Buying a home is a major milestone, but for many people, the idea of qualifying for a mortgage can feel overwhelming—especially if you’re concerned about your credit score, income, or debt. The good news? You don’t have to be perfect to get approved. With a bit of preparation and guidance, you can become mortgage-ready sooner than you think. Here are five smart steps to help you prepare—even if you're worried you won’t qualify right now.

1. Know Where You Stand Financially

Before applying for a mortgage, it’s crucial to get a clear picture of your current financial situation. Start by checking your credit report from all three major bureaus (Equifax, Experian, and TransUnion). You're entitled to a free report annually at AnnualCreditReport.com. Review your credit score, payment history, debt levels, and any potential errors. Even if your credit score isn’t ideal, catching mistakes or starting to improve it now gives you a head start.

In addition, calculate your debt-to-income (DTI) ratio—a key figure lenders use to evaluate your loan application. Ideally, your DTI should be below 43%, but some lenders allow for higher ratios depending on other factors.

2. Set a Realistic Budget

Understanding how much house you can truly afford is essential. A general rule of thumb is to spend no more than 28% of your gross monthly income on housing costs. Use mortgage calculators to experiment with different price points, down payments, and interest rates. Don’t forget to account for property taxes, homeowners insurance, and maintenance costs. Having a solid budget in place helps guide your home search and demonstrates financial readiness to lenders.

Discover: The Hidden Costs of Homeownership: What Buyers Often Overlook

3. Start Saving for Your Down Payment and Closing Costs

While some loan programs require as little as 3% down, the more you can save upfront, the better. A larger down payment can lower your monthly payments and reduce private mortgage insurance (PMI) costs. Besides the down payment, be prepared for closing costs—which can range from 2% to 5% of the home’s purchase price. Start setting aside money in a dedicated savings account. Even small, consistent contributions can add up over time.

Read more: How to Save for a Down Payment for a House

4. Pay Down Debt and Avoid New Credit

Lenders look closely at your existing debts and how well you manage them. If possible, work on paying off credit cards, auto loans, or other revolving debts. This not only improves your DTI ratio but can also boost your credit score. Additionally, avoid opening new credit accounts or making major purchases (like a new car) in the months leading up to your mortgage application. New credit inquiries or sudden changes in debt can raise red flags.

5. Get Pre-Approved and Talk to a Mortgage Professional

Once you’ve taken the steps above, consider getting pre-approved for a mortgage. This process involves a lender reviewing your finances and giving you a conditional approval letter. It’s not a guarantee, but it shows sellers you’re serious—and gives you a clearer sense of your price range. A trusted mortgage advisor can also help you explore options like FHA loans or down payment assistance programs if your situation isn’t conventional.

Read more: The Top 5 Benefits of Getting Preapproved Before House Hunting

Final Thought

Even if your financial picture isn’t perfect, don’t count yourself out of homeownership. With preparation, the right guidance, and persistence, you can take meaningful steps toward getting mortgage-ready—no matter where you’re starting from.