How much can I borrow?

At a glance: The amount you can borrow for a mortgage depends on your income, existing debts, down payment, and credit score. Lenders primarily use two key ratios to set your maximum loan: the housing ratio and the debt-to-income ratio. This calculator shows estimates under both conservative and aggressive underwriting scenarios.

This tool calculates loan amounts and mortgage payments for two underwriting scenarios: one that uses aggressive underwriting guidelines and one that uses conservative guidelines.

The calculator uses the lower of two ratios for each set of results: payment-to-income ratio (also called housing ratio) and debt-to-income ratio (also called debt ratio).

When the economy is strong, lenders are more aggressive and raise these ratios to compete for business. When the economy is weak, lenders are more conservative and lower their ratios.

The following housing ratios are used for conservative results: 29% for down payments of less than 20% and 30% for down payments of 20% or more. A debt ratio of 36% is used for all down payments.

The following ratios are used for aggressive results: housing and debt ratios of 31% and 38%, respectively, for down payments of less than 10%; housing and debt ratios of 32% and 40%, respectively, for down payments of 10% or more but less than 20%; and housing and debt ratios of 33% and 41%, respectively, for down payments of 20% or more.

How can I increase my borrowing power?

If your approved borrowing amount is lower than expected, here are steps you can take:

• Increase your income. A higher gross monthly income raises the total loan amount lenders are willing to approve.
• Evaluate your credit score. A higher score can qualify you for lower interest rates, which reduces your monthly payment and lets you borrow more within the same ratio limits.
• Save for a larger down payment. A bigger down payment lowers your loan-to-value ratio and may qualify you for more favorable lending thresholds.
• Reduce recurring monthly expenses. Paying off small balances or consolidating debt before applying frees up room in your debt ratio.

See also: Loan Savings Calculator to estimate how your credit score affects your loan interest rate and total cost.

Frequently asked questions (FAQs)

How much loan can I qualify for?

The amount you could qualify for depends on several factors. Lenders typically look at your credit score, income, debt-to-income ratio (DTI), and the type of loan you're applying for. Because each lender has its own guidelines — ranging from conservative to aggressive underwriting — the amount can vary. Pre-qualification tools from individual lenders can give you a general estimate without affecting your credit.

What factors could affect my loan eligibility?

Lenders generally consider your credit score, income, debt-to-income ratio, loan type, and loan term when deciding whether to approve you. Your FICO® Score plays an important role because it helps lenders gauge how likely you are to repay the loan on time. For secured loans, collateral may also be a factor, and for some loan types, having a co-signer could help strengthen your application.