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Figuring out how much you can afford is one of the most important topics when finding the right loan. In addition, for homebuyers, the loan amount you can afford will allow you to establish a price range for your new home.
The information presented is based on the requirements of most lenders, but there are always other factors that may alter the results. The evaluation process and approval of borrowers is not an exact science and there are always factors that may help or hurt a borrower's overall rating. In any case, the figures presented below represent a reasonable estimate of the affordability for most borrowers.
It is recommended that homebuyers try to attain a pre-approval which is a true loan approval, except that the property has not been identified yet. In other words, you can be pre-approved for a $200,000 loan, but you may not have found the exact property yet. The pre-approval is based on your personal information and assumptions about the property. Once you locate a property and execute a purchase contract, then you will need a satisfactory appraisal for the property to receive final approval. Having a pre-approval allows you to make a stronger offer and helps to establish a proper price range during the home shopping process.
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