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

Listing Agreement A.K.A. Listing is basically a contract allowing a real estate agent or broker to list a home for sale and act as the home seller agent representing his/her interests ...

A cost of funds index that most adjustable rate mortgages written in California in recent years are tied to. Computed by the Federal Home Loan Bank of San Francisco, it reflects the cost ...

Type of investment company that invests money in mortgages and various types of investment in real estate, in order to earn profits for shareholders. Shareholders receive income from the ...

Same as term marginal land: Land that has poor income potential, usually used in an agricultural sense meaning that the land is untellable, has poor access, is extremely steep, has suffered ...

Short-term leases are leases that run its completion in a faster time than regular ones.In real estate, short term-leases usually refer to temporary housing; that is: rent.The length of a ...

Also know as Fannie Mae, the FNMA accept bids from approved lenders as to the amount, price and terms wish to sell Fannie Mae. Upon deciding how much money it will spend during a given time ...

A cooperating broker or agent defines a real estate broker who helps another broker in a private property transaction. Typically, the cooperating broker represents the seller and is ...

Return before taxes on the capital invested in real estate property. ...

Real property usable in a trade or business. Such as, the property on a which retail store, hotel, or office building are located. ...