To start, visit an online loan comparison site. I’ve had good experiences with and recommend . There, you’ll complete some basic information, such as:

• Type of loan (purchase, refi, etc.)
• Your contact information
• Information about your credit

After that, the site will come back to you with several loan offers from different banks. Sometimes this is instantaneous, but often it takes 12-48 hours. Sometimes, a representative will call you to obtain some additional information for processing your quotes.

Once you receive the loan offers, you’re under no obligation to do anything. If they don’t look good, keep shopping. You can,of course, proceed with any of the offers to finalize your loan or pre-approval.

Get no-obligation home loan quotes now at .

The rule of 28: The golden rule in determining how much you can afford to spend on your home is that your monthly housing payments should not exceed 28% of your gross monthly income (e.g., your income before taxes are taken out). For example, if you and a spouse have a combined annual income of $80,000, your mortgage payment shouldn’t be more than $1,866.

The rule of 32: The next rule stipulates that your total housing payments (including the mortgage, insurance, association fees, and property taxes) should not exceed 32% of your gross monthly income. That means for the same couple, their total monthly housing payment cannot be more than $2,133 per month.

The rule of 40: Finally, your total debt payments (including credit cards, car payments, or student loans) should not exceed 40% of your gross monthly income. In this example, this leaves only $533 for things like car payments and minimum credit card payments. If your debt load is higher than this number (8%) of your gross monthly income, you should only take on a mortgage that will make your total debt load equal 40% or less of your monthly income.

Determine your mortgage amount: Your interest rate will determine the actual price range you can afford. You can, however, estimate your budget. Assuming an average 6% fixed interest rate on a 30 year loan, your mortgage payments will be about $55 for every $10,000 borrowed.

• $1,866 / $65 = 28.71
• 28.71 x $10,000 = $287,708 (Your maximum mortgage amount)

Factor in your down payment: Hopefully you have a down payment of at least 10% up to 20% of your future home’s purchase price. Add that amount to your maximum mortgage amount, and you have a good idea of the most you can spend on a home. Note: If you put less than 20% down, you will be required to pay private mortgage insurance (PMI), which will increase your non-mortgage housing expense and decrease how much house you can afford.

Ready to go house-hunting? Save time, money, and aggravation by lining up your financing first with a mortgage pre-approval. Read my post on how to get no-obligation mortgage quotes online.

Joint mortgage application basics

It seems reasonable enough: If his credit is bad but hers is good, why not just apply for a mortgage using only her good credit score? The trouble is, if you submit only one partner’s information on the mortgage application, the mortgage underwriters will only consider that partner’s income and assets in determining whether to approve the loan. Usually, couples count on their combined income and assets to afford a home.

If the partner with good credit cannot afford the loan on his or her own, you’ll need to apply using both of your scores. That means a more difficult road to approval and much less favorable loan terms.

Steps to take if his credit is good and hers is bad

Talk about your credit now. The last thing you want is for your husband or wife to find out from a mortgage broker that you have bad credit. Remember, financial differences alone rarely imperil relationships, but a couple’s failure to communicate about their finances can. In an older post, I asked: Is It Okay to Get Married in Debt? I think it is, as long both partners are continually honest and communicative about money.

Check your latest credit scores. Again, talk about what you find. Why is one partner’s credit poor? Is it the result of a past problem or a pattern of financial negligence? For a few dollars a month, a service like Experian Triple Advantage provides you with credit score updates so you can see if your credit is improving.

Set realistic expectations. In today’s times, it may be impossible for somebody with poor credit to get a mortgage alone. Together, with one good credit score and one poor one, you still have a shot at a mortgage approval, but it won’t be easy. Expect to deal with several lenders and to spend weeks waiting. You can also expect to pay a lot more in interest. Remember that this will also reduce the amount of house you can afford.

Improve your credit. You can usually improve your credit by a least a moderate margin in between six to eight months. Avoid any late payments, refrain from applying for new credit (or closing any credit accounts), and pay down any credit card accounts as much as possible.

If you apply alone

Despite the disadvantages, sometimes it makes sense for the partner with good credit to apply for the mortgage alone. (Perhaps that person also has a substantially higher income). The non-applying partner can also transfer any assets into the applying partner’s name, but any income will still be off limit.

Remember, however, that the deed of the house will be in the name of the partner whose name is on the mortgage—only. For married couples, this typically isn’t a problem. Should the owning spouse pass away, the home will go to the surviving spouse.

If you’re not married, think long and hard about how you want to buy a home together…especially if one partner is applying for the mortgage but expects the other partner to help pay. The partner that signs the loan owns the entire home in the eyes of the law—even if the other partner is paying 50% each month.

In this case, either determine that the non-owning partner is simply renting from the owning partner, or enlist an attorney to create a contract outlining how equity will be credited to both the owning and non-owning partner in the event of a sale or separation.

Ready to go house-hunting? Save time, money, and aggravation by lining up your financing first with a mortgage pre-approval. Read my post on how to get no-obligation mortgage quotes online.

Have you gotten a mortgage with a spouse who had credit much better—or worse—than yours? What did you do?

Stagnating real estate prices mean bargains abound for home shoppers, and the dearth of people applying for mortgages means embattled banks will fight tooth and nail to underwrite a well-qualified borrower. Of course, that’s just the problem. These days, fewer people will qualify for a mortgage than ever before.

If you want to take advantage of the soft times in real estate—and the $7,500 first-time home buyer tax credit—and mortgage lending to score a deal on your first home, you’ll probably need the following:

• Good to spotless credit (FICO of 700 or more)
• A job for at least two years (longer is better)
• Less than 20% debt-to-income ratio
• A down payment of at least 10%, preferably 20%

If you meet those criteria, why are you still reading this? Go out and buy a home! For the rest of us—we’ll just have to keep plugging away at our financial stats and wait for the mortgage market to recover from its recent injuries.

The tax credit is part of recently-enacted legislation to help the nation recover from the recent mortgage crisis. Basically, the first-time home buyer tax credit is designed to keep Americans buying homes. Not so much for our sake, but for the sakes of builders, real estate agents, and mortgage lenders who earn their livelihood from home sales.

Still, this tax credit, along with soft real estate prices, make it an excellent time to buy a first home.

How does the tax credit work?

The tax credit is basically an interest-free government loan of 10% of your home purchase price, to a maximum of $7,500, to help defer the initial costs of buying your first home.

Single taxpayers with incomes up to $75,000 and married couples with incomes up to $150,000 can get the full tax credit, and taxpayers with higher incomes may be eligible for a partial credit.

Taxpayers can claim the credit on their federal tax returns for the year in which the home was purchased. The taxpayers will then repay the credit over the subsequent 15 years of tax returns, interest free.

For more information, the National Association of Home Builders provides some consumer information about the tax credit.

Ready to go house-hunting? Save time, money, and aggravation by lining up your financing first with a mortgage pre-approval. Read my post on how to get no-obligation mortgage quotes online.