When you visit your lender to get a mortgage for your Santa Cruz home, they will tell you the maximum amount that you are allowed to borrow. But how do they reach this total and what factors do they take into consideration?
How do they determine that one borrower can take on a bigger mortgage than the next?
This decision is made by mortgage companies by considering a wide range of factors, including your credit information, your salary and much more.
Here are some of the common ways that lenders determine how much you can borrow:
1. Percentage of Gross Monthly Income
Many lenders follow the rule that your monthly mortgage payment should never exceed 28% off your gross monthly income.
This will ensure that you are not stretched too far with your…