Apply for the Maximum You Need:

What is your maximum loan using the Quoter list guideline for amount? The answer depends largely upon four highly personal factors:

• The total value of your home.
• The ratio of total loans to total home value.
• Your current income (ability to pay a loan).
• Your credit rating.

In the past, the rule of thumb was that anyone with average credit could qualify for a loan with a payment of less than 1/3 of their available monthly income. Today, this rule is quickly becoming obsolete and not recommended by Mortgage Quoter. Initial approval today relies heavily upon the appraised value of homes and relies less on income and credit ratings. Your credit rating determines your maximum payment, and consequently, the amount of your approval. The VA and FHA routinely approve total payments equal for reoccurring debt up to 41% of net monthly income.

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Tips for Requesting Specific Amounts: The best practice when requesting loan amounts is to apply for the maximum amount you may need. Then, mortgage companies will approve your application up to the amount requested. If you do not qualify for the amount you requested, almost all mortgage companies will still approve your application up to (in their opinion) your maximum payment amount. Thereafter, you may accept any amount you want up to your maximum. When your loan to value ratio is low, your current income and credit rating become less important. For instance, when the ratio of loans to value is 80% or lower, most companies are quick to approve loans despite a history of late payments and marginal income. If the ratio is 70% or lower, income and credit ratings merit little, if any attention.

What is the maximum amount? When refinancing, the best lenders today routinely approve loans up to 100% of home value. Most established, industry leading companies do not stray far above 100%. Be aware that past payment problems or a drop in income may reduce the approval percentage. To refinance, perfect credit and excess income are never required. Virtually everyone qualifies with a 70% loan to value ratio. From 70% upward toward 100%, your personal financial history largely determines loan metrics. With unblemished credit, even first-time home buyers can qualify for 3% down payments under several new expanded approval policies adopted by Gennie Mae, Freddie Mac, and other government sponsored mortgage purchasing organizations. Many of these new programs apply to all people and all loans. When you apply for a purchase mortgage, be sure to discuss these options after the initial application approval (at any level). You will likely be pleasantly surprised with your low down payment options.

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