How Much Money Can I Borrow To Buy A Home?

Definition of "How much money can I borrow to buy a home?"

There’s really no easy and quick answer to “how much money can I borrow to buy a home?”

It will all depend on the overall financial health of the area in question, the financial health of the mortgage company in question and the risk that giving a loan to you will provide to that same company. However, the first two aspects mentioned will weigh less when you apply for a mortgage, after all; everybody wants some profit, right? So, if the overall market condition is good and the financial health of the company is great, they *might* get a portion of their earnings to re-invest to bring even more revenue but the bigger part of it will be converted into profit for its shareholders  not necessarily on making your life easier by loaning you more. That’s capitalism, buddy.

Alright, are you lecturing me or answering how much money can I borrow to buy a home, RealEstateAgent.com?

Ok. Let’s cut to the chase. You will get as much money as the calculations of the mortgage company say you will be able to pay it back in a timely manner. And to figure out how much that means in your case, we will need to figure out what is your risk to the company.

To do that, you'll need to figure out what your gross income is (before taxes) monthly and yearly. To get a quick ballpark figure, take the yearly income of yourself - and your co-purchaser if applicable - and multiply by 2 to 2 1/2. Most people will fall into this category. There are other things to consider, however – like monthly debt payments and home-related expenses like homeowner’s insurance policy cost and homeowner’s association fees, your expected loan term and interest rates. If you have a large down payment combined with little to no bills, the lender may believe that you could afford a more expensive home than the ballpark figure allows.

An important thing to do in order to prepare yourself to lure the mortgage companies into a large loan amount is taking care of your credit score, developing good habits towards it. Once you understand what is a credit score and how does it impact real estate, you will be able to secure, most of the times, not only better deals, but with less hassle.

image of a real estate dictionary page

Have a question or comment?

We're here to help.

*** Your email address will remain confidential.
 

 

Popular Real Estate Questions

Popular Real Estate Glossary Terms

Contractual provision requiring apportionment. ...

Interest is due on a loan only if a particular circumstance occurs. ...

In conducting a real estate transaction, each party is presumed honest and fair with no deceit. The intentions are honorable and realistic. If deception occurs without prior knowledge, the ...

Equals the tax divided by taxable income. Foe example, if the tax is $30,000 on taxable income of $120,000 the effective tax rate if the business is 25% ($30,000/$120,000) ...

Fluctuation in sales, profits, rat of return, etc. Likelihood of declining value. ...

Approach to appraise rental property based on anticipated future earnings to be derived from it plus the estimated selling price at the end of he period held. ...

An agreement, debt, or low which can be operationalized, fulfilled, completed, or performed. ...

Founded in1934 and located in Chicago, IL with a 1993 membership of 8,300, the IAAO seeks to ameliorate assessment standards as well as to perform ongoing property assessment research. The ...

Square footage of space a parcel of land has. ...