Mortgage companies are looking for customers whose housing costs will probably be around 30% of their household income. This does not mean that you will be turned down for a home loan if you are at 40% or even 50%.

Clean credit beats DIR? If you are very young and upwardly mobile, or live in New York City for example, it is possible that your debt to income ratio will always be above recommended threshold. Most mortgage financing institutions will work with you to provide an appropriate loan product or an interest rate that will qualify you for a home loan.

The cleaner your credit, they more flexible mortgage lenders will be when considering your entire financial profile. A large debt load with a consistent payment history can be better than a small debt to income ratio with an imperfect or poor credit history.

Do your homework and keep an eye on spending habits. In addition, use a good online mortgage calculator to ensure that you won’t trade your future home ownership dreams for impulse purchases and credit card debt.

You also need money for home maintenance and repairs There are also home maintenance issues that are not included when you qualify for a home loan. If you live in a part of country that’s particularly hot or cold, your heating and air conditioning bill could easily add up to a couple of hundred dollars per month.

Your home loan package does not include budgeting for lawnmowers, landscaping and fixing broken windows. Some of these expenses can be put off until a later day, but some of them will require your immediate attention once you move into your home.

Know your spending habits to gauge how much debt you can carry If you are used to living paycheck to paycheck and generally not taking care of your budget as a renter, you will probably carry over some of same habits to your new home.

The best way to avoid a financial disaster is to make your home loan a part of your financial life instead of centerpiece of your financial life. If you are stressed out about money issues from very first move in, it is unlikely that you will enjoy your new home or anything else in your life for a long time.