• Income: Your gross income—which is what you earn before taxes and other deductions—is generally used to determine qualification, not net income, which is your “take-home” pay. Base pay, overtime, bonuses, commission, and any other type of income may also be considered.

• Employment: Steady employment improves your ability to pay your mortgage, and therefore, is an important qualifier. If you’ve experienced gaps in employment in the last year or two like many have due to the pandemic, talk to your lender about your options.

• Credit: Credit history and credit score are significant to whether you may qualify and what terms may be available to you. Many loan programs require a minimum credit score. Also, you may be more likely  to have access to lower interest rates if you have a strong credit history and credit score.

• Savings: It’s ideal to show that you have two to three months of mortgage payments saved in the event that you are unable to make your payment. In addition, you’ll need money saved to pay for other costs associated with buying a home such as the earnest money deposit, (which is separate from the down payment), appraisal, and other potential expenses.

• Ratios: Lenders use two types of debt-to-income ratios to determine the loan amount you may afford based on your gross monthly income. The first is the percentage of your monthly income that can be used to pay your mortgage payment. The second is the percentage of your gross monthly income that can be used to pay debts including your mortgage, HOA payments, credit cards, auto loans, student loans, etc.