-
Develop a family budget. Instead of
budgeting what you would like to spend, use
receipts to create a budget for what you
actually spent over the last six months. One
advantage of this approach is that it factors in
unexpected expenses such as car repairs,
illnesses, etc., as well as predictable costs,
such as rent.
-
Reduce your debt. Generally speaking,
lenders look for a total debt load of no more
than 36 percent of income. Since this figure
includes your mortgage, which typically ranges
between 25 and 28 percent of income, you need to
get the rest of your installment debt—car loans,
student loans, revolving balances on credit
cards—down to between 8 and 10 percent of your
total income.
-
Get a handle on expenses. You probably know
how much you spend on rent and utilities, but
little expenses add up. Try writing down
everything you spend for one month. You will
probably see some great ways to save.
-
Increase your income. It may be necessary to
take on a second, part-time job to get your
income at a high enough level to qualify for the
home you want.
-
Save for a down payment. Although it is
possible to get a mortgage with only 5 percent
down—or even less in some cases—you can usually
get a better rate and a lower overall cost if
you put down more. Shoot for saving a 20 percent
down payment.
-
Create a house fund. Do not just plan to
save whatever is left toward a down payment.
Instead, decide on a certain amount a month you
want to save, then put it away as you pay your
monthly bills.
-
Keep your job. While you do not need to be
in the same job forever to qualify, having a job
for less than two years may mean you have to pay
a higher interest rate.
-
Establish a good credit history. Get a
credit card and make payments by the due date.
Do the same for all your other bills. Pay off
the entire balance promptly.
