Get mortgage ready

A lender checks four things before they say yes to a mortgage. These are steady income, climbing credit, a low debt load, and cash in the bank. Build all four and you're on the path to success.

A lender wants proof you have consistent income. The rule of thumb is about 2 years in the same line of work.

Two years in the same field counts, and it does not have to be the same job. Job changes inside the same line of work are fine. What worries a lender is unexplained gaps and long stretches with no work and no reasons.

Make sure you are keeping track of your documents while prepping. Keep every pay stub and your last two tax returns somewhere safe. Side income counts too, but only when you can document it. Gig work like Uber, doordash, flex count and so do cash jobs as long as you have the right documentation.

Your credit score is a number from 300 to 850 that tells a lender how you have handled borrowed money. For a home loan, you want a credit score in mid 600s and above for the best rates and opportunities.

DTI stands for debt to income, and it is just like it sounds. The amount of debt you have relative to your income. Add up your monthly debt payments and divide by your monthly income to calculate.

Lenders like to see the DTI under about 43 percent. This is when they trust you can carry a house payment on top of what you already owe. Debt payments means set monthly amounts you owe: a car loan, credit card minimums, a student loan. Rent and groceries are bills, but they do not count as debt payments in this math.

The less debt you carry, the more house your income can hold. You also get more room to breathe after you buy. Pay a card down before you shop for a home. It is one of the fastest ways to lift how much a lender will trust you with.

Buying a home takes three piles of cash. Count them one at a time.

First, the down payment: the money you put in up front. For a first home this is often 3 to 5 percent of the price, never only 20.

Second, the closing costs: the fees to finish the deal, from the lender, the title company, and taxes. Plan on about 3 percent of the price.

Third, the pile people forget: your emergency savings have to stay alive after you buy. Do not drain them to close. The day you own a home is the day surprises get more expensive, a dead water heater, a leaking roof. You want cash still standing when they come.

So the real target is down payment plus closing costs plus savings that survive the purchase. Save toward all three, and keep that third pile whole.

A pre-approval is a free letter from a lender that says what they would lend you. Think of it as your shopping tool. It tells you your real price range before you spend a single Saturday looking.

Get it before you fall for a house. Walk into a place you love with no letter and you are guessing. Walk in with one and you know exactly what you can carry. You never lose a weekend on something out of reach.

The preapproval does not commit you. The letter does not tie you to that lender or that loan. You can shop it around, and you can walk away. It works for you, and it costs nothing.

You do not have to figure any of this out alone. A free HUD-approved housing counselor may be able to assist. You can find one near you at hud.gov/counseling.