How much money do I need to buy a house in Chicago?

There isn't one universal amount. Your cash requirement depends on the purchase price, loan program, down payment, closing costs, credits, prepaid expenses, and other transaction-specific factors. FHA financing may permit qualifying buyers to put as little as 3.5% down. A lender should calculate your estimated cash to close for your specific scenario.

Do I need 20% down?

No. Twenty percent down is one financing strategy, not a universal requirement. FHA and various conventional loan programs may allow lower down payments depending on borrower and property eligibility. HUD notes that FHA financing may allow qualifying borrowers to put down as little as 3.5%.

Should I get preapproved before looking at homes?

Yes, in most financed purchases that's the better sequence. Preapproval helps establish a realistic purchase range and allows your broker to develop a search and offer strategy around your financing.

What is earnest money?

Earnest money is a deposit made in connection with the purchase contract showing the buyer's commitment to the transaction. The amount, deadlines, holder, and circumstances affecting its return depend on the contract.

Do I need a home inspection?

An inspection is an important due-diligence tool that can help you understand the property's condition. Inspection rights and deadlines depend on your contract, so discuss your specific situation with your broker and attorney.

What's the difference between inspection and appraisal?

An inspection focuses primarily on the property's physical condition. An appraisal focuses primarily on the property's value in connection with financing.

When do I know exactly how much money I need for closing?

Your lender's Loan Estimate gives you estimated costs earlier in the financing process, and the Closing Disclosure provides the final loan terms and closing-cost information before closing.