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.
Popular Real Estate Questions
Popular Real Estate Glossary Terms
An Act, passed by congress in order to prevent the practice of redlining and disinvestments in central city areas. Redlining is a practice in which lenders refuse to make loans in certain ...
The proprietary lease definition is the binding occupancy agreement between the cooperative corporation and the shareholder to possess a rental unit in a building using cooperative ...
Act of receiving the rights and privileges of a citizen including property rights. ...
Worth of property based on the relevant economic factors (e.g., state of the economy, unemployment rate). ...
Alias is a different name by which a person is known.In the real estate world, there are times when an agent goes by a different name than the one he/she was originally named by his/her ...
Rating used by lenders and creditors to determine if a credit applicant should be granted credit. It depends on many factors such the applicant's job history, earnings, net worth, etc. Some ...
One of the most recurring real estate doubts is regarding what is a broker in comparison to what is a real estate agent. Well, it depends from state to state to tell exactly what a Broker ...
Provision in the insurance policy lapses due to premium nonpayment, all unpaid premiums must be paid, and any additional requirements must be satisfied before reinstatement can take place. ...
Room in a home where the occupants spend their leisure time. ...
Have a question or comment?
We're here to help.