There are several factors that lenders take into consideration when determining how much they will lend to you for your home purchase. The three most important factors are your income, debts and down payment. Any one of these can greatly impact the amount of mortgage you qualify for. Lenders are primarily concerned with the percentage of your gross monthly income that goes to your new monthly housing expense and to your new monthly housing expense plus your other monthly debts. As a general rule, no more than 28% of your gross monthly income should be going toward your monthly housing payment and no more than 36% of your income should be going to your housing payment plus other monthly debt. These guidelines vary by the amount of down payment you make and the loan program you choose. These are general rules for conforming loans (loan amounts of $252,700 or less). Jumbo loans (loan amounts above $252,700) usually use ratios of 33% and 38%.

If you have been pre-qualified and are not satisfied with the amount you qualify for, we have listed four of the most common obstacles to qualifying for a home below and possible solutions to each.

1. Excessive Long-term Debt

• Consolidate your debts by taking out one loan and paying off your bills with the money.
• Pay off long-term debts by using some of your cash and making a lower down payment
• Pay off long-term debt by selling another asset and using the cash generated from that sale. (Generally, this is something you should consider doing in preparation for looking at homes to purchase, well before the application process.