How to Buy a House in Georgia: 6 Steps

Purchasing a house is a major financial decision that requires careful consideration. In Georgia, the average home value is $333,862, lower than the national average of $362,481. This difference may influence your decision-making process when considering a home purchase in the state.

Understanding down payment assistance programs, mortgage types and state-specific regulations is essential for a smooth homebuying journey in the Peach State. MoneyGeek has compiled key pointers to help you navigate the process in Georgia, from saving for a down payment and selecting the right location to finding the best financing option tailored to your needs and credit history.

According to the U.S. Census Bureau, the homeowner vacancy rate in Georgia for the second quarter of 2024 was 1.1%. The homeowner vacancy rate measures the percentage of homeowner-occupied units that are vacant and available for sale, providing insight into the housing market's supply and demand.

A stable vacancy rate is typically around 2%, offering homebuyers some choice and flexibility. Georgia's 1.1% suggests limited options for buyers, potentially leading to competitive bidding and higher home prices.

Before purchasing a home in Georgia, you must closely examine your financial and credit history. A strong financial profile increases your chances of getting approved when applying for a mortgage.

Your credit score plays an important role in determining the mortgage loans and interest rates you qualify for. A higher score increases your chances of securing a reasonable rate. According to Experian, the average credit score in Georgia is 695.

If you have bad credit (between 300 and 579 on the FICO scale), getting mortgage approval may be challenging. Check the table below to see which mortgage type is ideal for you based on the minimum credit score requirements.

Source: Experian

Your debt-to-income (DTI) ratio helps lenders determine how much of your monthly income goes to debt payments. This evaluation is crucial for assessing the amount of mortgage debt you can handle. In Georgia, the average mortgage debt was $217,383, according to Experian. This figure highlights the additional financial responsibility you may consider when taking on a mortgage.

Monthly debt payments included in your DTI typically cover mortgages, credit cards, car loans and other debts. Use our DTI ratio calculator to see your front-end DTI, back-end DTI and total monthly debt payments. The front-end DTI measures the percentage of income going toward housing-related debt, while the back-end DTI accounts for all debts.

Purchasing a home is a significant financial commitment, and it's easy to fall into the trap of buying a house that costs beyond your budget. To avoid this, consider using the 28% rule as a guideline. This rule advises that you should not spend more than 28% of your gross monthly income on your mortgage payment. By adhering to this rule, you can ensure that your housing costs remain manageable and sustainable over the long term.

According to the U.S. Bureau of Labor Statistics, the median annual income in Georgia as of April 2024 was $45,480. This translates to a gross monthly income of $3,790 before taxes. Applying the 28% rule, you should aim to keep your monthly mortgage payment at or below $1,061.

Use our mortgage calculator below for a more precise estimate tailored to your situation.

A down payment is an upfront payment made when buying a house, often 20% of the home's purchase price. This standard can be a considerable obstacle for many homebuyers. In Georgia, for instance, the average home value is $333,862, requiring a 20% down payment of approximately $66,772. For homes valued above the average, say at $350,000, the down payment would be $70,000.

Fortunately, saving up for a 20% down payment is not a requirement. Most mortgage types allow for lower down payments. Government-backed loans offer alternatives, such as VA loans with a 0% down payment requirement and FHA loans requiring just 3.5%.

Note that if you opt for a down payment of less than 20%, your lender may require you to take out private mortgage insurance. You can use our PMI calculator to estimate your monthly private mortgage insurance (PMI) premium based on your credit score and down payment.

Georgia offers various down payment assistance programs to help make homeownership attainable for many. Initiatives such as the Georgia Dream Loan Program aim to support potential homeowners in overcoming financial hurdles. Check out the table below for the available down payment assistance programs in Georgia offered by the Georgia Department of Community Affairs (GDCA).

Finding the right location in Georgia for your new home requires careful consideration of several factors. Start by looking at the average house prices in your preferred areas. Consider how close you want to be to family, friends, work or school. Accessibility to public transportation, parks, restaurants and shopping centers can significantly affect your daily life and should be evaluated as part of your decision-making process.

The cost of living is another critical factor to consider when choosing your new home. According to the Missouri Economic Research and Information Center (MERIC), Georgia's cost of living index for the first quarter of 2024 is 91, which is lower than the national average of 100. When selecting the right location, keep in mind these essential expenses:

• Food
  
• Healthcare
  
• Clothing
  
• Utilities
  
• Education
  
• Transportation
  
• Entertainment
  

Check out the table below to see some cities in Georgia and their average home values. You can also use our cost of living calculator to help you estimate how much you'll need to pay for all the essentials in different locations.

Source: Zillow

Working with a real estate agent can expedite your house hunt in Georgia by offering you the advice you need, extra hands to manage paperwork and an expanded list of property options you may not access alone. Additionally, agents can recommend other service providers, such as title companies and inspectors, to assist you in purchasing your home in Georgia.

When finding a real estate agent, ensure you do your due diligence and interview those with experience in the neighborhoods you're interested in. Consider the following tips:

• Find someone compatible with your needs and personality
• Verify the agent's credentials, training, and licensure
• Ensure they have in-depth knowledge of the area
• Shop around for agents and compare their rates

The homebuying process involves securing a mortgage that you can afford. In Georgia, options include conventional loans, jumbo loans, FHA loans, VA loans and USDA loans. You can select terms from 10 to 30 years and decide between a fixed-rate mortgage or an adjustable-rate mortgage (ARM). Choosing the appropriate financing option can increase your approval chances and lead to long-term savings.

Interest rates on a mortgage can change daily due to factors such as the type of mortgage, the lender and the economy. The annual percentage rate (APR) differs from the interest rate as it includes additional costs like fees, providing a clearer picture of the actual cost of borrowing.

As of September 2024, the APR for a 30-year fixed conforming loan in Georgia is 5.98%, while the APR for a 30-year fixed rate FHA loan is 7.69%. Check the table below to see the current mortgage rates in Georgia by mortgage type.

Getting pre-approved for a mortgage in Georgia helps you understand your budget and demonstrates to sellers that you are a serious buyer. Lenders usually issue a mortgage pre-approval letter, which states the loan amount you are qualified for based on a thorough review of your financial situation. This letter is typically valid for 60 to 90 days, giving you a specific timeframe to find a home and finalize your loan.

To get pre-approved for a mortgage, you must submit several documents. These include:

• Proof of income
• Employment verification
• Credit history
• Identification

Home inspections are highly recommended in the homebuying process to identify potential issues before finalizing the purchase. Inspectors will examine structural components, roofing, plumbing, electrical systems, and heating and cooling. The inspection report typically includes findings on the condition of these components and recommendations for repairs. This helps buyers understand the property's actual condition and anticipate necessary repairs or maintenance.

For example, an inspection might reveal major issues such as a damaged roof, outdated electrical wiring or a failing foundation. These issues can significantly affect the home's appraised value, potentially lowering it. This information could lead buyers to reconsider their offer or rescind altogether based on the inspection's results.

Georgia does not regulate home inspections or require certification for home inspectors. Despite this, many home inspectors choose to become certified through professional organizations, such as the American Society of Home Inspectors (ASHI) or the International Association of Certified Home Inspectors (InterNACHI). This voluntary certification can provide some assurance of an inspector's qualifications and adherence to industry standards.

If you're looking for a home inspector in Georgia, ensure they are licensed. Checking online reviews and asking for references can provide insights into the inspector's reliability and professionalism.

Home appraisals determine a property's fair market value. This necessary step ensures buyers do not overpay and that lenders can confidently provide a mortgage. According to the 2023 Appraisal Survey from the National Association of Realtors (NAR), the median cost of a home appraisal in 2023 is $500.

A home appraisal differs from a home inspection. While appraisals focus on the property's value, inspections assess its condition. Lenders require appraisals to confirm that the property's value supports the loan amount. This distinction between inspections and appraisals helps protect both buyers and lenders from potential financial risks.

Closing is the final step in buying a house in Georgia, where ownership transfers and you receive the keys. Your lender must provide a closing disclosure document three days before the official closing. This document includes details on loan terms, projected monthly payments and closing costs. Plan a final walk-through with your real estate agent near closing day to ensure the property is in expected condition.

During closing day, you'll review and complete a lot of paperwork. Some of the key documents you need to sign include:

• Final loan application: Confirms all the details of your loan, including the interest rate and loan amount. It verifies your financial information and ensures everything is accurate before finalizing the loan.
• Deed transfer: Transfers property ownership from the seller to you. It is a legal requirement to officially become the home's new owner.
• Promissory mortgage note: Outlines your loan repayment terms, including the amount you owe, the interest rate and the repayment schedule. It is a legal promise to repay the loan under the specified terms.
• Homeowners insurance: Protecting your new home is essential. Georgia home insurance covers potential damages to your home and provides peace of mind as you settle into your new property.

Closing costs are fees paid at the end of a real estate transaction. In Georgia, the average closing costs are $3,218, according to NAR. These costs include several specific fees:

• Appraisal fee: The cost of having a professional appraiser evaluate the property's value.
• Title search and insurance fee: Fees for verifying the property's title and securing insurance to protect against future title disputes.
• Escrow deposit: Funds held in escrow for property taxes and insurance payments.
• Prepaid costs: Advance payments for property taxes, homeowners insurance and mortgage interest.
• Other closing costs: Additional fees such as loan origination, recording and credit report fees.

If you are a first-time homebuyer, learning about different first-time homebuyer programs in Georgia can help you achieve homeownership faster.

Buying a house in Georgia is a long-term financial commitment. We answered some frequently asked questions about the process to help you kickstart your homebuyer journey.