Getting Mortgage-Ready
If you’re one to three years away from buying, this is the module that pays off the most. Lenders look at three things — your credit, your debts, and your cash — and every one of them can be improved with time. This module turns “someday” into a plan with dates on it, so that when you do talk to a lender, you’re the borrower they want.
Meet Rosa and Theo. They earn $75,000 a year between them, rent a two-bedroom apartment for $1,400 a month and would like to buy in about two years. Theo has a $350 car payment, and neither of them had looked at a credit report in years. The course follows the numbers they used at each step, so you can run the same steps on yours.
What lenders actually check
Their first step was a plain inventory: what would a lender see if they applied today?
Every mortgage decision comes down to three questions: will you pay on time, can you afford the payment, and do you have the cash to close? Underwriters call these credit, capacity and cash.
Credit: what actually moves your score
Rosa pulled all three reports. Two matched; the third listed a store card she had never opened. She disputed it, the bureau investigated within the usual 30 days, and the account came off. With that fixed, both their scores sat around 720.
Scores are built from five ingredients. They don’t carry equal weight, so put your effort where it counts.
Pull your reports from all three bureaus for free at AnnualCreditReport.com and dispute anything wrong — a late payment that wasn’t late, or an account that isn’t yours, can cost you more than any other single thing.
In November 2025, Fannie Mae dropped its hard 620 minimum for loans run through its automated underwriting system, letting the system weigh your whole file instead. FHA loans allow 3.5% down with a 580 score.
That doesn’t make your score matter less. It still sets your rate and your mortgage insurance cost, and many lenders keep their own minimums. A practical target: 620+ for the most options, 740+ for the best pricing.
Lowering your DTI without a raise
Theo’s car loan still had about $11,000 to go, too much to clear before they bought. So their rule became simple: no new monthly payments.
Lenders calculate DTI from your minimum monthly payments, not your balances. That changes which debts are worth attacking first.
Example: $5,500/month gross income with $660/month in debts leaves about $1,705/month for housing under a 43% back-end limit. Paying off a $350/month car loan raises that to $2,055 — enough to support roughly $55,000 more in mortgage at 6.5%.
$6,250 gross a month × 43% = $2,688 allowed for all debts. Minus Theo’s $350 car payment, that leaves $2,338 for housing. A new $500 car payment would cut it to $1,838.
Cash: more than the down payment
Their first instinct was to save for a down payment. Based on what similar homes sell for near them, they set a working target of $160,000, and the cash goal came out bigger than they expected.
Your savings goal has four parts. Most buyers only plan for the first one.
Keep a clean paper trail: lenders review your last two months of bank statements, and any large deposit that isn’t payroll will need a documented source. Money from family usually needs a signed gift letter. Cash kept outside a bank is hard to use.
Cash goal = down payment + 3% for closing costs + 1% cushion for reserves and moving. Down payment assistance can lower it — see Module 2.
Every module in the full course has a calculator like this one, set up with Rosa and Theo’s numbers.See the course →
- 24–36 months out: pull all three credit reports, dispute errors, set up autopay, and open a separate savings account with an automatic monthly transfer.
- 12–18 months out: bring card balances under 30% (then 10%), pay off small installment loans, and avoid new credit.
- About 6 months out: talk to a lender for a pre-qualification and credit review — many will tell you exactly which change would raise your score the most.
- 60 days before applying: no new credit, no large unexplained deposits, no job change if you can avoid it, and keep your down payment in one account.
- After pre-approval: no new car, no furniture on credit, no co-signing until after closing — lenders often re-check your credit right before closing.
Next: they ask a lender for a pre-approval, and the answer is a much bigger number than they expected.
Key takeaways
Quick knowledge check
Which credit score factor carries the most weight?
Payment history — about 35% of a typical score.
What credit card utilization should you aim for before applying?
Under 30% of each card’s limit, ideally under 10%.
True or false: lenders calculate DTI from your total debt balances.
False — they use your minimum monthly payments.
Besides the down payment, name two things your cash goal should cover.
Closing costs, reserves, and moving or first-month costs.
Why should you avoid large unexplained deposits before applying?
Lenders review recent bank statements and will ask you to document where any non-payroll deposit came from.
Next, a lender says yes to a much bigger number.
Module 2 is where Rosa works out what’s actually comfortable, and the rest of the course follows them all the way to the keys.
- 8 written modules, from affordability and the real cost of owning to offers, inspection and closing day
- A calculator and a printable worksheet in every module
- Free year-one bonus: 7 lessons, 9 tools and the Year-One Binder for after you move in
$47 one-time · lifetime access · 30-day money-back guarantee
Sources: CFPB, Freddie Mac, Fannie Mae · How we research
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