This is part of an ongoing blog series in which we answer common questions among Oregon home buyers. Today’s question is: How much can I borrow for a mortgage loan in Oregon?
The amount of money you can borrow will largely depend on your income. But there are other factors that play into this equation as well. Here are some concepts you should understand when shopping for a mortgage loan in Oregon.
How Much Can You Borrow for a Mortgage Loan?
Your ability to repay your home loan is a primary consideration for loan approval. Above all else, this will determine how much you can borrow for a mortgage in Oregon.
Banks and mortgage lenders use various tools to assess your ability to repay the loan amount, and we’ll review those factors below. For now, just know that this is one of the overriding qualification criteria that determines how much you can borrow.
Your Debts Play a Role as Well
Your debt and income levels are another important consideration. And there’s a name for this. It is called the debt-to-income ratio, or DTI. As you might have guessed, this is a numerical comparison between the amount of money you earn each month, and the amount you spend on your various debts.
While these numbers aren’t necessarily written in stone, mortgage companies prefer to see a debt-to-income ratio below 50%. The lower the better, in terms of qualifying for a home.
If you have a manageable level of debt right now, you have a better chance of getting approved for financing. This is another key factor that can affect how much you are able to borrow for a mortgage loan in Oregon.
Loan Limits in Oregon
Loan limits play a part here as well. Most of the major loan programs have limits associated with them, and these can affect the amount you’re able to borrow.
Here’s an overview of the limits for various mortgage programs in Oregon:
FHA: Federal Housing Administration home loans have limits that vary by county. In most Oregon counties, the limit for a single-family home purchase is $275,665. In more expensive areas — like those in and around Portland, Oregon — the limit can be as high as $408,250. View limits for all counties.
Conventional and VA: Conventional (i.e., non-government backed) and VA mortgage loans have limits as well. In most states, these limits also vary by county, because they’re based on median home prices. But in Oregon, all counties currently have the same VA and conventional loan limits, for 2017 at least. It is $424,100 for a single-family home purchase.
Going Jumbo for a Larger Amount
Loan limits can affect how much you can borrow for a mortgage in Oregon, but they don’t necessarily restrict you to that amount. Borrowers who have sufficient income can qualify for a so-called jumbo loan that exceeds the limits mentioned above.
Jumbo loan amounts in Oregon can rise above $1 million in some cases, as long as the borrower has sufficient income to repay the loan. So here again, the ability to repay becomes a primary consideration.
Whether you are seeking a conventional, jumbo, or FHA loan, you must have the capacity to repay the amount you are borrowing.