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Mortgage loan: What’s The Maximum I Can Borrow?

It’s the top question potential buyers ask before starting to shop for a new home: how much can I borrow?

The answer to this question will directly influence the type of home you can shoot for, so it’s natural to know the ballpark of your price range before you start looking around.

Unfortunately, answering this question is not always so easy because it will mostly consider your current financial circumstances. But, things can change. You could get a promotion that could increase the amount of money you’d be eligible to borrow, or the house prices could fall, so the mortgage loan calculator is really an estimation and not a final amount.

Still, there are two main factors you can take into consideration to determine this figure: your monthly income and your current financial obligations.


Why Your Wage Matters

Lenders want to lend you money, but they also want to make sure you can make the monthly mortgage payments. They will analyze your current salary (or income) to determine how much you could realistically borrow from them to pay them back every single month comfortably.

Of course, other criteria can also factor in, such as how ‘stable’ your job is or the length of the mortgage loan you want, but for the most part, all lenders will ask you how much money you’re making. The higher your wages, the more money you can end up borrowing.

Why Your Current Financial Obligations Matter

A good salary doesn’t really mean a lot if you already have other loans and financial obligations. Lenders want to know if you’re already carrying the burden of a sizable monthly payment that could potentially impact your ability to make the monthly mortgage payments to them.

They can be credit card payments, student loans, car payments, and any other financial commitments you have that can overlap with your mortgage. If you already have a lot of withstanding debt, you might even not get a loan approved at all.

Other Factors That Could Impact Your Maximum Loan

Maximum mortgage loans are determined on a case by case principle because simply put, everyone’s financial situation is unique. Apart from your wages and outstanding debt, the lenders can rely on other criteria to determine how much money to give you:

  • Your credit history
  • Your average monthly spending
  • Their own guidelines (lenders can have different rules when it comes to determining loan amounts)
  • The type of loan you choose, etc.

What Can You Do?

Some online mortgage calculators will give you a rough idea of how much you could borrow based on your income, but it’s always best to shop around for a mortgage and get an estimate directly from the source. While even that won’t necessarily be set in stone, it will be the closest you’ll get to the final loan figure.

The Better Rate Mortgage Team specializes in making the home purchase or refinances process a great experience, whether your first purchase, your 10th, or needing assistance with the FHA 203k or Fannie Mae. Homestyle construction loans, we make it happen for you!

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Whether you’re purchasing your first home or taking cash out to make your dream home even dreamier, the door is open. Welcome to Better Rate Mortgage.

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