1. Develop a household budget - Use receipts to create a budget that reflects your actual
spending habits over the past several months.
This will all you to factor in unexpected expenses, such as auto
repairs, as well as predictable costs such as rent.
2. Reduce your debt - Lenders generally look for a total debt load of no more than 36 percent
of income. This figure includes your
mortgage, which typically ranges between 25 and 28 percent of your net
household income. So you will need to
get your monthly payments on the rest of your installment debt down to between
8 and 10 percent of your net monthly income.
3. Look for ways to save - You probably know how much you spend on rent and utilities
but keep in mind that little expenses add up too. Try writing down everything you spend in one
month; you will probably spot some great ways to save.
4. Increase your income - Now is the time to ask for a raise! If a raise is not an option you may want to
consider taking on a second job to get your income high enough to qualify for
the home you want.
5. Save for a down payment - Designate a certain amount of money that you will put in away
in a savings account every month.
Although it’s possible to get a mortgage with only 5 percent down, or
even less, you should strive to make a 20 percent down payment.
6. Keep your job - While you don’t need to be in the same job forever to qualify for a home
loan, having a job for less than two years may mean you have to pay a higher
interest rate.
7. Establish a good credit history - Get a credit card and make payments by the due date. A good
practice would be to pay off the entire balance promptly.
