How Much Money Can I Borrow To Buy A Home?

Definition of "How much money can I borrow to buy a home?"

Olivia Capizzi real estate agent

Written by

Olivia Capizzielite badge icon

Keller WIlliams Space Coast Realty

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

An individual or business that buys someone else's equity in property but may not assume any responsibility for a loan balance. ...

In any field, from the corner store or long-term rentals, the potential gross income is the expected revenue earned from a sale or the rendering of services. The potential gross income ...

The maximum depth to which the ground normally becomes frozen in a given geographic area. The depth of the frost line is an important consideration when placing or installing pipes or any ...

Lease agreement having level payments during the contractual period. It does not have an escalation clause to allow for increased costs due to increases in inflation, taxes, or other ...

In real estate terms, many consider having corner influence an extra financial advantage when it comes to transactions in most cases. Usually, enjoying a corner influence brings an ...

Created by law usually for the right to travel to landlocked parcel of land ...

Analysis of the risks and rewards to an individual in making a particular property investment. Investment analysis considers the cost of the original investment, the investment return over ...

A legally transferable debt instrument by which the issuer agrees to pay the payee within a certain time period. Note usually pay a specified rate of interest tied to the market rate of ...

Unincorporated combination (roll-up) of limited partnerships in a real estate together as a group. It is usually more comprehensive, financially sound, and marketable than individual ...