Thinking about buying a home? Congratulations! But, unless you have hundreds of thousands of dollars saved up, like most people, you’re probably going to need a mortgage to purchase your dream home.

For many people, the process of getting approved for a mortgage is confusing and nerve-wracking. It doesn’t have to be, though! The following steps can help to calm your nerves and prepare you for a mortgage approval.

Calculate your monthly income and debt.

This first step is very important in preparing yourself to apply for a mortgage. 

You’re going to need to provide no less than two weeks of pay stubs to your potential lender, so make sure that you start keeping track of those. 

If you happen to be self-employed or receive an income that typically fluctuates, it’s likely that the underwriting process will be more complicated. There’s a chance that you’ll need to supplement pay stubs with copies of past tax returns. 

Find out your credit score. 

Your credit score is one of the most important factors that will determine if you’re eligible for a mortgage, and if so, how much you can borrow. Find out your score before you apply so you know where you stand.

Your credit score should ideally be 680 at the very least but preferably over 700. If your credit score is less, you’ll likely need to find a stable cosigner with a high credit score, or you’ll need to take the time to improve your credit before moving forward with your mortgage application. (The lower your credit score, the higher the rate of your mortgage will end up being.)

Definitely avoid applying for new credit in the months leading up to your application. Banks tend to be wary of potential mortgage applicants who pile on new credit to their name. 

Get your credit history in order. 

In addition to your score, lenders also review your credit history. If you make credit card, student loan, car, rent, and any other payments you have on time, your credit history should be good to go for mortgage approval.

You’ll want to make sure that your report is accurate, and that there are no recent derogatory items associated with your credit. 

It might behoove you to subscribe to a service that provides regular credit report monitoring in the months you spend shopping for a new home. This will keep you aware and vigilant of any discrepancies or things that might pop on your report that could negatively affect your mortgage application. 

Figure out what your mortgage budget is

Before endeavoring to apply for a mortgage, you’ll want to make sure you have a good idea of what you can afford as far as buying a new house, but also how much you’re comfortable paying monthly/in the long term for one, too. (These two things are not the same.)

The standard rule-of-thumb is that your total monthly payment toward your home (which includes taxes, insurance, and other fees) should not exceed 35 percent of your gross income. 

Determine how much you’re able to save and contribute toward your down payment

In today’s housing market, you can expect that your lender will require around a 10 percent down payment at the very least toward your home. 

Make sure you’re committed to the maximum amount you’re willing to put toward your down payment before beginning the mortgage approval process. It’s very easy to get pressured into considering more expensive homes than you can afford by real estate agents, amoral mortgage lenders, and even yourself.