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  • The amount you can borrow from mortgage lenders when applying for a home loan depends on your current financial situation and your history of paying down previous debts. Mortgage lenders often give a loan to applicants with full-time jobs at which they have been employed for at least two years. Lenders often secure the lowest-cost mortgage to suit the circumstances of the applicant.

    Monthly Income

    Mortgage lenders consider your average monthly income as part of the criteria in how much to allow you to borrow. As part of your income, mortgage lenders consider the amount of your savings or investment income before taxes, overtime hours and any additional streams of income besides your main job. For applicants who are self-employed, mortgage lenders consider their net taxable income over the past two years. This is to determine that an applicant earns consistent income and is thus likely to be able to pay for a home loan. At an interest rate of 7 percent and at a 30-year fixed rate, without accounting for property taxes, homeowner's insurance or debts, an applicant who makes $1,000 a month may be eligible for a loan close to $54,000 with maximum monthly payments close to $360.

    Property Taxes and Homeowner's Insurance

    Mortgage lenders consider how much you will pay every month for the new home as well as your property taxes and expenses for homeowner's insurance. The amount you pay in property taxes and homeowner's insurance varies depending on where you live. If the same applicant who makes $1,000 a month pays $1,000 a year in property taxes and $800 a year in homeowners insurance, then he would be eligible for a loan close to $31,000 with a maximum monthly payment close to $200.

    Monthly Debts

    Mortgage lenders consider your monthly debts including payments on any another properties you own, payments on a car and any unpaid balances on revolving accounts such as credit cards. Mortgage lenders consider these factors as an indication of whether you can afford to pay back a home loan. Mortgage lenders total your monthly expenses and spending habits to determine whether you can afford the new mortgage. Lenders will consider how much of your income remains at the end of each month after expenses and how a monthly mortgage will affect these savings and expenses. If the same applicant who makes $1,000 a month and pays $1,000 a year in property taxes and $800 a year in homeowners insurance, but has monthly debts costing $500, then she may not be eligible for any loan.

    Free Mortgage Calculators

    Free online mortgage calculators are available to help you determine how much you may be able to borrow from mortgage lenders. Your results will give you a general idea of how much you may be able to borrow from mortgage lenders and how much you may have to pay every month on the loan.

    Source:

    Home Loan Encyclopedia: Mortgage Calculators How Much Can I Borrow?

    Mortgage X: How Much Can You Borrow?

    Mortgage Calc: How Much Can I Borrow?

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