Buying a home is a big deal, and it’s understandable you’d be anxious to grab the keys and move in as soon as possible after a seller accepts your offer. But before you can do so, the details of the sale need to be finalized, your mortgage approved and funded, and legal ownership of the home transferred to your name. This last leg of the home buying process is called closing, and it doesn’t happen overnight. Let’s look at how long it takes to close on a home.
Key Takeaways:
- The process of applying for and closing on a mortgage contains several different steps and typically takes anywhere from 30 to 45 days.
- Your closing can get delayed if there are issues with the appraisal, inspection, title or financing.
- On closing day, you’ll sign all the paperwork, make your down payment, and pay your closing costs. Then, the title of the home will be transferred to your name.
Closing Timeline Breakdown: What To Expect
Closing on a house takes time. According to ICE Mortgage Technology, it took an average of 43 days to close on a purchase loan as of August 2024. The exact timeline for any particular sale depends on the mortgage loan type and whether any delays crop up.
Average Time To Close On A House By Mortgage Type
Every home buyer is unique and must find financing that suits their situation. As a result, there are different types of home loans, and each one comes with a slightly different closing timeline. Let’s look at how long it takes to close on three common mortgage types:
- Conventional loans: ICE Mortgage Technology data shows that conventional loans take an average of 43 days to close. These loans tend to close quickly since they follow a traditional path from application to closing. They generally don’t include specialized underwriting or approval requirements beyond those required to conform to Fannie Mae or Freddie Mac’s rules.
- FHA loans: The ICE Mortgage Technology data shows that Federal Housing Administration loans take an average of 44 days to close. FHA loans operate on a timeline similar to conventional loans. However, they may need additional time for some parts of the process. For example, FHA loans require that home appraisals be carried out by FHA-approved appraisers.
- VA loans: VA loans usually take the longest to close. Based on an August 2021 report from ICE Mortgage Technology, Veterans Affairs loans took an average of 53 days to close. This is partly due to their stricter eligibility and underwriting requirements and the fact that not all lenders have automatic underwriting authority for VA loans. Similar to FHA loans, VA loans require an appraisal from a VA-approved appraiser.
How Long Does It Take To Close On Average?
| Loan Type | Days To Close Purchase | Days To Close Refinance |
|---|---|---|
| Conventional loan | 43 | 44 |
| FHA loan | 44 | 48 |
| VA loan | 53 | 49 |
Application To Closing: Step By Step
The closing process can feel like a never-ending stream of paperwork. However, it’s easier if you take it step by step. Here’s a look at the typical timeline from application to closing.
Step 1: Mortgage Application (1 Day)
Prospective home buyers should get preapproved for a mortgage before they begin house hunting. A preapproval letter will tell you how much the lender will let you borrow.
Once you’ve found a home you want to buy, it’s time to officially apply for a mortgage with a lender. In addition to the mortgage application, expect your lender to ask you to document your finances as part of the underwriting process.
Step 2: Disclosure (Less Than 1 Week)
Your lender is required to issue a loan estimate within three business days of receiving your mortgage application. This three-page form estimates your interest rate, monthly payment, total closing costs, property taxes and homeowners insurance premiums.
Step 3: Appraisal (1 – 2 Weeks)
Expect your lender to order an appraisal to determine your prospective home’s fair market value. A licensed appraiser will review the home’s condition and compare it to similar properties in the area that have sold recently. The appraisal report usually takes one to two weeks to complete and should confirm to you and your lender that the purchase price and loan amount are reasonable.
Step 4: Underwriting (1 – 3 Days)
Underwriting is when your lender reviews your finances to confirm that you can afford the loan you’ve applied for. The underwriter assesses your income, assets, savings, debts and credit report to determine whether you can afford the mortgage. This process is typically automated and can be completed within a few days as long as your lender has accurate and up-to-date information. If your finances are complicated, it may take a few weeks to complete underwriting.
Step 5: Conditional Approval (1 – 2 Weeks)
Conditional approval means the underwriter expects to approve your application but needs more information or documentation from you. They may ask for additional income documents and bank statements or verification of your homeowners insurance. Once everything checks out, the lender can officially approve your mortgage.
Step 6: Cleared To Close (3 Days)
Once you’ve received approval from the lender, you’ll get a closing disclosure at least three business days before your closing date. This five-page form provides the final terms of your loan, including your projected monthly payments and total closing costs. You can use this three-day window to compare the terms on the closing disclosure to the loan estimate you were given and ask your lender any questions you have.
Step 7: Documentation (Less Than 1 Week)
Several documents are reviewed, signed or both on closing day, so you’ll want to make sure you’re prepared. Take your time and examine these documents thoroughly:
- Proof of homeowners insurance
- The closing disclosure
- The mortgage promissory note
- The deed of trust, or mortgage
- The deed to the property
- The certificate of occupancy (for a newly constructed home)
- The initial escrow disclosure
Step 8: Closing Day (1 Day)
On your closing day, you’ll sign all the necessary paperwork. You’ll also make your down payment and pay closing costs. Then, the title of the home will be transferred to your name. Your closing day shouldn’t take more than one to two hours to complete.
Here’s a list of some of the people you’ll want to have on hand:
- Your real estate agent
- Your attorney
- The seller’s real estate agent
- The seller’s attorney
- Title company representative
- Lender representative
Most likely, your closing day will occur at a title company’s offices. Depending on the seller and your state, it could also occur at alternative locations or even in a virtual setting.
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What Happens On Closing Day?
Let’s look at how closing day works and what you can expect to happen.
Pay Closing Costs
Closing costs can add up to 2% to 5% of the home’s purchase price. Typical closing costs include:
- Escrow funds: To ensure you have sufficient money to pay future insurance and tax costs, your lender may ask you to provide two months of payments upfront at closing to establish your escrow account.
- Third-party fees: Your lender might use third parties to process your loan, resulting in third-party fees like appraisal and credit report fees.
- Prepaid mortgage interest: Interest accrues between the closing date and the day of your first mortgage payment, so your lender may have you pay some interest upfront to cover this amount.
- Homeowners association transfer fee: If you’re moving into a community with a homeowners association, this transfer fee pays for switching the monthly HOA fees from the seller to the buyer.
- Mortgage points: Also called discount points, mortgage points are a percentage of your loan you can pay upfront at closing to lower your interest rate.
You should know how much you’re paying in closing costs and which closing costs you’re paying before the closing date. As a result, you’ll be able to streamline the process.
Transfer Ownership
After signing your closing documents, your ownership will be registered with your county or city. This shows up in public records and certifies that you are the property’s rightful owner. Afterward, you’ll get the keys.
Unless your contract demands a delayed move-in time, you can move into the house as soon as you wish.
What Do I Need To Bring On Closing Day?
A few items may be necessary on closing day. Coming unprepared can delay your closing. Here’s an (uncomprehensive) list of what you should bring:
- A cashier’s check (or wire payment) for closing costs
- An acceptable form of ID
- A copy of your homeowners insurance policy
- Your closing disclosure
- Contact information for important parties, like your attorney or real estate agent
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What Can Delay Closing?
The mortgage closing process hinges on multiple factors. As a result, it can be easily stopped or delayed if an issue pops up. Here are some of the most common problems encountered during the closing phase.
Appraisal Issues
Your lender will most likely require a home appraisal before providing you with your mortgage loan. This can lead to delays if the home appraisal is lower than expected. Your lender needs the home to be appraised for at least the requested loan amount since it uses the house as collateral for the mortgage. If your appraisal comes back low, you can renegotiate the home’s sale price, contest the appraisal, contribute more money or walk away.
If you waive an appraisal contingency on your purchase agreement, canceling the real estate contract may result in losing your earnest money deposit.
Home Inspection Issues
Home inspections reveal any building code violations, structural defects or safety issues with a property. Many homes have their share of wear and tear, but if an inspector flags something that seriously needs addressing, it can delay the process until the issue is fixed. Delays may also occur if the buyer and seller disagree on how to correct the problem. If this happens, the buyer can walk away, or the seller can offer to remedy the issue or negotiate a solution.
Like with the appraisal contingency, if you decide to waive a home inspection contingency on your purchase agreement, you risk losing your earnest money if you can’t come to a deal with the seller.
Title Issues
Before closing on a property, lenders run a house title search that allows them to see any liens, taxes or debts against the home. Most title issues can be resolved, but they may take time.
As a buyer, you can hire an attorney to help ensure you purchase a home with a clean title. Sellers need to pay off outstanding debts on the home to avoid this roadblock as well.
Financial Issues
Your lender reviews various documents and numbers before approving your mortgage and home purchase. In particular, they look at your credit score and your debt-to-income ratio.
Lenders may worry about your ability to repay the loan if your credit score is too low. Minimum credit score requirements differ depending on loan type and lender.
Your DTI ratio measures how much of your gross monthly income goes toward debt. As with credit scores, lenders have a certain number they’re willing to approve. It’s best to aim for a DTI ratio of 36% or below.
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Tips For Closing On Schedule
Your real estate closing timeline is more fragile than you may assume. Setbacks can unexpectedly derail the process. Consider taking the following steps to help the process move forward more smoothly:
- Get preapproved. Getting preapproved for a mortgage before you even put an offer on a home can help expedite the closing process.
- Organize your financial documents. Storing your mortgage and housing documents in one place helps you stay organized, so you don’t have to scramble to look for them on closing day.
- Avoid big purchases and life changes. Getting married, switching jobs, taking on additional debt and making large purchases while purchasing a house can all affect your closing process. They introduce new factors, create possible financial strain, affect credit scores, and more.
- Work with experienced professionals. From scheduling movers to borrowing from a trusted lender, the right people can make a world of difference. Discuss what’s expected from both sides before closing day to avoid issues.
FAQ
You may still have concerns about the time it takes to close on your new home. Here are some of the most common questions that home buyers ask about the closing process.
The Bottom Line
The timeline to close on a home varies because it depends on several factors. Incorrectly filed paperwork, low appraisals and poor credit are just a few issues that can extend the timeline. While delays can be frustrating, you can avoid them through organization and careful monitoring. Being proactive is one of the best ways to ensure a smooth closing process.
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Rory Arnold contributed to the reporting of this article.
Ashley Kilroy
Ashley Kilroy is an experienced financial writer who writes for solo entrepreneurs as well as for Fortune 500 companies. She is a finance graduate of the University of Cincinnati. When Ashley isn’t helping people understand their finances, you may find her cage-diving with great whites or on safari in South Africa.
