When you ask yourself the question “how much can I borrow for my mortgage?“, the answer is dependent on your individual financial circumstances and not the amount which the lender is ready to offer you.
You must remember that it’s not wise to go for the biggest loan that is offered to you but you must rather attempt to become qualified for a loan that is favorable for your budget and requirements.
Mortgage loan limits
Lenders fix specific limits for particular types of loans. The most affordable terms and conditions are usually available with traditional mortgages. Fannie Mae fixes the lending limits for these loans. Though these restrictions can be modified, they suggest the costs of buying an affordable home in the US. Regions with higher livelihood expenses have higher restrictions.
Though you can exceed these restrictions and get into the domain of jumbo mortgages, if you wish to stay within the borrowing restrictions of traditional loans, you can’t surpass the limit set by Fannie Mae. To determine the most recent borrowing limits, you need to talk to your loan advisor and ask “how much can I borrow”.
The amount that a lender would lend you is considerably dependent on your individual financial condition. Usually, it is simpler for you to qualify for a home loan if:
- You have a good credit score
- You make a hefty down payment
- You have a low debt to income ratio
- You have a stable job
All these elements are taken into consideration when the lenders decide how much they should lend you. If you ask “mortgage how much can I borrow”, you should also think about ways to better your finances so that you can qualify for the amount you need.
The house you want to buy
How much mortgage you can borrow is also dependent on the house you want to buy. Lenders hesitate to offer any amount that is more than the appraised value of the home. At a time when the number of foreclosures is at a record high, lenders are asking for bigger down payments rather than permitting borrowers to take out a loan that is more than the value of their homes.
Two useful techniques to find out how much mortgage you can borrow
For finding out how much mortgage you can borrow, you can follow two simple techniques that are given below:
- Become prequalified with a lender
- Use an online home affordability calculator
However, a calculator would only provide you with a ballpark figure. For getting the precise figure, you have to talk to a lender.
When you know how much mortgage you can borrow, then you wouldn’t have any problems to buy the home that fits your budget and pay off the loan.