First tip, start saving your money
for the down payment and closing costs. You will need at least 5% of the home purchase price for your down payment, and another 5-6% of the home purchase price for closing costs.

Set up a spending plan where you can set aside savings:

Link to our Budget Planning Module at our parent site:
www.SayLending.com

We have more information on costs: view the costs of a mortgage

• How to increase savings?
  (links jump to our parent site at www.SayLending.com)
  
  
  1. Establish a monthly budget: download budget forms
  2. Reduce your monthly costs: view lowering your bills
  3. Increase your income: view income building ideas

Note that the IRS allows first-time home buyers to use retirement savings for purchasing their first home:

If you qualify, additional sources of money for purchasing a home can come from:

1. federal government programs: link to HUD
2. State or local government agencies: view your state
3. government agencies: FHA / VHA / RHA
4. employers and/or private foundations
5. family members donating a "gift":
   
   usually the mortgage lender requires a gift letter verifying that the gift is not a loan and that you do not have to repay it.

Depending on your financial status, you may qualify for mortgage loan products that require little or no down payment:

Review mortgage product: zero-down mortgages
Review mortgage product: government loans

• This might be a good time to review mortgage loan options that are available:
  
  Review mortgage product: fixed-rate mortgages
  Review mortgage product: interest-only loans
  Review mortgage product: adjustable rate mortgages
  Review mortgage product: hybrid rate mortgages
  Review mortgage product: balloons, RIMs, other types

Depending on the market, you might be able to afford a home mortgage if interest rates are low and dropping.

Keep your eye on the movement of interest rates and be ready to start the process your application if interest rates meet financial hurdles.

View how to monitor rates:
click here mortgage interest rates

This will be a good time to run some numbers to see how much you can afford:
click here for mortgage calculators

You will need to establish good credit in order to qualify for home mortgage financing.

Link to our affiliated Credit Management Center on building and sustaining good credit.

Topics covered:

• establishing good credit
• maintaining good credit
• repairing your credit
• checking your credit

Make sure that you have a clean credit report prior to submitting your mortgage application. It will prevent delays and non-approvals:

We have some valuable quick notes for review:

what's in your credit report
checking your credit report
repairing your credit report

Review mortgage loan products for individuals with less-than-good credit: click here for a-minus mortgage loans

• Note: the higher your credit score, the lower your interest rate. Lower interest rates may put you in the affordability range.

Lenders require mortgage applicants to be within certain "housing" and "debt-to-income" ratios.

Run your numbers:
link to calculate your ratios

Some lenders will increase both the housing ratio and debt-to-income ratio for qualified applicants: view getting qualified for a mortgage loan

If you have too much debt — meaning your "debt-to-income" ratio is above the minimum threshold — you will need to reduce or consolidate your debts prior to submitting your mortgage application:

(links jump to our debt management module at: www.sayconsolidate.com)

Guides to reduce or consolidate: credit card debt
Guides to reduce or consolidate: personal loan debt
Guides to reduce or consolidate: student loan debt

Use the calculator below to estimate how much home you can afford.

Note that this calculation does not take in the cost of your escrow payment. See Understanding the True Cost of a Mortgage

Monthly Affordability Calculation
Enter the amount you want to pay per month:
Enter the number of months to repay:
Enter your estimated loan rate (APR):	%
	*
Loan Amount to Borrow:
* Calculations are based upon the assumptions you entered. Please note that rounding errors can make a small difference in calculations. The circumstances surrounding your credit and loan qualifications may result in different calculations.

Before you submit your mortgage application, review these steps about the mortgage lending process.

It will give you understanding how the process works so that you can negotiate the best terms for your financial needs:

click here for our quick review: 12-step mortgage lending process