How much can I borrow for a home loan?

Before you can start shopping for a home, you’ll need to know how much you can borrow — and more specifically, what size mortgage you’ll be able to qualify for.

A mortgage qualification calculator can help you get a handle on those numbers and guide your home search.

Credible’s mortgage qualification calculator can arm you with two important bits of information: The mortgage payment you can afford and the size of the home loan you’ll likely qualify for.

To be clear, the two numbers aren’t the same. Lenders qualify you based on the maximum amount you can afford given your loans, debts, and other accounts listed on your credit report. As most of us have other expenses on top of those debts, you’ll typically want to go under that maximum amount to avoid unnecessary financial strain.

To use the calculator, you’ll need the following information on hand:

• Household income: This is the total amount you take in as a household on an annual basis.
• Down payment: Your down payment amount will influence your private mortgage insurance (PMI) costs. Generally, if you make a down payment of less than 20%, you’ll be on the hook for PMI, at least at the outset.
• Monthly debts: These are your monthly payments on any loans, credit cards, or other debts you have in your name.
• ZIP code: This will be used to estimate your annual property tax bill.
• Loan term: This is the length of your loan. The most common loan terms are 15 years and 30 years.
• Credit score: Your credit score will impact what interest rates you’re offered. You can usually pull your score through your bank or credit card issuer.
• Property taxes: This will be estimated based on the ZIP code you enter, but if you have a more specific number, you can enter it here.
• HOA fees: If you’re buying a home in an HOA-controlled area, these are the annual fees you’ll pay. You’ll usually find them on the home’s listing if they’re applicable.
• Homeowners insurance: Lenders will require home insurance before they’ll close on your loan. This protects the investment in case of natural disaster, burglary, or other issue.

In addition to your ideal payment and your maximum loan amount, our calculator can also shed light on your potential closing costs and any PMI, if applicable, that you can expect to pay.

Check Out: Mortgage Qualifications: How to Qualify for a Mortgage

Credible’s mortgage qualification calculator is best used in the very early stages of your home search. It can help you gauge your budget and determine the best path forward.

See if your dream house is within budget

If you have a specific home, community, or price point in mind, the mortgage qualification calculator can help you determine if it’s in range. If it’s not, you can adjust your search accordingly or delay your home purchase until you’re able to save more or increase your income.

Check if you’re buying too much house

The mortgage qualification calculator is also a good way to make sure you’re not over-extending yourself. Once you’ve found that dream home, plug in your numbers and see what your monthly payment would be. If the payment is out of reach, you can course-correct and find a more affordable property.

Decide on your loan term

Adjust the loan term and calculate the monthly payment for different options. Generally speaking, a 30-year loan is best if you need a smaller monthly payment and plan to be in the home a long time. A 15-year loan is best if you can afford a higher payment and want to pay less in long-term interest.

Figure out how much to put down

Likewise, you can also adjust your down payment to determine how much savings you’ll need upfront. If you want to avoid PMI costs, try upping your down payment to 20%, and see how it impacts your monthly payment and interest fees.

Learn More: How to Get the Best Mortgage Rates

Lenders base your maximum loan amount on a number of factors, including your credit, debts, income, and more. The main goal is to reduce risk and only lend you what they know you can repay.

Debt-to-income ratio

Most loans require a 43% debt-to-income ratio (DTI) or less, which means that your monthly debt payments take up no more than 43% of your monthly income. For example, if you have to pay $2,000 on your debt each month — for student loan payments and credit cards — and you earn $4,000 per month, your DTI would be 50% (2,000 / 4,000). (If this is actually you, it’s probably time to refinance.)

A lower DTI will generally qualify you for a higher loan amount, while a high DTI will do the opposite.

Credit score

Your credit score will also play a role. If you have a high credit score, it shows you’re a pretty low risk to a lender since you have a history of paying debts on time. This will usually qualify you for a bigger loan amount.

A lower credit score may indicate you’ve been late on payments or that you’ve racked up more debt than you can comfortably afford. You’ll likely qualify for a smaller loan or higher interest rate than someone with a higher credit score. That’s why it’s always a good idea to work on bumping up your credit score before applying for loans.

Loan-to-value ratio

Your loan-to-value ratio reflects how much you borrowed for the home versus its market value. So, if you put down $160,000 on a $200,000 home, your LTV would be 80% (160,000 / 200,000). Generally, the lower your LTV is, the less of a risk you are to the lender and the better loan terms you’ll be offered.

If you’re not happy with the maximum loan amount you see after inputting your info into the calculator below, don’t worry, there are ways to bolster your chances of qualifying for bigger loans.

Save up for a bigger down payment

The more you can put down, the lower that LTV goes, and the more you’ll be able to borrow. You might also be able to avoid PMI, which would mean fewer costs both monthly and in the long run.

Pay down some debt

Reducing your debts can help your credit score and increase your chances of getting a bigger loan. You should also set all bills and credit cards up for autopay, as on-time payments can help your score too.

Consider a longer loan term

When you stretch your loan out over a longer term, it reduces your monthly payments and makes homeownership more affordable (at least in the here and now). If you’d previously put in a 15-year loan term when using the calculator, consider trying a 30-year one and see if you qualify for more.

Compare offers from different lenders

Every lender offers different rates, terms, and loan programs, so shopping around is critical whether you’re happy with your loan amount or not. Make sure you compare at least three different lenders and use Credible to streamline the process.