Before you start your house search, and certainly before you ask for a loan, it would be beneficial to run through the same calculations as a bank lender would to get an accurate idea of how high of a mortgage you and your family can afford. A basic step would be to multiply your total yearly income by three, and that is the amount you could afford in a mortgage. That is only a ball-park figure, however, and not one you want to bank on. A more important figure to know is your discretionary income: how much do you have left over in your monthly budget? Then you will have to calculate how much you would be able to pay in a mortgage, and then still be able to meet tax payments, insurance, upkeep, etc.

Lenders say that paying a mortgage and any other debts should not take up more than 28 percent to 44 percent of your earnings every month. Thus debt payments should use up $880 or less of a monthly income of $2,000, for example. But what you are able to afford is not the entire equation. Credit history matters too.

Someone with a history of late bill payments may have their application denied, or they may be asked to pay a steep down payment or to have a high interest rate. Even late rent payments can count against you. It does not even matter if you had every reason to miss a payment, unfortunately.

Your FICO score, or your credit score, can be provided by Equifax, Experian, or TransUnion to a lender as they go over your application for a loan. On this score will be a record of how consistently you meet your payments on time, how much debt you still have, etc. Your loan application has a higher chance of being accepted the higher your credit score is. Usually speaking, you have to at least have a credit score of 730 if you want your loan application to be accepted.

Once you have done the math for yourself, you can then ask a lender (or a loan broker) do go over the same information. That is, you could request a prequalification letter, which says that an approved loan for a certain amount is probable because of your income and credit score. If you prequalify, this furnishes you with details on the amount you would be able to get from a loan, and it informs you on the down payment and closing costs that you can expect.

If you can, you will want to be further preapproved for a loan that will be sufficient for what you need. This preapproval would show that a lender has said they would want to approve your loan application because they have looked into your credit history and finances for themselves. Now there is no such thing as a guarantee that a loan application will be accepted, but being preapproved is near enough to one. This will look very good to someone who is selling a home. But loan approval is based on more than your financial situation, as a loan being accepted also depends on the property's appraisal, a title report, and more.

For help understanding all the fine print on the conditions of your loan, on a home appraisal, or in any step of the home-buying process, you could find it of great benefit to work with experts, financial experts and legal experts. Whenever you need help with real estate law, do not hesitate to contact a real estate attorney for the assistance that you deserve. Call one today!