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
Mortgage placed on a property after a previous mortgage. It can be a second, third, etc. mortgage. A junior mortgage is subordinate to the terms of a previous mortgage. Junior mortgages ...
Amount required to payoff the full balance of the mortgage today. The amount equals the principal balance plus any prepayment penalty. ...
Allocating common or central costs to each unit of property. An example is assigning to each owner of an apartment based on the number of rooms occupied the cost incurred by the landlord to ...
A backfill defines the act of replacing a vacant lot. People use a backfill as a replacement for an unoccupied position. Backfill in construction and archaeology! The most common ...
Claim by a real estate broker that his or her actions were the principal cause of the completion of a property sale between two parties. A successful procuring cause claim would entitle a ...
Natural resource, such as oil, coal, and timber, having a limited useful life and subject to depletion. Such assets decrease in worth primarily due to the extraction of the valued commodity ...
The rate at which a market can absorb additional units of supply without causing market saturation and severe price distortions. For example, during a recessionary period, many homeowners ...
A broad definition of termite clause is a provision in a contract for the sale of real property that gives the purchaser the right, at his or her expense, to have the property inspected for ...
The definition of a rambler house is quite simple in nowadays circumstances as any one-story home or ranch is also referred to as a rambler. The typical rambler house, however, has some ...
Have a question or comment?
We're here to help.