Here are the steps you need to take to show the lender that you have the ability to repay the mortgage.
Show proof of steady income, including your W2 (for employed) and tax returns, bank statements, and other documents regarding your financial status.
Show a satisfactory credit history, including a clean credit report and good-excellent Credit Score. Lender’s will pull your credit report and a FICO Credit Score (unique to lenders).
Keep your Debt to Income ratio (DTI) down. Make sure that you have sufficient funds to cover your monthly housing and debt expenses. This includes your mortgage payments, property tax, homeowner insurance as well as your monthly debt payments. A recommended debt to income ratio (DTI) is about 36% and 20-25% for your household expenses.
Down-payment of 20% or more will save you paying mortgage insurance for conventional loans. However, you can qualify for a conventional loan or a FHA loan with a down-payment as little as 3-3.5%.