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
Relating to trees or shrubs normally found in temperate climates. Deciduous trees shed their leaves in the fall. Deciduous woods such as pine, oak, Maple, redwood, and spruce are widely ...
Also called accounting or unadjusted rate of return. The return computed by dividing the anticipated future annual net income by the required investment in real estate. Sometimes the ...
Lender's written statement and accounting for the remaining balance, date of maturity, and interest rate on a mortgage. The lender is certifying this information to the borrower or any ...
Recognizes profit on a long-term construction contract as it is earned gradually during the construction period. This approach is preferred over the completed contract method because it ...
After-tax cash flow is a calculation method for companies’ financial performance to show their ability to generate cash flow through their operations. The after-tax cash flow formula ...
Provision in a mortgage that requires the final payment to be substantially more than all other payments. ...
Bond collaterized by real assets. Two kinds of mortgage bond are senior mortgages and junior mortgages. A mortgage bond may have a closed-end provision that prevents the firm from issuing ...
The central core of an urban area. The inner city contains the major commercial center, termed the central business district (CBD). Close to the inner city are also some of the poorest ...
Ownership of property by two or more people in undivided interests, without the right of survivorship. Each coowner's interest may be conveyed separately by its owner. Tenancy in common ...
Have a question or comment?
We're here to help.