Get a sense of how much you may be able to borrow. Simply divide your "before tax" monthly income into your total monthly debt payments. This figure is your "debt ratio" or "back-end ratio". By dividing your "before tax" monthly income into your total projected housing payment (including lot rent, if applicable) will give you the "housing ratio" or "front-end" ratio. As a general rule, the ideal ratios should be around 31% on your "front-end" ratio and 43% on your "back-end" ratio. Those ratios are guideline to help the consumer and the lender get an idea of what the consumer may be able to afford.

Please note that prequalification is different from a preapproval. Prequalification gives you an estimate of how much you may be able to borrow. Preapproval, on the other hand, indicates that you have been approved for a set loan amount prior to property selection.