When you’re going to buy your dream home, you might be wondering “mortgage how much can I borrow”. Potential homebuyers frequently ask this question to themselves. The answers vary from one borrower to another. Though a specific amount of mortgage might be right for you, it might not fit someone else. Therefore, how can you find out the answer to the question “mortgage how much can I borrow”?
You can use a mortgage affordability calculator to determine whether there is a possibility of your loan application being turned down. You can also figure out how much mortgage you are eligible for.

Now, what are the factors that affect your capacity to take out a loan? Given below are some of them:

1.  Your income

By using an affordability calculator, you can easily work out the income needed to qualify for a particular home loan. You should remember that it’s important for you to try to spend less than you earn.

2. Your debt to income ratio

See whether your debt to income ratio permits you to take out a home mortgage loan at reasonable terms and conditions. The rule of thumb is that the front ratio shouldn’t be more than 28% of your gross monthly income and your back ratio mustn’t be more than 36% of your gross monthly income.

3. Your affordability

In the very beginning, you should find out if you can manage your monthly mortgage payments or not. Your affordability is also dependent on a variety of factors including the repayment term and interest rate.

4.  Your credit score

If you have a poor credit score, then it can become an obstacle in your qualification to obtain a loan at a reasonable rate. Lenders don’t take poor credit scores positively when they evaluate loan applications.

5. Type of mortgage

If you go for an FRM, your monthly payments would remain unchanged during the whole loan term. On the other hand, if you choose an ARM, the amount of your monthly payments would change from time to time in relation to the existing market rates. If your financial situation doesn’t allow you to take risks, then you mightn’t afford an ARM.

When you’ve made a decision to go for a home loan, you should evaluate your financial condition properly since buying a home is a very big responsibility on your shoulders.