How to Buy a House in Georgia

Currently, the housing market in Georgia is exploding. Georgia Public Broadcasting reports that housing prices have increased by 22% between 2020 and 2021, which leaves many people wondering exactly how to buy a house there with the rising costs.

If you’re a first-time homebuyer in the Peach State facing challenges,  that doesn’t mean you’re out of the game. In this guide, we’ll show you how to buy a house in Georgia, including some tips on how to navigate the competitive real estate market.

Before You Start

Before you even begin your search, there are a few questions you’ll want to consider about your potential investment:

What Are Your Housing Needs?

Obviously, you plan to buy a home, but how do you want to use it? If you’re planning to live in Georgia for a short period (less than 10 years), your needs might be dramatically different than if you intend to put down roots and make your next house your long-term home.

You’ll want to look at factors ranging from:

• How many bedrooms you need
• Proximity to parks, schools or amenities
• Commutes
• Size of yard

Knowing your needs beforehand will help you narrow your search and find a home that perfectly meets your needs.

What Are the Best Georgia Cities to Live In?

When you think of Georgia, your first thought might be to live in Atlanta. And, really, there are a lot of benefits to living in the capitol. After all, the Atlanta airport is a major hub that provides access to many other parts of the country.

If Atlanta is your destination, you might look into one of the many in-demand neighborhoods within the city, including Collier Hills North, Atlantic Station, Morningside/Lenox Park or Peachtree Park.

Alternatively, you might want to consider one of the many suburbs of Atlanta, which offer an easy commute without the price or congestion of living in Atlanta proper:

• Decatur
• Johns Creek
• Berkeley Lake
• Milton
• Suwanee

While these suburbs offer more of a small-town feel than the major city, many Georgia residents have come to love Alpharetta for its friendly atmosphere and low crime rates.

Known for being a college town, Athens has a lot of amenities to offer, but you can also find affordable housing within this larger city.

What Is Your Budget?

You’ll need to consider how much money you’re willing to spend on a home in Georgia. Conventional loans require anywhere between 3 to 20% down payment.

Additionally, you’ll want to know your credit score before you begin the process. Mortgage lenders typically expect a score of 620 or above and will also expect you to have a debt-to-income ratio of no more than 36% to 43%.

These factors can influence how large of a mortgage you qualify for, as well as your prospective interest rates. Many lenders will preapprove you for a mortgage, which can help you to determine your maximum price range before you start shopping.

Finding a Home For Sale in Georgia

Once you’ve done your planning, the fun part can begin! Many first-time buyers can find the process of finding a home in Georgia a bit intimidating. But we’ll try to make it as simple as three steps:

Getting an Agent

Partnering with a real estate professional can smooth out the homebuying steps. In fact, if you don’t have a real estate agent, you might find yourself at the mercy of a seller’s real estate agent, whose primary concern will be taking care of their client’s needs.

Never attend an open house or contact a seller without a realtor who can advocate for you.

Even if you’ve already completed the preliminary steps (above), an agent can help you refine your budget and direct you to homes and neighborhoods you might not have otherwise considered. And, in the purchasing process, an agent can help you navigate negotiations and paperwork to make the sale as stress-free as possible.

Finding a Home

These days, first-time homebuyers can look for homes right from their smartphones. But if you’re already in Georgia, don’t neglect the value of actually driving through prospective neighborhoods to get a feel for where you’d like to relocate. This can help you match the homes listed online with their geographic settingfor .

Your realtor can be a huge help in this. They may even have leads for homes that haven’t been made public yet.

Making an Offer

Did you notice that we’ve included this step in the “finding a home” phase? That’s because purchasing a home isn’t always a simple process, and you might discover that your first choice might not be your final purchase.

Once you find a home, you’ll make an offer. This happens through your realtor, who will communicate your offer in writing to the seller’s real estate agent. The seller then has two options: they can either accept or reject your offer.

Don’t be discouraged if your first offer is rejected. This is common in any real estate market, especially one as competitive as the current Georgia housing market. In some cases, the seller will put together a counteroffer, which you can accept or reject.

This process may go back and forth a bit before a decision is made. And with such stiff competition, you may learn there’s not much wiggle room in housing prices as you might prefer. This means you’ll need to be willing to walk away if you can’t reach an agreement or adjust your budget to fit the current market.

Financing a House in Georgia

To finance a house in Georgia, you’ll need to understand some of the following:

Closing Costs

Make sure to budget in closing costs. They’re typically 1% to 4% of the home’s total value and are designed to cover things like:

• Taxes and filing fees
• Escrow accounts
• Owner’s title insurance
• Lender’s title insurance
• Mortgage origination/underwriting fees

In some cases, your seller may agree to pay some of these costs if they are included in the purchase agreement, though buyers should be prepared to cover these fees in the event the seller is not willing to negotiate on them.

Mortgages

Despite rising demands for housing, there’s good news: Georgia’s average interest rate for a 30-year fixed-rate mortgage are lower than nationwide averages.

A conventional mortgage broadly refers to any mortgage not insured by the U.S. government. These traditional mortgages offer the best interest rates, though some first-time homebuyers can struggle to make the a 20% down payment. These loans also require a qualifying credit score.

Some conventional loan programs allow buyers to purchase a home for as little as 3% down. However, paying less than 20% means that you’ll often have to pay private mortgage insurance (PMI) monthly until the loan is paid down to 78% of the home’s value.

Still, a conventional mortgage is the best option for most Georgia home buyers.

Government Programs

What if you’re struggling to come up with a down payment? What if your credit score isn’t as high as you’d like it to be? The U.S. government has three financing options that you might consider. These include:

• FHA loans
• USDA loans
• VA loans

FHA loans come with down payment requirements that are based on your credit score. Those with a score of 580 or above only need to put down 3.5%, while those with scores between 500 and 579 require a down payment of 10%.

However, unless you make a 20% down payment, you’ll be required to purchase FHA mortgage insurance, which can add to your monthly costs. Fortunately, this fee can be eliminated after you’ve paid down your mortgage sufficiently or if you refinance your home after a few years.

USDA loans and VA loans are available without a down payment. However, both of these programs have some additional requirements that must be met.

USDA loans can only be used for homes in approved suburban or rural areas. Because of this, some homes may not qualify for USDA financing.

VA loans are only available to qualified veterans or active members of the military (or their spouses). Depending on your eligibility, you may need to pay a VA funding fee or roll this fee into your final loan amount. Still, if you meet the service criteria, you may be able to obtain a VA loan even if your financial health isn’t the strongest.

One thing to watch out for, though, is that these types of loan programs can’t be used for homes that require a lot of repairs. If you’re looking for a fixer-upper, it’s unlikely you’ll qualify for one of these loans. You’ll either need to pursue either a conventional mortgage or an FHA rehab loan, or find another home that qualifies for USDA/VA financing.

Tips for Navigating the Georgia Housing Market

The process of buying a home can be exciting, but it can also be stressful. Here are some tips for navigating today’s competitive market:

Adjust Your Expectations

In a competitive market, you may need to put in a few offers before you have one accepted. Come in with a strong offer upfront and you’ll be less likely to face rejections.

Even after you get an accepted offer, challenges could arise. You might find surprises during inspections or have to negotiate after a low appraisal. Set your expectations accordingly.

Extend Your Commute

Having trouble finding a home in a particular neighborhood? You might want to extend your search radius. While this might mean your morning and evening commutes will be longer, you’ll have more options to choose from. It’s possible that extending your search to suburban areas can also help you to find more affordable options.

Seek Something Temporary

Your “right now” home might not be the home you initially dreamed of, but it could be a stepping stone to your future dream home. If you don’t qualify to buy your “forever” home right away, consider investing in a home that you can live in for five to ten years while you get your credit in line.

Find Your Perfect Georgia Home with Agave Home Loans

At Agave Home Loans, we provide more than advice. Our skilled professionals can help you take the next steps toward purchasing a home. When you’re ready to get started, contact our team!