In order to propose to Cove at the end of Step 3 you need to have the Step 3 DLC, specifically you need to have played the Reflection moment. During that moment ask Cove what his views on marriage are. Just everytime the word marriage comes up you need to hit that option and be positive about it.
And yes, you need to be in love. Don't forget to choose at the start of Step 3 to tell Lee that you're in love with him but haven't admitted it yet.