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Get Informed


Deciding you want to buy a home.

Confirming that you’re serious about buying a home is he first step. You may need to do a bit of soul searching to confirm that you’re ready to take this plunge. It’s a worthwhile endeavor, if you proceed with diligence, prudence, and the right perspective. However, it can be a bit of journey to get to the point where you’re finally moving into that dream home.

I always advise people interested in buying that the idea of homeownership needs to cause them little to no level of uncertainty. If you’re on the fence about buying a home, take the time to think through the commitments associated with homeownership.

Loan pre-approval process

This is an import step in the homebuying process because it will dictate whether you’re able to get out on the market and start seriously searching for a home or if you need to reexamine your financial situation before proceeding towards homeownership.

The loan-preapproval process requires that you contact a mortgage lender directly (e.g., a brick-and-mortar bank) or a mortgage broker. Going directly to a bank may prove fruitful if you have a longstanding and healthy relationship with a bank. Just know that if you approach a bank directly for a mortgage, you’re limited to the type of loans, interest rates, and loan amounts that the bank is comfortable issuing. On the other hand, utilizing a mortgage broker will allow you to see an array of home loan options (FHA or conventional loans that take the shape of 30-year fixed mortgages, adjustable-rate mortgages, mortgages with a construction component to them for home improvements). Mortgage brokers are able to shop your loan application to a wide range of mortgage lenders that have diverse interest rates and loan structures.

If you have a real estate agent at this point in the process, you can ask them if they have a mortgage brokers or banks that they recommend. You don’t need a real estate agent to begin shopping around for a home loan. Though, a real estate agent may have lender and/or mortgage broker recommendations that have proven to be reliable and beneficial for their past clients. (Mortgage lenders and mortgage brokers are prohibited by law to providing any sort of referral fee or benefit to real estate agents that refer them clients, so if you ask a real estate agent for a recommendation, the requires that recommendation not be biased by financial interest.)

Also, it's worth mentioning that sometimes you can approach mortgage lenders and give them a rough estimate of your income, monthly expenses, and credit score, and they'll give you an approximation of the value of the mortgage that you may be able to afford without even going through the pre-approval process.  

What does the loan pre-approval process look like?

The loan pre-approval process is usually a relatively quick process. It can take as little as a couple of days to obtain a pre-approval letter.

The loan pre-approval process involves you and any other co-borrower filling out an application where you’ll provide personally identifiable information, like your name, address, employment status, employer, tax returns, bank statements, and Social Security Number. This might seem like a lot of information to give someone, but it’s the sort of information that a lender or mortgage broker will need to verify your identity, the loan amount for which you’ll qualify, and to process your mortgage application, when the time comes.

The loan pre-approval application process is usually a free process.  

At the end of the loan pre-approval process, you’ll be issued a loan pre-approval letter. This letter will inform you as to the type of loan that you’re likely to qualify for as well as the interest rate and the loan type. Know that none of this is set in stone until the loan closing process happens when you’re in escrow to close on a home.

Does submitting a loan pre-approval application mean I have to move forward with the homebuying process and take out a loan?

No. This is a non-binding commitment. It’s not until you make an offer on a home, that offer is accepted by a seller, a formal loan application is submitted with a lender after acceptance, the loan closing process is complete, all conditions to the purchase and sale agreement are satisfied, and escrow fully closes that you’re bound to your mortgage. (There are quite a few steps in the process!)

Loan pre-approval letter

Once the loan pre-approval letter is issued, you’ll have a good idea as to whether you want to move forward with hunting for a home or whether you want to reassess your financial situation.

If you don’t qualify for the amount of loan, the interest rate, and/or the type of loan that you were hoping to qualify for, then you may want to talk to a mortgage broker, financial advisor, or do some research on how you can get the mortgage and interest rate that you had hoped to obtain. You may find that you need to increase you credit score, reduce your monthly spending, pay off some debt, and/or save some additional money for a down payment.

If you’re happy with details of the loan pre-approval letter and you’re still certain that you want to enter the world of homeownership, then it’s time to start the exciting process of home hunting!

I've heard you need to put down a 20% down payment to get a mortgage?

If you're buying a home to serve as you primary dwelling (even if you're a first-time homebuyer), it is possible to find conventional mortgage loans with as little as 3% down in some instances. You may also be able to qualify for an FHA loan with a 3.5% down payment, if you're a first-time homebuyer.

What if I don't have enough money for a 3% down payment? 

If you're a first-time homebuyer in California and you make under a certain amount of income (in Sacramento County, if you make less than $202,000/year per household), CalHFA has a homebuyer down payment assistance program that will provide you with a low-interest loan that will cover the following amounts:

  • Conventional / VA / USDA Loan: The lesser of 3% of the purchase price or the appraised value of the home.

  • FHA Loan: The lesser of 3.5% of the purchase price or the appraised value of the loan.


The CalHFA low-interest loan will be placed on your home's title as a junior lien on the property (lesser in priority that the senior lien (your mortgage)). You're not required to pay back the low-interest loan until either: (i) the mortgage has been fully paid off; (ii) the home is transferred; or (iii) the owner refinances their mortgage. 

Click on the CalHFA links to learn more: ​

Engaging a real estate agent

At this point, if you haven’t already (and regardless of whether you decide to move forward in the homebuying process), you may want to engage a real estate agent. 


You’ll want to ensure that the agent you select, at minimum: (i) knows the market in which you want to buy; (ii) knows the homebuying process; and (iii) is someone with whom you feel comfortable with and confident in to adequately representing your interests.  


If you choose to go unrepresented, it can be daunting journey with out.  It would be difficult (but, in theory, not impossible) to move forward in the process without a real estate professional, like an attorney or real estate agent. There is a wholesome amount of detail that does into crafting up an offer, navigating through a real estate transaction, and closing escrow (i.e., getting the keys in your hand). There are numerous mandated disclosures, industry standards, and details to purchase and sale agreements that can be perplexing and frustrating for someone not familiar with the world of residential real estate.

*The information outlined in this page is intended to help homebuyers strengthen their understanding of the homebuying process. This information is provided as general information and not all information applies to every homebuyer's situation. This information is also not legal advice and the act of providing this information does not create an attorney-client relationship. Homebuyers should use this information in conjunction with many other resources to guide them through the homebuying process. The best resource being a licensed real estate profession capable of shepherding them through the process based on the specifics of their circumstances.  

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