 TITLE: First-Time Home Buyers: How to Qualify for Loans, Programs and Grants CONTENT: How to Qualify for a Mortgage Loan\n----------------------------------\nWhether or not you use a first-time homebuyer program to get into your new home, you'll still need to qualify for a mortgage. Here are some steps you can take to be proactive:\n*   **Check your credit reports and scores.** Do this at least three months in advance to give yourself time to address any issues. You can get a free credit report from Experian.\n*   **Check your debt-to-income ratio.**debt-to-income ratio (DTI), calculated by dividing your monthly debt payments by your monthly gross income, tells lenders whether adding a new loan would stretch you too thin. Mortgage lenders use two rules of thumb with your DTI: The first is to keep your monthly housing costs below 28% of your gross income, and the second is to keep your total monthly debt payments below 36% of your gross income.\n*   **Consider your options.** If your credit score is below 620, which is typically what lenders require for conventional mortgage loans, don't fret. It is possible to get a mortgage with bad credit (you can go as low as 500 with 10% down payment on an FHA loan). Just keep in mind that you'll have fewer options and may need to pay a higher interest rate. If you want a better selection of lenders and a lower interest rate, try improving your credit scores before applying for a mortgage.\n*   **Address potential issues.** If your DTI is on the high end or you found something troubling on your credit report, address the concerns immediately. For example, pay down your credit card balances, get caught up on late payments and dispute any errors you find. These actions can take a while to reflect in your credit score, so it's critical that you start working on them as soon as possible. Also, avoid applying for credit cards and other loans leading up to your mortgage application and throughout the mortgage process. END