Potential borrowers should never go outside their means of income. Own the home don't let the home own you. Just because you qualify for a loan doesn't mean you have to buy. Lenders have greatly loosened their standards and will give borrowers more money than they can afford to repay. Mortgage payments used to be capped at 26-28 percent of the borrowers gross monthly income, but today many lenders let homebuyers borrow up to 33 percent, and some even go as high as 55 percent.

Buying a home is the biggest investment of a borrower's life, so preparing months ahead of time will help immensely. Manage your credit wisely; this will help when qualifying for a loan. Next, have enough money for a down payment. This is the best leverage a borrower can have when buying a home. Finally, keep track of all monthly expenditures; this will give the home buyer a good idea about how much of a monthly mortgage payment they can afford. A good tool of reference is to contact an independent mortgage advisor. These advisors can run scenarios to show borrowers what they can qualify for; most of these consultations are free so take advantage of them. Always cover all bases and get a couple of quotes before making a decision.

Remember there is a big difference between being pre-qualified for a home loan and being pre approved for a home loan. When a borrower is pre-qualified for a loan this means the borrower has qualified for a specific amount of funding. Simply put, the borrower has filled out an application and their credit has been pulled, and the financial status of the borrower has not yet been reviewed. While being pre-approved means that all documentation has been submitted to the lender, financial status, verifications, and all other information has been reviewed and the borrower has met all the conditions set by the underwriter.