1: Prepare Your Credit
Mortgage lenders typically require at least 24 months of good credit history in order for you to qualify for a mortgage. It's normally a good idea to have a few credit cards, a few installment loans and a 24-month history of making rent payments on time.
2: Prepare Your Cash Flow
Mortgage lenders typically require less than a 43% debt-to-income ratio in order to qualify for a mortgage. This means that your total monthly debt payments (including the new mortgage payment) should be no more than 43% of your monthly income.
3: Prepare Your Savings
Mortgage lenders typically require you to have a certain amount of savings in reserve in order to qualify for a mortgage. Your savings should be in your account for at least three months in order to qualify, and any large deposits will need to be explained and documented. The amount of the required savings will vary based on the loan program that you choose. However, a good goal is to save enough for a 3%-5% down payment, plus 1-3 months of mortgage payment reserves. For example, if your new mortgage payments will be $1,400 per month, you should probably aim to save approx. $4,200 plus the amount of your down payment.
Of course, each loan program has its own guidelines that may be different than what I've outlined above. That's why it's important to speak to a professional who could help you consider your options and evaluate your specific scenario. Please contact me for further information!
Source: CMPS Institute