Should You Borrow the Maximum a Lender Will Approve? When you apply for a mortgage, a lender will decide how much money it’s willing to give you to put toward the purchase of a house. That doesn’t necessarily mean that you should take out a loan for the full amount. In some cases, borrowing the maximum a lender will allow could leave you overwhelmed by debt. How Lenders Decide How Much You Can Borrow Lenders base their mortgage decisions on several factors, including credit score and length of credit history, but the most important factor is a borrower’s debt-to-income ratio. This is the sum of all debts, including a mortgage, credit card minimum payments, and vehicle, student, and personal loans. Most lenders want borrowers to devote no more than 28 percent of their gross income to a mortgage, property taxes, and homeowners and private mortgage insurance. They also want total debt payments to be no more than 36 percent of gross income. If your debt-to-income ratio is highe...
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