Debt issues

Finally, consider your debt load — that is, how much debt you currently have, from credit cards, student loans, a car loan, and so on. Most mortgage lenders want your total monthly debt payments to use no more than 36% of your monthly income — including the mortgage — though there may be some flexibility. This is called your debt-to-income ratio. So if you earn $3,300 a month, you’d probably want no more than $1,188, or 36%, going toward all your debts. And remember, your monthly housing costs will include mortgage principal, interest, taxes, and insurance, sometimes shortened to PITI. No more than 28% of your income is usually the limit for these mortgage-related expenses.

If you haven’t already done so, pay down some debt ahead of time to get your debt-to-income ratio in a good place.

But if you have a spectacular credit history, your mortgage lender might be willing to bend these rules and let you have more debt than it would normally allow.