• You can use our online prequalification tool to connect with a loan officer and find out approximately how much you can borrow before you start shopping for a house.
• Once you have that number, you can provide more information and allow your loan officer to run your credit report to verify your assets and income.
• Your loan officer can also help you obtain a complete written credit approval, subject to an appraisal, before you make an offer on a house.

Keep in mind that there’s a difference between being preapproved and prequalified.

When you’re prequalified, you’ve given your mortgage lender all the basic info they need to help you determine what loan program and what amount you may prequalify for. When you’re preapproved, your lender will have collected the necessary documents and verified your information to move the loan forward to underwriting and approval.

Prequalification can be done easily, quickly, and online. To take the next step and to get preapproved, you may be asked for:

• Tax returns and W-2 forms from the most recent two years.
• Bank/asset statements from the most recent two months.
• Paystubs from the last 30 days.
• Valid photo ID.

But remember, by furnishing any and/or all of this documentation, you are in no way obligated to accept the terms and conditions of the mortgage offered, nor do you have to provide these documents to receive a Loan Estimate (LE).

• Don’t start shopping for a new home until you’ve been prequalified.
• Don’t pack or ship any important documents, such as tax returns, bank statements, paystubs, and W-2s.

Prequalifying for your home loan before you begin shopping for a house can save you hours of unneeded stress and heartache. When you know how much house you can afford in advance, you can meet with your realtor, well-informed and ready to make an educated buy. In eyes of a seller, a prequalified homebuyer also appears more motivated.

Likewise, holding on to your paystubs, bank statements, and tax returns can make a speedy prequalification even speedier. To further grease the wheels and keep your loan process moving, make all your bill payments on time. It also helps to have a paper trail of any large deposits you make, as well as to notify your loan officer directly if you plan to use a down payment gift from your family.

• Don’t start shopping for a new home until you’ve been prequalified.
• Don’t pack or ship any important documents, such as tax returns, bank statements, paystubs, and W-2s.

Prequalifying for your home loan before you begin shopping for a house can save you hours of unneeded stress and heartache. When you know how much house you can afford in advance, you can meet with your realtor, well-informed and ready to make an educated buy. In eyes of a seller, a prequalified homebuyer also appears more motivated.

Likewise, holding on to your paystubs, bank statements, and tax returns can make a speedy prequalification even speedier. To further grease the wheels and keep your loan process moving, make all your bill payments on time. It also helps to have a paper trail of any large deposits you make, as well as to notify your loan officer directly if you plan to use a down payment gift from your family.

How can you keep your credit clear while your new home loan is in the works? Don’t do this:

• Apply for a new credit card, auto loan, or other types of credit.
• Co-sign a loan with someone.
• Change jobs, become self-employed, or quit your job.
• Skip payments on existing credit accounts, utility bills, or loans.
• Charge up your existing credit on big-ticket items, like furnishings for a new house.

If you think any of these don’ts are musts, talk to your loan officer before you take action. They can help you figure out what to do so that your mortgage loan is the least negatively affected.

• Income ratio: Your total monthly housing expense divided by your pre-tax monthly income.
• Debt ratio: Your total monthly housing expense plus any recurring debts, i.e., car payments, monthly minimum credit card payments, and other loan payments, divided by your monthly income.
• Standard loan underwriting guidelines suggest a max 28 percent income ratio and 36 percent debt ratio, which may vary based on personal finances, loan program, and down payment.

While not taking on any debt and paying for everything with cash seems like a logical choice if you feel you can’t afford your lifestyle, no credit also means bad credit in the eyes of a lender. There’s bound to be a time when you can’t buy something with cash, like buying a house (in most cases). So, we recommend opening at least three credit card accounts and making occasional purchases.

To manage your debt and maintain healthy credit, keep credit card balances to less than 30 percent of your credit limit. Also, don’t close long-term credit lines, even if they’re not being used. Your longest-standing credit card account might be a huge contributor to your credit score health — and the mortgage rate you qualify for.

• Cash reserves: The extra funds available to you after your loan closes.
• These funds reflect your ability to make monthly mortgage payments, and different loan programs may have different cash reserve requirements.

To estimate your ability to pay your monthly mortgage, we recommend setting aside about 28 percent of your monthly income. This number factors into your debt-to-income ratio, mentioned above.

For many people, any number between 25 and 32 percent of your income is manageable. But, relying on a higher percentage of your monthly income could put you at risk if you have a big financial change, like rising insurance costs or loss of employment.