Steps to getting your finances in order to purchase a home.

A. Budget. Instead of budgeting what you'd like to spend, try using receipts to create a budget for what you actually spent over the last 6 months. With this approach, it factors in unexpected expenses, such as car repairs, illnesses, etc., as well as predictable costs such as rent.

B. Reduce debt. Generally, lenders look for a total bebt load of no more than 36% of income. Since this figure for some people include their mortgage, which typically ranges between 25% and 28% of income, you need to get the rest of installment debt---car loans, student loans, revolving balances on credit cards---down to between 8 to 10% of your total income.

C. Figure out Expenses. Try wiriting down everything you spend for one month. You'll probably see some great ways to save. Little expenses add up.

D. Increase your income. It may be necessary to take on a second, part-time job to get your income at a high-enough level to qualify for the home you want.

E. Save for a downpayment. Although it's possible to get a mortgage with only 5 percent down---or even less in some cases---you can usually get a better rate and a lower overall cost if you put down more. Shoot for saving a 20% downpayment.

F. Create a house fund. Don't just plan on saving whatever's left toward a downpayment. Instead decide on a certain amount a month you want to save, then put it away as you pay your monthly bills.

G. Keep your job. While you don't need to be in the same job forever to qualify, having a job for less than two years may mean you have to pay a higher interest rate.

H. Establish a good credit history. Get a credit card and make payments by the due date. Do the same for all your other bills. Pay off the entire balance promptly.