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Qualifying for a mortgage is not as easy as it used to be

Check your credit reports. The three main reporting agencies are Equifax, Experian, and TransUnion. You'll want to make sure that all the information on these reports is correct. If you find some information that is incorrect, you should report the discrepancy immediately to all three reporting agencies. Anything negative on your credit report can hurt you, even if it's not right.

Boost your FICO score. Most mortgage lenders use the FICO score to determine if a borrower will default. Because the score measures your ability to repay a loan, there are steps you can take to improve it. Pay down your debt, pay all your credit accounts on time and keep open accounts with a $0 balance.

Put money aside for a down payment. Sock enough away for a 5% to 10% down payment. This will show that you are serious about becoming a homeowner. Most lenders feel more comfortable granting a mortgage with a larger down payment. No-down-payment mortgages, a staple of the housing boom, have virtually disappeared. To qualify for a government-insured Federal Housing Administration loan, you'll need to put at least 3% down.

Get realistic about your budget. Your mortgage payment should be about 25% of your monthly household income. Choose a price range that fits this. If you make $4,000 a month, don't take a mortgage out for much more than $1,000 a month. This will ensure that you have adequate reserves to make your payments.