1. Do you have a steady reliable source of income and employment, or have you attended an institution for higher education for the last 2 years?
2. Do you have a credit history?
3. Have you prepared a budget and considered the costs associated with owning a home?
4. Do you have money saved for a down payment, closing costs, and/or a reserve account for emergencies?
5. Will your current job or a family member's job change where you live or your income?

Looking at Your Budget, 6 Things to Consider when Creating a Budget:

1. Fixed Expenses: Payments made on fixed expenses are the same amount each month and typically can not be changed. Items such as student loans, vehicle payments, insurance, etc.
2. Variable Expenses: Payments made on variable expenses can change from month to month. Items such as utilities, groceries, dining out, and entertainment expenses.
3. Savings: How much are you, or do you want to be putting away for a rainy day?
4. Retirement: It may seem a long way off, but saving for retirement is important to consider.
5. Additional expenses that owning a home will bring.
6. Tax benefits of owning a home. There may be items you can deduct from your income taxes because you own a home. Consult a tax advisor to see what impact owing a home may have on your overall tax obligations.

Deciding How Much You can Afford:

To get a quick idea of what you can afford to spend, take your annual gross income and multiply it by 2.5. For example, if your annual gross income (before taxes) is $65,000, you may be able to qualify for a $162,500 home. This is just a rough estimate; the actual number will be based on many factors, some of those factors include your debt ratios, credit history, income type, and assets available.

Mortgage Lender Calculations/Guidelines:

Mortgage lenders typically use the following calculations to determine if a home is affordable for you.

• Mortgage Debt Ratio: The combination of your monthly housing payment obligations (principal, interest, taxes, insurance, mortgage insurance, and home owner's association dues) divided by your monthly gross income.
• Total Debt Ratio: The combination of your monthly housing payment obligations and your other debt payments divided by your monthly gross income

Establishing Good Credit:

Your credit report is compiled by three private companies: Equifax, Experian, and TransUnion. These companies sell your credit report to banks and other creditors so that they can use your history. Visit www.annualcreditreport.com to learn how to get a free copy of your credit report(s).

Your credit report includes:

• A list of debts and a history of how you've paid them. This includes credit cards, car loans, and student loans.
• Any bills referred to a collection agency
• Information recorded at the county court house, including judgments and Bankruptcy.
• Any inquiries made about your creditworthiness

In addition your credit score(s) are considered in the evaluation of your credit profile. Your credit score is a single number utilized to help determine how likely you are to repay your debts.

According to FICO, the weight of your score is determined for the following:

• 35% of punctuality in making payments
• 30% the amount of revolving debt owed as compared to the credit limit available
• 15% length of credit history
• 10% types of credit used (installment, credit card, mortgage)
• 10% recent inquires into credit and/or recent credit obtained