You might think you're ready to buy a home, and maybe you are. But before you start the process, make sure. Buying a house is a huge investment.

Your first consideration is whether you can even afford a mortgage at this time, and if you can, you need to know how much you can spend. A good rule of thumb is that your mortgage payment should not exceed 28 percent of your gross income.

It's always best to keep the percentage of your income spent on a mortgage as low as possible, despite what a lender tries to tell you

1 A High Credit Score

The higher your credit score, the better the interest rate you'll get on a loan. You can view your credit report at for free. If there is inaccurate information on it, notify the credit bureau because wrong information could be falsely lowering your score.

You can see your actual score by paying a nominal fee to the credit bureaus. You'll probably need a minimum score of 640 to qualify for a loan. You need 750 and up to get the best rates.

A High Credit Score

2 A Mortgage Payment Calculator

A mortgage calculator takes all the guesswork out of what your mortgage payment will be. You first enter your mortgage amount. This is the price of the home minus your down payment. You then decide the length of the mortgage; 30 years is typical. You then put into the calculator your interest rate and the taxes you'll pay for your county

If you gross $80,000 a year, for example, you don't want to pay more than 28 percent of that, or $1,866 a month.

A Mortgage Payment Calculator

3 Cash

You need money for a down payment. The traditional 20 percent down payment is a good idea. If you can put that much down, you don't need to pay private mortgage insurance. And many mortgage lenders won't approve your loan unless you put down 20 percent.

You also need money for closing costs, which are fees from third parties associated with the home buying transaction. A loan origination fee, a home inspection fee and attorney fees are part of closing costs


4 A Job

You need to have a job and provide proof of income to get a mortgage. Lenders will ask to see your job history for the past two years. If there was a gap during that time when you weren't working, you need to explain why.

You typically need to show the lender your pay stubs for the past 30 days, your tax returns for the past two years and two months' worth of bank statements.

A Job

5 A Low Debt-To-Income Ratio

You can determine your debt-to-income ratio by adding up all your monthly debt and dividing that figure with your gross monthly income. Be prepared to share this information with your lender. Lenders need that information to determine whether to approve your loan.

Typically, lenders want you to have a debt-to-income ratio of no more than 43 percent to approve you for a mortgage

A Low Debt-To-Income Ratio

A Final Consideration

If you've determined that you are ready to buy a home, you have another important consideration: how long you think you'll live there.

You need to be prepared to stay put for at least five years (10 is better) to avoid losing money on the transaction. Closing costs, for example, can be thousands of dollars. Plus, you typically pay more in interest the first few years of home ownership, and that's money that doesn't go toward equity in the home