One of the first steps to purchasing a home is to determine how much you can afford. You will begin by contacting your local bank or lending institution. Here you will tell the bank that you are interested in purchasing a home and would like to get pre-approved. They will ask to run your credit, verify income and check the background of your finances. 

Some items the lender may ask of you:

• Provide prior two years of tax returns
• Provide most recent bank statements
• Provide your most recent pay stubs
• Run your credit report

Your purchasing power is determined by how much of a monthly payment you can afford. They will look at your monthly debt obligations (min credit card payments, car payment, student loans, etc..) to your monthly income. Some other very important items to consider are your credit score, income, and amount of cash available for the down payment.

Typical questions for your loan officer:

• What is the interest rate?
• What are your estimated closing costs?
• How long is a typical closing?
• What type of loan do I qualify for? (Conventional, FHA, VA, FHA 203K Rehab)

Once the lender has completed their pre-approval process, they will generate a pre-approval letter outlining the terms of the loan. This will include your max purchase price, amount of down payment, type of loan, and interest rate. This letter will be emailed to you via a PDF and will have to be submitted with any written offers. It is a good idea to email a copy of your letter to your Realtor.