The Conventional Way of Buying a House Buying a house is something that most people do at least once in their lives. Many people dream of buying their own home. The amount of new homes has grown tremendously and many people are buying homes. The median home price in California is around $500,000. The conventional way of buying a house is a procedure that requires a lot of time and patience. There are certain steps and procedures included in purchasing a home. It includes getting prequalified by a loan officer to determine the highest dollar amount of mortgage you can truly afford (really important step in the process), finding a real estate agent, searching for homes, making offers, l hiring a title company, an appraiser, home inspector, termite company, and opening and closing of escrows and other various services that benefit both the buyer and the seller. Buying a home is a complex process and most consumers don't know where to start and don't have any education about it. Buying a home is more complex than many people think. A home buyer does not pay cash when purchasing a home. If that were the case, no one would be able to afford it. A potential buyer must obtain a loan. The bank does not lend its money to just anyone, so there are prerequisites before a buyer can consider buying a house. The prospective buyer must have enough money for a down payment of between 3% and 20% of the purchase price, a stable job for at least two years or more, must have a decent credit score with at least 640 or higher. This is the standard for the market. (1) Your credit score is based on your FICO score. FICO stands for Fair Isaac Corporation, a company that has been around since the early 1950s and monitors consumers' credit ratings and puts a scoring system into them. (2) Conventional loans are generally financed up to eighty to ninety percent with a required down payment of between ten and twenty percent. The potential buyer must also have a debt/GDP ratio of no more than 28/39 of their income. The first number 28 refers to the new mortgage payment which cannot exceed 28% of the combined gross income and 39 refers to the mortgage payment plus revolving and installment debt as well as taxes and insurance cannot exceed 39% of total combined gross income (3).