Most of the time, it all boils down to your personal budget, monetary discipline, and your professional development.

If homeownership is something you’re aiming for, then here are some targets you can work toward.

Credit

Assets

Debts

Income

I added a “shortcuts” section. But if you can’t afford the mortgage payment, don’t use it to make yourself ‘house-poor’. 

The shortcuts sections are ideas on getting approved, assuming you can afford the new mortgage if you don’t fit in mortgage-underwriting’s box of rules.

Credit

Lenders don’t need perfect credit, but they do need to see responsibility and consistency.

Utilization

High credit card balances tank scores fast. Getting everything under 30 percent of the limit is the quickest way to see a jump.

On-time payments

Even one late payment in the last 12 months can hurt automated underwriting results. Set every bill on autopay for the minimum due.

Time

A lot of credit improvement is just letting positive history age.

Shortcuts

No Credit

Some mortgages don’t require a credit score at all. They build a “non-traditional” credit history instead. Here’s a post on that.

Authorized user

Getting added as an authorized user to a long-standing, low-balance card can help you instantly. Just confirm the card has perfect payment history.

Debt relief

Debt relief companies are not credit repair, and many actually hurt your profile.

Low credit

Here’s a post on how to get a mortgage with the low credit score

Assets

You need more than the down payment. Lenders also look at closing costs and whether you have a cushion once you move in.

Down payment

This can be as low as 3 percent on conventional loans or 3.5 percent on FHA.

Closing costs

Usually 2 to 4 percent of the loan amount. This covers lender fees, title fees, prepaid taxes/insurance, and escrow funding. Here’s a post on closing costs.

House-repair fund

Make sure to budget for home repairs. Even new homes run into issues and a lot of builders only give a warranty for 12 months.

Shortcuts

Down payment assistance

Down payment assistance programs. Here’s a link to a guide for all 50 states.

Gift money

A gift from family really depends on family, but is definitely a shortcut to saving.

Borrowing from your 401k or retirement account

You might be able to pull money from your 401k for a home purchase without penalty

Seller-paid closing costs

In a buyer’s market (houses having a hard time selling) sellers may be having a hard time selling and may be willing to pay for your mortgage’s closing costs.

Income

The cleaner the income history, the easier the loan.

Salary

W-2 salaried income is the easiest for lenders to use.

Hourly

Hourly with a guaranteed # of hours per week is also easy for underwriting.

Variable income

Commission, bonuses, overtime, and variable hours (inconsistent hours per week) usually need a 2-year documented history to count.

Self-employment

Also requires two years of tax returns.

Shortcuts

Get a salary instead

Negotiating with your employer for more base salary instead of bonuses makes qualifying easier

One year of taxes

If you’ve been in the same line of work for 5+ years as a W-2 employee, some lenders allow qualifying with just one year of tax returns on your self employment income

Consider a different loan program.

Here's a post on loan programs that allow different methods of calculating income

Debts

Debt doesn’t automatically kill a mortgage, but the payment amounts matter.

Pay off the highest payment-to-balance ratio first

This gives you the fastest boost to your debt-to-income ratio. Attach the debt that gives you the best return on your cash flow.

Don’t take on new debts

A new car loan could be a home-killer.

Student loans

Even if they’re deferred, underwriting counts 0.5% - 1% of your student loan balances against your monthly debt to income ratio. Consider this as you calculate your debt-to-income ratio. Here’s a post on student loans.

Shortcuts

Omitting a debt

If you co-signed a debt but the other person has made the payments for 12+ months, you can usually omit it from your mortgage profile

Structure your student loans strategically

If you earn $100k–$150k per year and owe over $100k in student loans, talk with a student loan tutor. You may qualify for forgiveness programs or income-driven plans that drastically reduce your calculated mortgage payment, and in some cases omit the debt entirely

Get a co-signer

A co-signer that has a good debt to income ratio will likely improve your mortgage application’s debt-to-income ratio.

Restructure your debt

Use any equity you might have in your car to pay off high interest loans. 

Use a personal loan to pay off higher interest credit cards (and shred/delete that card from online shopping while you’re at it)

Bonus strategies

Get the lowest rate on your mortgage.

Here’s a full post on how to get the lowest interest rate possible.

Make a good offer on the home

Here’s a post on gauging what kind of offer you should make on a home.

Use a first-time buyer guide

Use this guide which walks you through buying a home from start to finish 

I hope this helped!

Sam