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 upper limit on the interest rate that can be charged in a variable rate mortgage over its life. For example, a variable rate loan is initially offered at 7% loan rate, and its interest ...
Investments you can hold on to all your life or sell for a profit when they have appreciated in value. Real assets are those investments you can put hands on. Real property includes real ...
Surveyor's use of hypothetical lines to portray a properties position. North to South in the meridian line while East to West is the base line. ...
Interest rate on an adjustable rate mortgage based on the total of the current value of an index and margin applicable to the mortgage. The rate is the basis for the computation of monthly ...
Final property appraisal estimate arrived at by applying appropriate appraisal methods. ...
Involves the transfer of property from one individual to another for a consideration in the form of sale. It is the most widely used type of real estate deed with a period of bargaining ...
The real estate world features many tricky terms and concepts. One that often sneaks up on even the most experienced buyers and sellers is the "red herring." What is the meaning of red ...
Real estate, home and life insurance use numerous ambiguous terms you should know because you can significantly benefit from them. Let’s discover what the word boot usually applies to ...
Legal order for a person to present at a deposition or trial documents in his possession, such as related to a real estate transaction. ...
Have a question or comment?
We're here to help.