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

Statement made verbally. It is better legally to have a written statement because verbal ones without witnesses may be denied. ...

Also called trust deed. A document that conveys title to a neutral third party during the period in which the mortgage loan is outstanding as collateral for a debt. ...

Same as term soil porosity: Extent to which soil has cavities or pores, thereby allowing water to pass through. ...

(1) foreclosed real estate or subject property in a bankrupt estate. (2) Income property which is making inadequate returns and has a negative capitalization rate. ...

Money payments to be delayed for a future date or extended over a period of time. ...

A void property is a real estate property that is immediately available for new owners or renters as it is vacated. Void real estate properties can be occupied at a short notice as no ...

Situation in which an owner of property sells the property to an investor and then leases the property back, usually for a 20- or 30- year term. ...

Giving of a promise or guarantee to the receiver to instill confidence. ...

Recurring obligation or assurance given. ...