Before you begin the search for your dream home, decide how much you can comfortably spend. Mortgage lenders most often will take into consideration all of the following:
- The size of your down payment
- Your job stability
- Existing debts
- Credit references and,
- Payment history.
Knowing your credit status and how credit agencies rate your credit also may be a deciding factor, especially when you begin talking to lenders. There are three main credit-reporting agencies that will, for a small fee, send you the most current credit report on file.
Lenders usually use the following two qualifying guidelines to decide how much of a loan you can manage:
- Your monthly housing expenses – mortgage payment, property taxes, insurance, etc. These expenses should total no more than 28 percent of your monthly gross income.
- Your monthly living expenses and any long-term debts – utilities, car and school loan, child support, health and car insurance, etc. These expenses should be no more than 36 percent of your monthly gross income.