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
Increase in the value of property arising from holding it. The gain is realized only when the property is sold at which time it is taxable. An example is the increase in the appraised value ...
Past action of a property owner or tenant. ...
The meaning of a guarantee covers a legal and financially-binding agreement signed between three parties involved in real estate or financial transactions. In this document, typically ...
See effective tax rate. ...
In a construction loan, payments made to a contractor as the various construction stages are completed. The contractor uses progress payments to pay the various subcontractors and suppliers ...
Cash outlays required to maintain an investment position. ...
Book value is a quintessential term used in the financial world and the real estate business. Though, there are slight differences in its interpretation in these two areas of ...
An offering of securities, stock and/or debt, directly to investors rather then through the public exchange markets. An advantage of a private placement to a real estate business is that ...
If you are involved with real estate, chances are you've come across the term "convey" or conveyance. But what does convey mean in real estate? This term is crucial whether you're buying, ...
Have a question or comment?
We're here to help.