Before going out to shop for a home, you really should have a good idea of what you can afford. In fact, if you are working with a real estate agent, chances are they will require you to be pre-qualified before looking at homes. You can get a ballpark idea of what you can qualify for by using our mortgage calculators and calculating your debt to income ratio, but there is no substitute for working with a mortgage professional.
During the prequalification process for a home loan, your mortgage professional will take an application and look at your financial situation. You will typically want to provide income and asset documentation. There are stated loan products available if you cannot or do not want to provide documentation, but your rate is typically going to suffer a bit, especially in today's mortgage market. I would not recommend stated programs these days unless you are self employed. Many lenders are starting to put heavy restrictions on these loans, and usually a stated loan for a W-2 employee means inflated numbers. If you cannot qualify for a loan with your true income, you should probably rethink your price point.
In addition to income, your mortgage broker will take a look at your credit. Your credit will be a factor in qualifying for a loan, and will play a large part of the rate and terms offered. If you are looking to purchase a home, you may want to look at your credit and see if there are any major issues that need to be resolved. Read my article on credit for some information on how to obtain a free credit report and manage your revolving debt. It is a good idea to keep tabs on your credit, and if you are going to be purchasing a home, it is even a better idea.
Visit my home page to read more on prequalification and shopping for a home.