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Know What You Can Afford

We're at the trailhead of the homebuying experience.

The first step is determining what you can afford. Everything else will depend on that answer. Let's explore what lenders look for when determining whether to give you a loan.


Why Get Pre-qualified?

Before you start looking at houses, it's important to work with me to get pre-qualified, which will let you know how much home you can afford. This can help you narrow your home search to houses within your budget, give you an idea of how much you'll need for a down payment, and help you identify budgeting goals to work toward.


How Does My Lender Determine My Loan Amount?

To determine the loan amount you can qualify for, we will look at your credit, income, assets, and debts.

We will also look at two important ratios.

Loan-to-Value (LTV)

LTV expresses how much you're borrowing compared to the value of the home. A lower LTV is more favorable because it represents less risk to the lender.

You can lower your LTV by increasing your down payment.

Debt-to-Income (DTI)

DTI shows how much debt you have compared to your monthly income. This debt includes credit card bills, auto loans, alimony or child support, and other regular monthly payments you make.

The lower your DTI, the better your chances are for qualifying for a loan.


Knowing how much you can afford to pay each month toward your mortgage will help you as you begin your search for a new home, and your credit, LTV, and DTI all contribute to determining your budget and your loan amount. Learn more about credit, LTV, and DTI.

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