How Do Lenders Decide The Maximum Loan Amount That Buyers Can Afford?
2 September 2025
As you’ll see in the video, the lenders consider your debt-to-income ratio, which is a comparison of your gross (pre-tax) income to housing and non-housing expenses.
Non-housing expenses include such long-term debts as car or student loan payments, alimony, or child support.
According to the FHA, monthly mortgage payments should be no more than 29% of gross income, while the mortgage payment, combined with non-housing expenses, should total no more than 41% of income.
Lenders also consider cash available for down payment and closing costs credit history and the rest of your financial picture when determining your maximum loan amount.
Well, as this story shows, this will likely be the first opportunity to examine the house without furniture giving you a clear view of everything. Check the walls and ceilings carefully as well as any work the seller agreed to do in response to the inspection. Any problems discovered previously that you find uncorrected should be brought up prior to closing. It is the seller’s responsibility to fix them.
You’ll see some pictures in this video to help you remember later, but essentially, home warranties offer you protection for a specific period of time, such as one year, against potentially costly problems like unexpected repairs on appliances or home systems which are not covered by homeowner’s insurance.
A flood plain is an area of land adjacent to a stream or river that experiences flooding during periods of high discharge. Watch this video and it’ll make sense.
As we show you in this video, an inspector checks the safety of your potential new home.
Like the video shows, “earnest money” is money you put down to demonstrate your seriousness about buying a home. It must be substantial enough to demonstrate good faith and is usually between 1-5% of the purchase price though the amount can vary with local customs and conditions. If your offer is accepted the earnest money becomes part of your down payment or closing costs. If the offer is rejected, your earnest money is returned to you. If you back out of a deal, you may forfeit the entire amount.
Well, as this story shows, there isn’t a definitive answer to this question. You should look at each home for its individual characteristics.
As you’ll see in this video, many of your questions should focus on potential problems and maintenance issues.
There are some great tips in this video, like:
As we show you in this video, in addition to comparing the home to your minimum requirement and wish lists use the HUD Home Scorecard and consider the following:
The video puts this in more visual terms, but basically, contact the local Chamber of Commerce for promotional literature or talk to your real estate agent about welcome kits, maps, and other information.