How much of a loan can I afford?

Lenders evaluate a prospective borrower's ability to afford a loan based primarily upon two questions:

• Can the borrower pay the up front costs associated with the mortgage?
• Is the borrower's income sufficient to cover the mortgage payment, in addition to any existing debt obligations?

Up front costs

The most obvious of the up front costs that the borrower must cover is the down payment. While this has traditionally been an amount equal to at least 20% of the loan, in recent years, most lenders have relaxed this requirement such that 10%, 5% and even 0%