What steps can I take to make sure I am approved for a mortgage?

My fiance and I are planning on buying my cousin's home from her sometime this summer. We are in our early 20's and don't have any type of parental guidance for this matter. I have decent credit right now, but as soon as I get my income tax return, I will pay off my credit card debt and should have excellent credit. The only loan I have is my student loan, which I am ahead on, have never missed a payment and always pay more than my minimum. I make just above minimum wage and bring in about $1000/month myself. My fiance doesn't have any credit - good or bad. I read that it's bad to have anything put on your credit months before you try to get a mortgage. However, he makes much more than I do, bringing in about $2000/month. She's asking $160k for the house and we have about $8000 saved up so far for a down payment. What are our odds of getting approved for a mortgage? What can we do to make them better? Any advice you can give me in this matter would be much appreciated and very helpful. Thanks in advance.

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