Waiting is not optional. The look-back is two years. Most lenders average your cash flow to figure what you can afford. An exception can apply to select lenders: if you became self-employed in the same "job" you were previously employed in by someone else.
Perfect credit is not required, but the lower your credit score, the higher your down payment. If it's below 580, your choices are non-existent or expensive.
2. Documentation of your income......tax returns, bank account statements
3. Evidence that you pay your bills, pay on time, debt is manageable.
Meet with a loan officer and let them get your prequalified. NOW is the time to do it even if your purchase is still in the future. That way they can advise you if things are quite right now, how to get them in order. They can also tell you exactly what documentation you'll need to get your loan or what goals to shoot for.
Credit scores seem to rule the world these days. And, the days of stated income loans appear to be over. We're all having to document our income. Realtors are self-employed, too, so we're all in the same boat. Not every home purchase is done in 30 days. Many times we have to start working with a prospective buyer 1-2 years ahead of their purchase so they can get their credit in the best light to be ready to get the best deal on real estate. We're fine with that. Having the time to reduce your debt in the right way can improve your credit score dramatically, reduce the interest rate you'll be quoted, reduce the insurance on the house, and optimize your ability to reap all the benefits of home ownership. All Realtors have lenders that they work with all the time, who provide good service and counseling to our clients to prepare them for home ownership. You may even qualify for home loan assistance programs through banks, credit unions, your employer, or the government that you aren't even aware of until we start a dialogue.