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How much can I borrow and why?
Income, debt, and mortgage payments are the primary factors that affect
whether you qualify for a loan.  To determine your qualification, the first thing a
lender will do is divide the monthly payment of your proposed loan by your gross
monthly income. This provides your housing-to-income ratio.  If the resulting
percentage falls within a certain range, the next step is to divide your total
monthly debt by your gross monthly income. This provides your debt-to-income
ratio. Again, if the ratio falls within prescribed limits, you are qualified for a loan.

The limits within which your housing and debt ratios must fall are determined
primarily by the size of the loan, the value of the property, and the ratio between
the two (known as the loan-to-value ratio, or LTV). This loan-to-value ratio is
one of the most important factors in determining a home loan.

You can use our calculator tools to determine whether you can qualify for a
loan, the amount of loan you qualify for, the types of loan products that are best
for you, and many other things.

Why is the loan-to-value ratio important?
Your LTV is critical because common wisdom among lenders is that the higher
the LTV and the lower the equity, the higher the risk of a borrower defaulting on
his or her loan. Thus, high LTV and low equity loans present lenders with
greater risk, forcing them to increase their costs.
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