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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? This article will help answer that question.
Are you thinking of buying a home in Oregon? If so, you’ll want to do some homework on how much you will be able to borrow to finance such a big purchase.
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.
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.
Related: Average closing costs in Oregon
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 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.
FHA: Federal Housing Administration home loans have limits that vary by county. In most Oregon counties, the 2021 limit for a single-family home purchase is $356,362. In more expensive areas — like those in and around Portland, Oregon — the limit can be as high as $517,500.
Conventional and VA: Conventional (i.e., non-government backed) mortgage loans have limits as well. In most states, these limits also vary by county, because they’re based on median home prices.
Conforming loan limits in Oregon is $548,250 for 2021, and that is for 1-unit homes in all counties.
As of 2021, veterans who wish to obtain a “jumbo loans” – which is a loan that exceeds the conforming loan limit – or veterans who live in higher-cost markets won’t be subject to the VA loan limit (or conforming loan limit) maximums anymore. That means members of the military can still get a no-down payment VA-backed loan in any county, regardless of the price of the home they intend to purchase.
Read: Which mortgage option is right for you?
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.
Are you looking to apply for a mortgage in Oregon? We can help. Sammamish Mortgage is a local mortgage company serving the broader Pacific Northwest region, including Washington state, Idaho, Colorado, and Oregon. We have been offering a wide variety of mortgage programs and products with flexible qualification criteria since 1992. Please contact us if you have any questions or are ready to apply for a home loan.
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