money deposit – protecting you from a major financial loss.

    What is included in a financing contingency?

    The financing contingency is only effective if it remains active and all terms in the contract are met. Waiving the contingency, missing deadlines, or failing to act in good faith can eliminate these protections.

    A financing contingency can vary from contract to contract, but most include several key components that define the buyer’s rights and obligations:

    Timeframe: Usually 30 to 60 days to secure financing. If the buyer can’t get a loan by the deadline and hasn’t requested an extension, they risk losing their earnest money.

    Loan type: Specifies whether the buyer is using a conventional, FHA, VA, or jumbo loan. This matters because each loan type has different requirements and approval timelines.

    Loan amount: The buyer must be approved for a loan amount that covers the purchase price. If the loan comes in short (often due to a low appraisal), they may need to renegotiate or walk away.

    Interest rate cap: Some contingencies include a maximum acceptable interest rate. If mortgage interest rates spike above that number, the buyer can cancel the deal.

    Earnest money protection: This is the core of the clause – it ensures the buyer can walk away and keep their earnest money deposit if financing falls through.

    Closing costs: Occasionally, this section outlines who pays which closing costs, though that’s often negotiated separately.

    Why the financing contingency matters

    Including a financing contingency is important because it protects buyers from being legally obligated to complete a home purchase if they can’t secure a mortgage. Purchase agreements are legally binding contracts, so without this clause, failing to close could expose you to legal or financial penalties. 

    According to a recent survey of Redfin agents, 27.8% of canceled home-purchase agreements were due to buyer financing falling through, and 14.9% were due to a change in the buyer’s financial situation. The financing contingency is a crucial protection for buyers, especially those using a loan to purchase a home.

    Real-world example

    Sarah waived her financing contingency to win a bidding war. But when the appraisal came in $40,000 below the purchase price, her lender reduced the loan amount. Sarah didn’t have enough cash to cover the difference and ended up losing her $10,000 deposit when she couldn’t close on the home sale.

    Situations where waiving the financing contingency may be riskier

    Even in a competitive market, there are situations where waiving this protection could put you at serious financial risk. You may want to keep the financing contingency in place if:

    • You’re a first-time homebuyer. If you haven’t gone through the mortgage process before, you may not be aware of potential delays or surprises that can derail financing. 
    • You have a low down payment. Smaller down payments may trigger stricter lender requirements or private mortgage insurance (PMI), increasing the chance of financing issues. 
    • Your income is variable or recently changed. If you’re self-employed, just changed jobs, or have inconsistent income, lenders may take longer to approve your loan—or deny it altogether. 
    • You’re buying a unique or hard-to-appraise property. Unusual homes can cause appraisal challenges that impact loan approval. 
    • You’re using a government-backed loan. FHA or VA loans often have longer processing times and stricter property standards, which could create unexpected delays.

    In these cases, keeping the financing contingency gives you critical protection if something doesn’t go as planned.

    Situations where waiving the financing contingency may make sense

    In hot housing markets, buyers sometimes waive contingencies to strengthen their offer, but that comes with risk. Here are a few scenarios where waiving your financing contingency might make sense:

    • You’re paying in cash. If you’re not relying on a mortgage to finance the home, the financing contingency becomes irrelevant. Cash buyers have a significant advantage in a competitive market because they eliminate the risk of financing falling through. 
    • You have a strong pre-approval. If your lender has already given you a solid pre-approval, you may feel confident that your loan will be finalized. Strong pre-approvals often come with assurances that your financing is nearly certain, reducing the risk of backing out. 
    • You’re making a large down payment. A substantial down payment can reduce the chances of financing complications. Lenders may see buyers with larger down payments as lower risk, making the loan process smoother and more likely to close without issues.
    • You’re confident in your financial situation. If you’re in a stable job, have a high credit score, and have no significant changes expected to your financial situation, you might be more comfortable waiving the contingency, as the chances of your financing falling through are low.

    Even if one or more of these factors apply to you, waiving a financing contingency still carries risks. If your loan falls through, you could lose your earnest money or even be legally obligated to follow through with the purchase. For this reason, it’s essential to evaluate your situation and the market conditions carefully before deciding to waive this common contingency.

    How to protect yourself if you waive the financing contingency

    If you decide to waive this clause, here are a few ways to lower your risk:

    • Work with a reliable lender: Partnering with a lender known for efficiently closing loans can help avoid issues later in the process. 
    • Increase the down payment: A larger down payment can improve the chances of loan approval and lower the risk of financing falling through. 
    • Have a backup plan: In the event that financing is not secured, having alternative options such as a bridge loan or private lending in place can help protect the buyer.

    FAQs: Financing contingency in real estate

    How long does a financing contingency last?

    A financing contingency typically lasts 30 to 60 days, giving the buyer time to secure a mortgage approval. If the buyer is pre-approved, the process may move faster, possibly shortening the contingency period. However, if more time is needed or unexpected issues arise, the buyer can request an extension, but this depends on the seller’s approval. If financing isn’t secured by the end of the contingency period, the buyer can cancel the deal and walk away with their earnest money, as long as the terms of the contingency are met.

    What happens if the financing contingency period expires without securing a loan?

    If the buyer is unable to secure financing by the end of the contingency period and does not have an extension in place, they can walk away from the deal without losing their earnest money, as long as the financing contingency terms are met. However, the buyer must notify the seller that they are backing out due to financing issues. After the contingency expires, the buyer may no longer have the option to cancel for financing reasons.

    Can a buyer renegotiate the terms of the loan during the financing contingency period?

    Yes, during the financing contingency period, if the buyer faces issues with the loan, such as a lower-than-expected appraisal or a change in interest rates, they may try to renegotiate the terms with the seller. In some cases, they may ask the seller to lower the purchase price or offer concessions to make the loan more affordable. However, the seller is not obligated to agree to these changes.

    What happens if a buyer’s financing falls through after the contingency period?

    If the buyer’s financing falls through after the contingency period has ended, they are typically in breach of contract. Without the protection of a financing contingency, the buyer risks losing their earnest money and may be required to proceed with the purchase or face legal consequences. It’s essential for buyers to meet the terms of the contingency and secure financing within the set timeframe to avoid this scenario.

    Mekaila Oaks

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  • What’s a Structural Inspection and Do You Really Need One?

    When you’re buying a home, the last thing you want in an inspection report is a potential structural or foundation problem. Some buyers may decide to walk away, but if you’re serious about the home, a structural inspection is the next step.

    A structural engineer will look at the foundation, framing, and other load-bearing elements that keep a house safe and stable. Most of the time, the inspection can put buyers at ease and verify whether the issue is just normal settling or if further attention is needed.

    Whether you’re buying in areas prone to foundation problems, like Philadelphia or Dallas, or in wetter climates like Seattle, understanding if and when you need a structural inspection is key to making a confident purchase.

    What is a structural inspection?

    While a standard home inspection looks at the interior and outside of a home for wear and tear or items of concern, a home inspector may only note if something seems off with the structure. A structural inspection by an engineer answers the harder questions: Why is it happening, and is it serious?

    A structural engineer often has years of experience and understanding when it comes to the safe construction of homes and commercial properties. When they inspect a home, they’re looking to see how the house is holding up: the foundation, beams, joists, roof trusses, and load bearing walls. A licensed structural engineer’s inspection typically includes checking for:

    • Cracks in the foundation
    • Sloping floors or bowing walls
    • Moisture damage that could affect the integrity of the house 
    • Drainage, soil movement, and framing connections to assess stability

    When you should get a structural inspection

    Until a home inspector notes something concerning, many people don’t think about calling in an engineer for a structural inspection. Buyers are likely to hire a structural inspector if they want to know more about the bones of the home after the general inspection, and sellers or current homeowners might reach out for a structural inspection if they notice distinct signs of structural issues:

    • Cracks in the foundation or walls: Small hairline cracks are normal as a home settles, but wide, horizontal, or stair-step cracks (especially along brick or concrete block walls) can point to foundation movement or pressure from the soil outside.
    • Floors that slope or feel uneven: If you drop a marble and it rolls to one corner, it can signal issues with joists, beams, or subfloor framing that might be from long-term settling or wood rot.
    • Doors and windows that stick or won’t latch properly: As the foundation moves, the frame of the house might subtly twist, and it can cause doors to jam or gaps to appear around windows.
    • Bowing or bulging walls: Whether it’s a basement wall pushing inward or drywall upstairs rippling outward, that curve can mean the wall is taking on more load or moisture pressure than it should.
    • Sagging ceilings or rooflines: A dip in the ceiling or a wavy roof ridge can hint at overloaded beams, truss damage, or weakened supports from leaks or age.
    • Persistent moisture or water intrusion: Damp basements, musty crawl spaces, or standing water near the foundation can erode soil, compromise footings, and lead to structural instability over time.
    • Rot, rust, or termite damage: Decay and pests feed off the materials that hold your home together, eating away at beams and supports. Small rot holes could actually be a much bigger problem inside the wood.
    • After natural events: Earthquakes, floods, big storms, frost and thaw cycles, or even renovations that add more weight to the home can cause structural shifts that should be evaluated by a professional if something seems off.

    For buyers, structural inspections can make or break a home sale. An “all clear” brings peace of mind, while any concerning findings give buyers leverage to negotiate repairs with the seller or decide to walk away from the house.

    How much does a structural inspection cost?

    The cost of a structural inspection can vary widely depending on your local market, what the inspector is looking at, and if they are giving a professional opinion of an issue or writing and stamping a report. The cost of a residential structural inspection is often a flat fee ranging between $350 – $1500; but the average price homebuyers will pay for a structural inspection is about $550.

    Usually, the cost of a structural inspection includes a professional opinion on a structural red flag that was noted on the home inspection report. A stamped and signed report isn’t usually required unless they find something seriously wrong or the inspection is renovation-focused. Then, the cost will likely go up for the extra time, paperwork, and liability for the engineer.

    While many buyers might baulk at the price of hiring a structural engineer, structural issues in the home can be tens of thousands of dollars to fix—and it’s better to know before signing the final papers.

    Common structural problems and what to do about them

    The most common problems structural engineers find are foundation cracks, water damage, and rotted beams or sagging floors—but what do those issues actually mean when it comes to repairs?

    Foundation cracks

    Hairline cracks from natural settling are usually fine, but wide or horizontal ones may mean shifting soil or water pressure pushing against the foundation. A structural engineer can tell the difference, and if needed, recommend foundation repair methods like epoxy injection or underpinning.

    Water damage 

    Persistent moisture weakens concrete, rusts metal supports, and causes wood framing to rot. Fixing the source, whether that’s poor drainage, leaky gutters, or groundwater seepage, is key before repairing the structure itself.

    Rotted beams or sagging floors 

    These can be symptoms of long-term moisture exposure or overloading. Depending on the damage, repairs might involve sistering new joists to old ones, reinforcing beams with steel plates, or replacing damaged lumber altogether.

    Structural inspections: bottom line

    Structural issues don’t automatically make a deal fall through, but they can change the conversation between a buyer and seller. Even minor structural problems can affect the perceived value of a house since buyers often fear the worst for the bones of their future home.

    That’s why a residential structural inspection by a licensed professional is crucial if any frame or foundation issues are suspected. At best, the inspection can put any worries at ease; and worst case, the report can be a strong negotiation tool or a reason to walk away and find a different home, saving you thousands of dollars in future repairs.

    Ashley Cotter

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  • Who Pays For a Home Appraisal: Buyer, Seller, or Lender?

    When buying, selling, or refinancing a home, an appraisal is almost always a required step in the process. An appraisal verifies the home’s fair market value so the lender can approve the right loan amount. Usually, the buyer pays for the home appraisal, but it can also depend on the situation — no matter if you’re buying a home in Charlotte, NC or Salt Lake City, UT.

    Who pays for the appraisal fee?

    In almost all financed home purchases, the buyer is responsible for paying for the home appraisal, even though the lender orders it to confirm that the property’s value is equal to or greater than the loan amount.

    You’ll usually pay for the appraisal after you lock-in your rate but before closing. Sometimes, the fee or a credit for the fee is collected at closing, but most lenders require payment in advance before the appraisal can take place.

    Average appraisal cost: $400–$900

    Who orders it: Your lender

    Purpose: To confirm the home’s value for the mortgage approval

    Because appraisals happen early in the lending process, the fee is typically nonrefundable once the report is complete, even if your loan is denied, the deal doesn’t go through, or you switch lenders.

    Why don’t sellers pay for the home appraisal before listing?

    While it might seem like an appraisal would help sellers set an accurate listing price, they’re often considered an unnecessary expense for sellers—an appraisal is mostly a tool for lenders. A lender requires an appraisal to verify the home’s value for a loan, but sellers will use a real estate agent’s comparative market analysis (CMA) to set their listing price.

    A CMA, referred to as comps, gives a free, data-driven estimate of a home’s market value based on similar recent sales, current listings, and local trends. It’s fast, flexible, and tailored to pricing strategy, while an appraisal is a more rigid, loan-based valuation—but both can be affected by the rapidly changing housing market.

    That said, some sellers choose to order a pre-listing appraisal if:

    For most sellers though, a professional appraisal before listing is an unneeded cost, especially since the buyer’s lender will require a new appraisal anyway once an offer is accepted.

    Who decides the appraisal fee?

    Buyers don’t actually choose their appraiser or shop around for a price. Most lenders work with an Appraisal Management Company (AMC), which functions as a middleman between lenders and licensed appraisers.

    The AMC assigns a local appraiser to evaluate your property and sets the appraisal cost based on the home size and location, the type of property, and how complex or unique the process is.

    These fees are standardized within each lender’s network to keep the process fair and compliant with federal lending laws. This setup helps prevent any potential conflict of interest between lenders and appraisers (for example, lenders can’t pressure appraisers to say the home is worth a certain value).

    Because of this system, appraisal fees can vary slightly from lender to lender, but they’re not negotiable with the appraiser themselves. The appraiser will send the invoice to the lender who then passes it directly on to the buyer.

    What happens to the appraisal fee if the deal falls through?

    Basically, the appraisal is a nonrefundable step in the due diligence process, similar to a home inspection fee.

    If the sale doesn’t close—whether due to financing issues, inspection results, or a change of plans—the buyer still pays for the appraisal if it’s already been done. Once the appraiser has looked at the home and issued a report, the service is complete, and the cost remains your responsibility.

    Can you transfer an appraisal to another lender?

    Buyers might switch lenders mid-transaction if they found a better rate elsewhere or were denied the loan. Sometimes it’s possible to transfer the appraisal over, but if a new appraisal is required by the new lender, the buyer pays again. The loan type and individual lender policies are what will determine if a completed appraisal will transfer.

    • Conventional loans: Transfers may be allowed if the new lender accepts the same appraiser and management company (like if buying a house within the same area).
    • FHA, VA, or USDA loans: These are usually assigned to the property and can be reused within a set time frame.

    When the seller might pay for the home appraisal

    Buyers almost always pay for the home appraisal, including if the first one expires or there’s a change in lenders. But if the appraisal comes in low and the buyer has an appraisal contingency, then the cost of a second appraisal will likely fall to the seller disputing the report. 

    Sometimes the seller might agree to pay the appraisal fee in other special circumstances:

    • Seller concessions: To attract buyers or close the sale, a seller might offer to pay part or all of the appraisal fee as a seller’s credit.
    • Low appraisal negotiations: If the appraisal comes in lower than the purchase price, a seller may chip in for a second appraisal or towards the gap in appraised value and offer price to keep the home purchase on track.
    • New construction homes: Sometimes builders include appraisal fees as part of a closing incentive or as a negotiation tactic.

    Do you have to pay for the appraisal fee upfront?

    Most of the time, yes—the buyer pays for the home appraisal before closing, at the time it is ordered to avoid any delays in payment or processing. However, the fee will be listed as part of the closing costs, with a credit saying already paid. If covering the appraisal fee is included in negotiations, the appraisal will still need to be paid for upfront with a credit offered at closing.

    For refinancing, the homeowner pays the appraisal fee

    When you refinance your mortgage, your lender will ask for a new appraisal to get an idea of your home’s current value. This helps your lender know that your property still supports the loan amount you’re applying for, especially if values in your area have changed or you’ve made upgrades to the home.

    A refinancing appraisal shows how much equity you have and helps the lender calculate your loan-to-value ratio, which influences your refinance terms and interest rate. Just like with purchase appraisals, you’ll pay the fee upfront, and it’s nonrefundable once the appraisal is done.

    Bottom line

    Most of the time, the buyer or homeowner pays for the home appraisal, even though it protects the lender. It is a typical borrower expense and part of the cost of securing a mortgage. You might be able to negotiate for the seller to cover the appraisal fee, but it’s best to budget for it upfront — and remember, once the appraisal is completed, it’s nonrefundable.

    Tip: Want a head start before paying for an appraisal? Check your home’s value with Redfin’s Home Value Estimator to see how it compares to similar homes in the area.

    FAQs: Who pays for the home appraisal

    What happens if I don’t pay the appraisal fee?
    If you don’t pay the appraisal fee, your loan process can’t move forward. Lenders require an appraisal before approving or funding a mortgage, and most won’t schedule it until the fee is paid. By failing to pay for the home appraisal, you could delay your closing or even cause your loan application to be canceled.

    Why do you have to pay for a home appraisal upfront?
    Buyers pay for a home appraisal upfront because the lender needs the report early in the loan process to move things forward on time. The fee covers the appraiser’s work and can’t be rolled into your loan balance since the appraiser is an independent third party. Paying before the appraisal means the report can be completed on schedule, the loan amount can be verified, and the appraiser is compensated even if your loan doesn’t close.

    Do I still pay for the appraisal if my loan is denied or I don’t buy the house?
    Yes. The appraisal fee must be paid if the service was completed, even if your loan isn’t approved or the deal falls through.

    Who pays for a second appraisal?
    The buyer is usually responsible for appraisal costs, unless the seller wants to order another one to challenge a low valuation.

    Who decides the appraisal fee?
    The appraisal management company sets the cost based on property type, market conditions, and turn-around time.

    How can I get a house appraised for free?
    You can’t get a formal home appraisal for free, and a licensed appraisal is required for lending purposes. But you can use free tools like the Redfin Home Value Estimator or request a comparative market analysis from a real estate agent to get an idea of what a home is worth. If you’re refinancing, sometimes less expensive appraisal options are available, like desktop or drive-by appraisals.

    Ashley Cotter

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  • Pre-Qualified vs. Pre-Approved: What’s the Main Difference?

    Key takeaways

    • A pre-qualification is an estimate of how much you might be able to borrow, based on basic financial info you provide.
    • A pre-approval is a conditional offer from a lender stating how much they’re likely to lend you, pending final underwriting.
    • Pre-approvals hold more weight during the homebuying process than pre-qualification.

    If you’re considering buying a home, you’ve likely heard that you need to be pre-qualified or pre-approved in order to get a mortgage. While these terms are often used interchangeably, there are distinct differences between the two that every homebuyer should understand.

    In this Redfin article, we’ll outline the differences between pre-qualification vs. pre-approval and which option is right for you. Whether you’re touring homes in Norfolk, VA, or looking at houses in Dallas, TX, here’s what you need to know about being pre-approved vs. pre-qualified.

    What does pre-qualification mean?

    A pre-qualification is an informal look at your finances, with information you provide to a lender. It gives you an estimate of how much you might be able to borrow and helps you gauge your overall financial picture. 

    If you’re just starting to consider purchasing a home, a pre-qualification is a good indicator of your borrowing power. Since it’s a surface look at your financial situation, you have the opportunity to work on improving your finances before getting a pre-approval. 

    What does pre-approval mean?

    A mortgage pre-approval is an official statement from a lender showing how much you’re qualified to borrow. It also determines the type of loans you may be approved for and what your interest rate may be. Redfin real estate agent Joe Rath explains that a mortgage pre-approval, “certifies what you’re able to afford.” It shows you’re a serious buyer and that your offer should be strongly considered. 

    During the mortgage pre-approval process, a lender asks you to provide documentation such as W-2s, bank statements, tax returns, and proof of assets, among other things. The lender will run your credit report, which will result in a “hard inquiry,” meaning it can cause your credit score to decrease by a few points.

    What’s the difference between pre-qualification vs pre-approval?

    A pre-qualification gives you a general idea of what you can afford, while pre-approval confirms it with verified financial information and a credit check.

      Pre-qualification Pre-approval
    Purpose To get a general idea of your borrowing power To show sellers you’re a serious and qualified buyer
    Valid for Not typically time-limited Usually valid for 60–90 days
    Used for Early planning, browsing homes Making an offer, speeding up the loan process
    Required before offer No Often yes, especially in competitive markets
    Documents needed Self-reported info about:
    • Proof of income
    • Employment verification
    • Proof of assets
    • Credit history
    • Identification
    • Debt-to-income ratio (DTI)
    • W-2 statements
    • Pay stubs
    • Bank statements
    • Driver’s license
    • Social Security number
    Credit check Soft inquiry  Hard inquiry
    Timeline Minutes About 1 to 3 business days

    When should you get a pre-qualification?

    A pre-qualification is good if you’re casually looking at homes, but not necessarily planning to make an offer. It also gives you insight into how much you can afford to pay for a home and what mortgage you may qualify for. Your credit score won’t be affected by a pre-qualification if you decide you’re not ready to buy.

    When should you get a pre-approval?

    A pre-approval is good if you’re ready to buy a home soon, especially if you’re in a competitive market. Pre-approvals have an expiration date, so it’s important to get one if you’re serious about buying a home in the near future. It also triggers a hard inquiry on your credit score, so only get a pre-approval when you need it.

    FAQs about pre-approval and pre-qualification 

    How long does a mortgage pre-approval last?

    Mortgage pre-approvals are typically good for 90 days. The pre-approval letter will show an expiration date, after which it’s no longer valid. Pre-approval letters “expire” because a borrower’s employment, assets, and debts can change. Lenders need up-to-date information before agreeing to another pre-approval. 

    Do I need to be pre-qualified before getting pre-approved?

    No, you don’t have to be pre-qualified to get pre-approved. If you know you’re financially ready to buy and want to start the homebuying process, you can skip pre-qualification and apply for pre-approval.

    When is the best time to get pre-approved?

    Ideally, you’d have your mortgage pre-approval letter before looking at homes. Having mortgage pre-approval shows a seller you’re a serious buyer and may make your offer stand out.

    Do you need a pre-approval to make an offer?

    No, you don’t technically need a pre-approval to make an offer. However, including a pre-approval letter can strengthen your offer and show the seller that you’re a serious buyer who has a better chance of getting their financing approved.

    Can your mortgage application still be denied with a pre-approval?

    Yes, a lender can still deny your mortgage after pre-approval. It’s uncommon, but can happen if you took out other lines of credit, left your job, or the home appraises lower than the loan amount.

    Alison Bentley

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  • What is a First-Time Homebuyer Savings Account (FHSA)?

    If you’re hoping to buy your first home soon, one major step is saving for a down payment and closing costs. As a first-time home buyer, you may be eligible for a first-time home buyer savings account (FHSA), a special tax-advantaged account, that can help you save faster.

    In this Redfin article, we’ll cover what a first-time home buyer savings account is and which states offer this program. Whether you’re buying a home in Cincinnati, OH, or a townhouse in Portland, OR, here’s what you need to know about FHSAs.

    Key takeaways

    • First-time homebuyer savings accounts (FHSAs) are tax-advantaged savings accounts.
    • They typically offer competitive rates to help future homeowners save for a down payment and closing costs.
    • Not all states offer FHSAs, but some have pending legislation to establish programs.

    What is a first-time homebuyer savings account (FHSA)?

    A first-time homebuyer savings account (FHSA) is a state-sponsored, tax-advantaged savings account that helps you save money for your first home. Offered in some states, the money you contribute or the interest you earn, may qualify for state tax exemptions or deductions. 

    As a result, these accounts may help you grow your savings faster. You can use these funds for a variety of home buying expenses including your down payment, closing costs, real estate agent commissions, or inspection and appraisal fees, depending on your state’s guidelines. 

    Qualifications for a first-time homebuyer savings account 

    It varies by state who is considered a first-time homebuyer, but for the most part, you need to meet the following qualifications to open an FHSA:

    • Have never owned a home, or have not owned a home in a certain number of years
    • Live and buy a home in the state where you opened the account
    • Use the funds for costs such as a down payment, real estate agent fees, or closing costs

    What states offer FHSAs?

    Not all states offer first-time home buyer savings accounts. Here are the states that currently (or will) offer FHSAs:

    • Alabama
    • Colorado
    • Connecticut (beginning in 2027)
    • Idaho
    • Iowa
    • Kansas
    • Maryland
    • Michigan
    • Minnesota
    • Mississippi
    • Missouri
    • Montana
    • Ohio
    • Oklahoma
    • Oregon
    • Virginia

    As of 2025, there are three states with pending legislation around FHSAs:

    State programs are subject to change. Check your state’s housing or revenue department website for the most up-to-date FHSA information.

    Where can you open an FHSA?

    In states that offer FHSAs, you can typically open an account at participating banks or credit union branches. You’ll need identification, filled-out paperwork, and in some states, a minimum deposit. Some banks may let you open an account online. Check with your local bank or credit union to find out specifics.

    What contributions do you need to make?

    Minimum contributions vary from program to program. For example, in Missouri. you can contribute the following amounts:

    • $1,600 per year, as a single person
    • $3,200 per year, as a couple
    • $25,000 total over the lifetime of the account

    Contribution limits and eligible expenses differ by state. Some programs also cap how long you can contribute or how much interest is tax-exempt.

    Do you need a first-time homebuyer savings account? 

    If your state offers a FHSA, it can be a helpful way to ensure you’re setting aside enough money to buy a home, especially if you qualify for state tax deductions. While not required, it can give first-time buyers a financial advantage in a competitive housing market.

    FAQs about first-time homebuyer savings accounts

    What does a first-time homebuyer savings account cover?

    Most programs allow you to use the account funds to cover a down payment, closing costs, and real estate agent fees. Some specific costs include appraisal and inspection fees, loan origination costs, and title insurance, among others. 

    Can family members contribute to an FHSA?

    Yes, most programs allow family members to contribute to your first-time homebuyer savings account. 

    Can I use the account to buy a home in another state?

    No, most programs don’t allow you to use the funds to buy a home in another state. Check with your state’s program for specifics. 

    What happens if I don’t use the funds in the account?

    It depends on your state’s program, but you may face certain penalties. For example, in Oregon, you must use the funds within 10 years of opening the account. If you withdraw the funds for purposes other than buying a home, you could face a 5% penalty.

    Alison Bentley

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  • Should I Rent or Buy a House? What to Consider When Renting vs. Buying a Home

    Key takeaways

    • Renting vs buying depends on your finances, long-term goals, and lifestyle.
    • Buying a home helps build equity, has tax benefits, and gives you pride of ownership.
    • Renting gives you flexibility to move, stable monthly payments, and no repair costs. 

    Making the leap from renting to buying is a big decision that depends on factors like your long-term goals, finances, and lifestyle. Whether you’re moving to a new city or your lease is coming to an end, you may be wondering if you should rent or buy a house.

    In this Redfin article, we’ve partnered with Kinda Frugal, a veteran-owned personal finance and lifestyle brand, to help weigh the pros and cons. If you’re moving to San Diego, CA, or looking at homes for sale in Richmond, VA, here’s what to consider when renting vs buying a home this year.

    Renting vs. buying: pros and cons

    As you decide whether you should rent or buy a house, consider the pros and cons of each.

    Andreas Jones, from Kinda Frugal, says the biggest difference comes down to flexibility and control. “Renting gives you flexibility; you can move without the headache of selling, and if something breaks, you just call the landlord,” he explains. 

    “Plus, you’re not dropping tens of thousands upfront. The downside? Your rent money disappears every month instead of building equity. And your landlord can raise rent or decide to sell whenever they want.”

    5 pros of renting a house

    1. Home repairs: If something breaks in a home you’re renting, it’s typically the landlord’s responsibility to fix it. So when the air conditioning unit stops working in the middle of summer, you don’t have to spend thousands of dollars to fix it.

    2. Monthly housing expenses: For the most part, when renting a house or apartment, your monthly housing costs will stay the same, aside from minor fluctuations in utility costs. Your base rent doesn’t change month to month after you’ve signed a lease, and you likely won’t need to budget for any emergency repairs, maintenance costs, or property taxes.

    3. Flexibility: You can move out when your lease is finished or relocate to another city without having to worry about selling your home. Renting a house also allows you to see which home styles you like, which floor plans you don’t like, and if a neighborhood is the right fit, before buying a home.

    4. Investment opportunities: Renting can free up some of your income, since you won’t be spending it on repairs or upgrades. You may have extra funds, also called disposable income, to invest in building your finances or saving for a down payment.

    5. Time to improve credit: Renting also gives you the opportunity to pay off debts and help improve your credit score. A better credit score can give you better loan terms, so doing this can help you in the long run.

    5 cons of renting a house

    1. Temporary: As Andreas points out, “the biggest pro of renting is also the biggest con.” If you’re planning to live in a city for years to come, renting may not be the best option. Most leases last for only a year.

    2. Uncertainty: There’s no telling when the property’s owner may decide they don’t want the responsibility of being a landlord anymore. They may decide to sell the property, which means you’ll need to relocate. Similarly, when your lease is up, your rental may not offer you the option to renew your lease.

    3. Possible rent increases: As a renter, it’s possible that your rent will increase every time you renew your lease. Depending on whether you negotiate rent, the new cost may be out of your budget. In that case, you’ll likely need to find a new rental.

    4. No home equity: As a renter, you don’t build any equity. Home equity is the percentage of the home’s value you’ve paid for, rather than what your lender still owns. When you pay your rent each month, you’re helping someone else build equity.

    5. As-is home: You usually don’t have the option of modifying a rental to suit your needs. Some landlords may allow you to make small changes like painting the walls in your living space, but you’ll probably have to paint them back to the original color when you move out.

    5 pros of buying a house

    1. Building equity: When it comes to homeownership, Andreas says, “buying means you’re building equity with every payment, and it’s yours to paint, renovate, whatever you want.” You have the opportunity to potentially increase your home’s value over time. More equity can mean greater profits when selling and the ability to borrow for major expenses.

    2. Customizable: Buying a home means it’s yours. You can paint it, remodel it, and customize the space to your liking without having to follow a landlord’s rules.

    3. Stability: You won’t have to worry about a landlord who may decide to sell the home once your lease is up. You have the freedom to decide how long you want to stay in the home, and ultimately, if or when you want to sell.

    4. Mortgage payments: When you own a home, you’ll have stable mortgage payments each month, as long as you have a fixed-interest mortgage. This stays consistent over time, and you won’t have to worry about a landlord raising your rent each year.

    5. Tax benefits: There are several tax benefits of owning a home. Some homeowners qualify for tax breaks, which are reductions in federal or state taxes. Many first-time buyers can receive tax deductions, such as on their mortgage interest, which can save money at tax time.

    5 cons of buying a house

    1. Closing costs: Buying a home comes with closing costs, like inspections, title insurance, lender fees, and other costs, typically 2%–5% of the home’s purchase price. There are downpayment assistance programs that may help you cover these costs.

    2. Home value: Ideally, your home’s value will increase between the time you buy and the time you sell, but it doesn’t always. Events outside of your control, such as a change in the economy, can potentially reduce your home’s value.

    3. Home maintenance expenses: With owning a home comes the responsibility of home maintenance. If there’s a leak in the roof, it’s up to you to deal with and pay for repairs. You’ll also need to be prepared for emergency repairs, such as a burst pipe or broken heater.

    4. Investment limitations: Buying a home ties up most of your money in one asset, leaving fewer funds for other investments. However, some home improvements can add value and pay off when you sell.

    5. Property taxes: As a homeowner, another important cost to factor in is property taxes, which can be substantial depending on where you live. If you’re renting an apartment, you won’t pay property taxes (however, they may be factored into your rent).

    Should I rent or buy a house? 4 questions to ask yourself

    Everyone has a unique lifestyle, financial situation, and set of long-term goals that impact their decision whether to rent or buy a house. Consider the following four questions to help you decide:

    1. Does renting or buying work with your timeline? If you’re not sure how long you’ll stay in one place, renting may make more sense. Andreas shares a practical guideline: “If you’re planning to stay somewhere for at least five years, buying usually makes sense financially. You’ll have time to recoup those hefty closing costs. 

    However, if there’s a decent chance you’ll move in the next few years, renting is probably smarter (selling a house quickly can actually lose you money).”

    2. Where do you see yourself in 5 years? Do you want to move to a new city or state? Or are you looking to stay in your city for the foreseeable future? Answering these questions can help you determine whether to stay renting or consider buying. “If you’re in a settle-down phase, buying works,” Andreas says. “If everything still feels up in the air, don’t lock yourself in.”

    3. How much can you afford? The costs of renting and buying vary, and your budget plays a big role in deciding which is right for you. “Don’t just compare mortgage to rent,” Andreas advises. “Factor in property taxes, insurance, and repairs as they add up fast. You’ll want 20% down plus a solid emergency fund, because homeownership throws curveballs.”

    • Buying a home requires upfront costs like a down payment and closing costs, which depend on your loan, lender, and housing market. You’ll need to budget for mortgage payments, maintenance, utilities, and homeowners’ insurance.
    • Renting typically has lower upfront costs, like an application fee, security deposit, and first and last month’s rent. You’ll need to budget for rent payments, utilities, and renters’ insurance.

    4. Will renting or buying a home fit your lifestyle? Beyond finances, renting vs. buying is also a lifestyle choice. “Do you dream of renovating a kitchen, or does staying flexible sound better?” Andreas asks. “Can you handle surprise $5,000 repair bills? There’s no wrong answer; it depends on your priorities.”

    • Buying a home is a long-term commitment that allows you to build wealth over time. You can customize your space, whether that’s remodeling, painting, or making upgrades. If you want stability and to put down roots, homeownership may be the right move.
    • Renting offers flexibility and fewer responsibilities. You don’t have to worry about maintenance or unexpected repair costs. It can be beneficial if you move frequently or have a busy lifestyle.

    Is it better to rent or buy a house?

    Whether you make the decision to rent or buy a house, it’s a personal decision and one that means taking a look at different aspects of your life. From your finances to lifestyle, job situation, and long-term goals, many factors influence whether you should rent or buy a house. If you’re still unsure, calculate the cost of both options and speak with a mortgage lender or real estate agent who can help you understand what’s realistic for your budget and goals.

    Alison Bentley

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