Most potential homeowners can afford a mortgage that's 2-2.5 times their annual gross income.

How Much Mortgage Can I Afford?

A person earning $100,000 per year can only afford a mortgage between $200,000 to $250,000. This computation, however, is simply a broad guideline."

In the end, while choosing a property, you need to give some additional consideration to a number of different factors.

To begin, it's a good idea to understand what your lender believes you can afford (and how it arrived at that estimation).

Your capacity to buy a home (and the size and terms of the loan you will be provided) will depend on the following considerations.

How Do Lenders Determine Mortgage Loan Amounts?

Many factors influence a mortgage lender's decision on homebuyer affordability, but the main ones are income, debt, assets, and obligations.

A lender wants to know how much money an applicant makes, how many demands are placed on that income, and the possibility for both in the future.

This is the amount of money a prospective homeowner makes before taxes and other commitments.

Gross Income 

Part-time wages, self-employment earnings, Social Security payments, disability, alimony, and child support are all examples of supplemental income.

The front-end ratio, commonly known as the mortgage-to-income ratio, is heavily influenced by gross income.

This is the percentage of your yearly gross income that can be committed to mortgage payments each month.