How much can I afford? - How does the lender decide the maximum loan amount that I can afford?
The lender considers your debt-to-income ratio, which is a comparison of your gross (pre-tax) income to housing and
non-housing debts. Non-housing expenses include such long-term debts as car or student loan payments, alimony, or child
support. Typically, mortgage payments should be no more than 29% of gross income, while the mortgage payment, combined
with non-housing expenses, should be no more than 41% of income. The lender also considers your cash available for a down
payment and closing costs, credit history, and employment history when determining your maximum loan amount.