Perhaps the most important aspect of purchasing a new home is the financing involved, but before you can ever begin to shop for a lender, you may want to take a hard look at your family finances. If you have never developed a budget before, this is a good time to do so. Examine each expense over the course of the last six months, and try to create a realistic budget based on your analysis. This may help you not only get a sense of how much you might have available for a payment as well as different ways you can save for a down payment. While it is possible to get a mortgage with a very small down payment, you can expect better rates and lower long terms costs if you have a higher down payment. Most lenders prefer a 20% down payment.

After you've taken a careful look at your budget and your available down payment, you may also want to look at your current debt. Lenders will look for a total debt load of no more than 36% of income. Since this figure includes your mortgage, which typically ranges between 25 and 28 % of income, you need to get the rest of your installment debt---car loans, student loans, revolving balances on credit cards down to between 8 and 10% of your total income.

In addition to reducing your overall debt load, you should also establish a good credit history. If you don't already have one, get a credit card and make payments by the due date. If possible, pay to off the entire balance every month. It will help to reduce your risk in the eyes of lenders.

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