How much can I Borrow?
A lot of people are asking themselves this question and for a very good reason. When you want to purchase a new home or get one built, you may believe that the sky is a limit and you can borrow as much as you need. But that’s not the case. When you start talking to a lender about your options, reality will soon start setting in.
So, how much will you be able to borrow?
As we mentioned above, the primary concern of any lender is to make sure that you repay your loans. The mortgage program does come with a specific set of guidelines that will let the lender know if you can pay up your loan or not.
Basically, lenders will offer you money if your financial situation allows you to repay your loans. If you can’t do that, then you won’t receive any money most likely.
There are multiple things that any lender will take into consideration. This includes how safe your industry is, if you have a lot of experience and if you have a stable employment history or not. People that change jobs often aren’t considered very safe most of the time, so you want to avoid those types of problems at all times. People that are self-employed will also find it harder to get a loan because they aren’t seen as the best option by lenders.
You will see that most lenders will limit the total house income to around 30% of the total house income. So, if you and your loved one have a pretty large income, you can get a good deal. However, if you want to purchase a home on your own, then the overall options are rather limited, and you want to avoid all of that.
What can you do to increase your borrowing chances?
There are a few situations when you will get better results. Obviously, you will need to have a good credit score. This increases your chances quite a lot, and it all comes down to you to figure out the options. It’s a much better idea to take your time and increase the credit score. A larger downpayment will be very good too. The better the down payment you have, the higher the chances of getting the amount you seek.
Usually, the best down payment is around 3.5 or even 5% in total. It’s important to make sure that you think about the closing costs as well. These have to be paid either by you personally or by your lender. It may not sound like much, but you do get tons of value this way, and the experience is indeed worth it. So, you have to think about all the options and focus on what matters the most for you.
As long as you have the means to repay everything properly, you are not limited from borrowing money. However, try to stay away from borrowing too much, as it will be quite the hassle to repay the amount you borrowed in the end!