No matter who you are or where you live, owning a home is a dream we all share. Since most of us can't buy a home outright with cash, getting a loan is the way to make our dream of home ownership real. By following these five key steps, you'll understand how to get the loan you need for a place to call your own.

Step 1: Review your credit.

When you apply for a loan, the lender will want to look at your credit history to understand how you manage what you owe. How well you've paid back credit over the years will affect which loan programs and interest rates are available to you. If you don't know about your credit history, you can get a report from one or more of the three major credit bureaus: Equifax, Experian and TransUnion. You'll find contact information for these credit bureaus in How to Get and Keep Good Credit.

Study your credit report(s) to find any mistakes that need to be fixed, and close any credit accounts you no longer use. If your report shows any negative information, such as late payments or a bankruptcy that happened more than seven years ago, ask the credit bureau to remove it.

Step 2: Find out what you can afford to buy.

Generally, the home you can afford is based on two factors:

1. How much you can pay for your down payment and closing costs. Most home buyers provide a down payment of at least 10 percent of the home's purchase price. If that's more than you want to put toward your home, you may be able to get a loan that requires a smaller down payment or even no down payment.
2. How much you make and how much you owe. First, the lender will see if the total amount you'll pay each month for your home loan payment (including property taxes and insurance) is no more than 28% of your total gross (before taxes) monthly income. Second, the lender will see if your home loan costs and other debt payments such as credit cards and auto loans are no more than 36% of your total income. If you don't fit these guidelines, some loan programs are less strict.

Step 3: Qualify for a home loan.

Surprisingly, the best time to qualify for a home loan is before you begin house hunting. With an approval in hand, you can target your home search to the ones you can afford and give the home sellers confidence that your offer is an amount for which you've been approved.

If you're unsure about what loan size is within your reach, this Web site's Calculators can show you the price range of homes you can afford. When you're ready, Imperial Funding can qualify you for a loan at no cost in as little as 10 minutes -- even if you haven't selected a home yet -- in the Apply Now section of this Web site.

Step 4: Choose which type of home loan is right for you.

If you're not sure which type of loan would be best for you, you can find out about various loan programs in the Which Home Loan is Best for Me? section. To choose the right home loan option, ask yourself:

Do you want the lowest monthly payment available, and do you expect a higher future income? If so, an adjustable rate home loan may be a good choice for you. Adjustable rate home loans usually start off with a lower interest rate than those with fixed rates. But, if the interest rate "adjusts" higher in the future, the income you expect to increase should help you handle a slightly higher payment.

Do you want a monthly payment that remains the same for the life of the loan? Then you may prefer a fixed-rate mortgage, which will keep your payments stable. Although a fixed interest rate will usually be higher at first than an adjustable interest rate, interest rate changes will not affect a fixed loan payment at all.

Do you plan to live in your home for less than five to seven years? Your interest rate will be higher or lower based on whether you pay the lender any "discount points" (one point equals one percent of your loan amount). The more discount points you pay, the lower your interest rate will be. To find out if you should pay points, figure out how long it will take for your monthly interest rate savings to add up to the cost of any points you pay. If your costs would break even in three years and you plan to live in the home for longer than that, paying points could save you money in the long run.

Example: (Based on a loan amount of $100,000 with a 30-year fixed-rate mortgage)

In the above example the borrower would need to own the home at least 5 years (60 months) to avoid losing any money for the cost of getting the lower interest rate.

Step 5: Close your loan and move into your new home.

After you choose a home loan, you'll be asked for basic information about you, anyone else applying with you, the property (if you've found it yet), your income, your assets and any loans you owe. After you're approved and choose a home loan, you can "lock in" your interest rate so that it won't go up and then set a closing date, where you will sign the final paperwork to close your loan.

Within a short time, you'll be ready to close and move into your new home.

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