In today's competitive buying market, you need to stand out if you plan on buying a home. One major way you can do this is the make sure you're pre-approved for a loan. This will do two things - show the seller you're serious about buying, and show you how much you can afford.

Also, make sure you work with a local real estate professional.  They have personal relationships with lenders who can be more hands on int he process.  The following 4 points help determine the amount you can borrow:

  1. Capacity: Your current and future ability to make your payments
  2. Capital or cash reserves: The money, savings, and investments you have that can be sold quickly for cash
  3. Collateral: The home, or type of home, that you would like to purchase
  4. Credit: Your history of paying bills and other debts on time‚Äč

Getting pre-approved is one of many steps that will show home sellers that you are serious about buying, and it often helps speed up the process once your offer has been accepted.

Keep in mind that many potential home buyers overestimate the down payment and credit scores needed to qualify for a mortgage today. If you are ready and willing to buy, you may be pleasantly surprised at your ability to do so as well.