A familiar scenario today is as follows: You have been waiting for the right time to buy a house and have decided this could be it. There are great opportunities for buyers; this could very well be a good time to invest in a house.

However, as the scenario continues, you've been hit by the economy as well and were out of work for a while. Possibly you had difficulty paying some bills and used your charge card(s) more than you normally do.

How do know if you're able to qualify? Know what your debt-to-income ratio is.

Debt-to-income ratio is a key factor that will be taken into consideration. This is a percentage based on how much your monthly bills (personal debt) are and the amount of your monthly income. The reason for this is to determine if you can handle more debt (your mortgage) and how much more.

To figure your debt-to-income ratio, total your your credit card minimum payments, your car payment(s), student loans, etc. (you are not required to include groceries or utilities). Next, add up what you expect your new mortgage payment to be. Divide the total debt by your total monthly income.

What's the 'magic' number?
The norm is to not exceed 36%. If your number is higher then 36%, you could be denied a loan or be granted a loan but charged higher interest.

Is this a 'no exceptions' number?
Absolutely not! There are lenders who will accept up to 41%. You won't know until you ask. Talk to a knowledgeable mortgage broker. In the meantime, do what you can to decrease your debt-to-income ratio by paying down as much debt as possible.