How Much Can I Borrow for a Mortgage
From LoveToKnow Mortgage
When you ask yourself the question How much can I borrow for a mortgage you should look for the answer based on your personal financial situation and not on the amount the mortgage lender says you can afford. You shouldn't be on a quest to get the largest loan you can qualify for, but instead should try to get approved for a mortgage loan conducive to your personal needs and budget.
Loan Limits
Certain mortgage loan limits are set for specific types of loans. In most cases, the best interest rates and most attractive terms are attached to conventional loans. These are loans which fall within the monetary limits set by Fannie Mae. While these monetary amounts are always subject to change, they are indicative of the cost of a reasonable home within the United States. Areas of the country which have higher costs of living have higher limits.
While it is possible to go beyond these limits and to enter into the realm of jumbo loans, if you want to remain within the monetary boundaries of conventional loans you will not be able to exceed the Fannie Mae limit. To find out the most current loan limits, contact your mortgage consultant and ask, "How much can I borrow for a mortgage and still keep it conventional?"
Creditworthiness
The amount of money that you can borrow for a mortgage depends greatly on your own personal financial standing. In general:
- Applicants with higher credit scores can borrow more than people with low credit scores.
- Applicants with a substantial down payment can borrow more than people with little or no down payment.
- Applicants with a steady employment history may be able to borrow more money for a mortgage loan than applicants who have a sporadic or non-existent employment history.
- Applicants with a low debt-to-income ratio will be able to borrow more than applicants who have a high debt-to-income ratio.
Although mortgage lenders look at the bigger picture when reviewing applications for loans, each of these items are factored into the eventual decision of how much to loan an applicant for a mortgage. When you wonder, "How much can I borrow for a mortgage?" you may want to also wonder, "What can I do to make my personal financial standing more attractive to lenders so I can get the mortgage loan amount I want?"
Details of the House
The amount of money you're able to borrow has a lot to do with the house you try to buy. Mortgage lenders are reluctant to loan any amount of money over the appraised value of the home, and with more and more mortgages going into foreclosure there are many lenders insisting upon large down payments instead of allowing people to borrow beyond the home's value.
Some programs – such as those offered through the Federal Housing Administration (FHA) - allow borrowers to obtain a loan for the cost of the home as well as for necessary repairs or improvements to the home.
Find Out How Much I Can Borrow for a Mortgage
There are a couple of easy ways to figure out how much you can borrow for a mortgage:
- Obtain a prequalification through a lender. Contact your preferred lender and ask to conduct a simple mortgage prequalification. This is not the same as actually applying for a mortgage loan, but it will give you an idea of how much you can borrow based on the information you provide about your income and debt.
- Use an online calculator. Plenty of free mortgage calculators are online which allow you to estimate how much you can borrow for a mortgage loan based on your personal financial standing.
Remember that while these tools can be of assistance in narrowing down the amount of money you can borrow for a mortgage loan, you will not be able to actually find out the amount until you go through an application process with a mortgage lender.
Learn More
This page has been accessed 760 times. This page was last modified 20:00, 26 December 2008.
© 2006-2009 LoveToKnow Corp.
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