How to buy a house out of state

Quick insights

Buying a house out of state is a big step, but it can be manageable with the right approach. No matter what your motivation may be—chasing your dream job, moving closer to family or purchasing a getaway spot—it’s important to understand the unique challenges and steps involved with buying a house in another state. This way, you can confidently navigate the process and find a home that meets your needs.

Advice for buying a house out of state

Consider the lifestyle you want

Take the time to research an area by reviewing different neighborhoods. Think about what matters to you in terms of where you live. Do you want to immerse yourself in city life or the suburbs? What are the crime rates? Is the area walkable, or do you need a car? If you have kids or plan on starting a family, compare school districts. Taking these points into account will help you figure out which area may be a good fit.

If you can, visit the area in person to get a better sense of that region’s local flavor and community structure. You’ll be able to explore neighborhood businesses, traffic, walkability, noise levels, amenities and other elements that influence day-to-day living. And if you know someone who lives there, ask for their opinions and recommendations.

Tap into local knowledge

Finding a trusted local real estate agent is essential when buying a house out of state. A knowledgeable agent will understand the local market, guide you to the right neighborhoods and help identify properties that match your needs. Look for an agent with local experience and a clear understanding of your priorities. You may want to interview a few agents to evaluate their credentials. During this process, ask about their commission structure and check references before making your decision.

Factor in finances and logistics

Before making concrete plans, deep dive into your financial situation to determine if buying a house in another state is a solid investment. This process will also help you figure out which type of property you can afford and where. For instance, do you currently own a home and plan to sell it to use those funds toward a down payment? Are you still paying off your mortgage and plan to take out a second mortgage? Answering these questions will help you decide next steps.

It’s also crucial to plan ahead for typical fees you can expect when buying a home, like:

Finally, keep in mind that mortgage lenders will assess factors such as your income, employment history, credit score, any outstanding debt and assets you own to determine your loan eligibility. Each of these components can impact the mortgage rate. 

Assess the cost of living

When it comes to affordability, each region’s housing market is unique. Look into the local market to gain a sense of what to expect when buying a house there, as well as costs such as property taxes and closing costs. You can contact the local county assessor’s office or equivalent agency to learn the area’s tax rates to prepare yourself. 

Homeowners insurance rates and requirements can also vary due to an individual region’s weather patterns. Some states may require additional coverage, like flood or fire damage, which can impact your monthly payments significantly. Tax professionals and local real estate agents can also help you make sense of associated fees. Real estate agents can also help you navigate local property and real estate transaction laws relating to issues like property lines and zoning, which can differ by city, county and state.

Evaluate regional mortgage variations

Mortgage options and lender requirements can vary significantly based on the state and lender. For example, U.S. Department of Agriculture (USDA) loans are available only in designated rural areas and have specific eligibility requirements, such as income limits and property location. Some states offer unique down payment assistance or grant programs, and local lenders may have different underwriting standards.

If you’re considering a vacation home or investment property, you can expect stricter requirements from lenders—like higher down payments, stronger credit scores and more cash reserves compared to a primary residence. It’s important to consult a lender licensed in your target state, so they can help you navigate your options.

Tips for buying a house without seeing it in person

Buying a house in another state means managing logistics from a distance. If you can’t see a property in person, there are several strategies to keep in mind: 

Pros and cons of buying a house out of state

Buying a house out of state can open the door to exciting opportunities and help diversify your investment portfolio, but it requires careful research and local expertise. Balancing the benefits against the challenges will help you navigate the unique challenges of buying from a distance, so you can make an informed decision. 

Pros

New lifestyle or vacation options

Buying a second home in another state can provide a personal getaway and/or future retirement spot. On the other hand, you can use it as an investment property to generate income. 

Potential for lower property costs

If you live in an area with high real estate prices, an out-of-state market may offer more affordable homes so you can move without stretching your budget.

Access to growing markets

Some cities may have stronger job growth, population increases or rental demand, which can lead to a higher potential returns on investment (ROI).

Opportunity to diversify your portfolio

By investing in different areas, you can mitigate risk potential. If one market underperforms, your investment in another state may help balance your overall returns.

Possible tax benefits

Certain states offer tax incentives or investor-friendly regulations, which can improve your bottom line or make property management easier. A tax professional should be consulted. 

Cons

Limited local knowledge

Without first-hand experience, it’s difficult to assess a variety of factors. In terms of lifestyle and cost of living, you have to research neighborhood trends, school quality or future development. Real estate laws and tax rates also vary state by state, which can lead to compliance issues or surprise costs if you’re not careful. Finally, it can be challenging to source local trustworthy agents, contractors and property managers. 

Higher upfront and ongoing costs

If you plan to see the property in person and/or you plan on using it as a secondary home or investment property, you have to factor in traveling expenses.

Risks when buying sight unseen

Purchasing a home without seeing it in person increases the risk of hidden problems or overpaying for a home that doesn’t meet your expectations.

Harder to navigate from a distance

Handling repairs and maintenance is more challenging when you’re not local. And if you’re planning on using the home as a rental property, it can be challenging to deal with tenants from afar. In that case, it may be wise to hire a property manager, which can add costs and requires more vetting. 

Common mistakes to avoid when buying a house out of state

Common pitfalls when buying a home in another state typically stem from lack of knowledge and due diligence. These can include:

It’s important to approach the process with realistic expectations and careful planning. Rushing decisions or relying solely on information you found online may lead to overlooking details that can significantly impact your finances. Take time to research the market, evaluate your financial situation and find trusted local professionals to ensure the homebuying process goes more smoothly. 

When you’re ready to buy a house in another state

1. Start the mortgage preapproval process

Research multiple mortgage lenders licensed in your new state to evaluate their loan terms. Lenders can help you decide which type of loan fits your financial situation, such as a conventional mortgage or a government-backed loan like a U.S. Department of Veterans Affairs (VA) loan. Be sure to review factors such as the interest rate and any associated fees. 

2. Submit an offer

Once you’ve found the right home, contact your real estate agent to make an offer. Depending on where you plan to live, the housing market can be competitive, so it’s important to be ready to make an offer. The proposed purchase agreement will include the offer price, as well as earnest money, contingencies and expiration date.

Earnest money: Earnest money refers to the deposit (typically 1–3% of the purchase price) that’s often placed in an escrow account and then applied to your closing costs or down payment. 

Contingencies: Contingencies are conditions that need to be met before the house is purchased. This can include a home inspection, financing, an appraisal or a home sale clause if you plan on selling your current home. Your real estate agent can help you decide which conditions are appropriate based on the local market.

Expiration date: The expiration date declares the expiration of the offer (ideally within 24 hours) along with a proposed closing date. In some markets, you may be able to request that your offer remain confidential, but this isn’t guaranteed. 

3. Schedule a home inspection and appraisal

Before closing, you must schedule a home inspection if it’s listed as a contingency. Even if it’s not, it’s smart to consider an inspection, especially when you’re buying a house in another state. 

This process assesses the property’s condition to reveal any potential repairs needed. Sometimes, inspections can uncover issues that can either delay the purchase timeline or cause a buyer to reconsider. If you’re unable to attend the inspection, your agent can do so in your place and schedule time to review the findings with you. As the prospective homebuyer, you’re responsible for the cost, which depends on the age, size and location of the home. 

Your lender may also require a home appraisal to determine the property’s fair market value. Your agent may guide you on your target specific state’s practices.

4. Close on your new home

If the seller accepts your offer and contingencies are resolved, you’ll enter the closing phase. The closing process typically takes 30–60 days to complete, but this depends on your lender, state regulations and the terms of your contract. At this point, you can begin finalizing your move and setting a date. Remote closings, also referred to as an “eClosing,” may be available.

During a remote closing, you’ll submit notarized documents online and verify your identity with a notary by video using your ID. Because you’ll pay closing costs through a secure wire transfer, it may be wise to contact your settlement or title company to get detailed instructions on how they work. Finally, ensure you have homeowners insurance in place before you finalize the purchase.

How to buy a house out of state FAQs

Can you live in one state and buy a home in another?

Yes, you can live in one state and buy a home in another. Each location has its own real estate laws, associated taxes, closing costs and inspection and appraisal requirements. So, it’s important to work with a trusted real estate agent to navigate the process with confidence.

Is it hard to buy another house out of state?

Buying a house out of state involves careful planning and working with an experienced real estate agent. It can be worthwhile depending on your personal finances and goals. Whether you’re looking for a second home, an investment property or you want to sell your current home and move for personal or professional reasons, buying property in another state might be right for you. Evaluate your finances and the location’s cost of living to determine if buying another property is a reasonable purchase and/or if moving to your desired location makes sense.

Can I get a mortgage for a house out of state?

Yes, you can get a mortgage for a house out of state if you meet your lender’s preapproval requirements. You must meet certain requirements related to your income, credit score, debt-to-income (DTI) ratio and more specifications to qualify for a mortgage.

Can you take out a second home mortgage to buy a house out of state?

Yes, you can take out a second home mortgage to buy a home in another state if you meet lender mortgage preapproval requirements and use the property as a “second home” as stipulated. To meet those requirements, you have to own the property, live there part-time and you can’t use the property to generate income by renting it out.

In summary

As you consider buying a house in another state, know that with the right preparation and a trusted team, it can be a rewarding experience. Taking the time to research the specifics of your new location—such as the local housing market, cost of living and culture—with a knowledgeable real estate agent can help you make an informed purchase with confidence.