The First Step of Buying a House: Find Out How Much Banks Will Loan You.
Buying a home is one of the biggest financial decisions you’ll ever make. Whether you’re a first-time homebuyer or a seasoned investor, there’s one crucial step you should take before browsing listings or attending open houses: find out how much banks will loan you.
Skipping this step is like shopping without knowing what’s in your wallet. You risk falling in love with a home you can’t afford — or missing opportunities because you underestimated your buying power.
Why Your Loan Approval Should Come First
1. Know Your Budget Before You Shop
Banks use your credit score, income, debts, and down payment amount to determine your maximum loan amount. This tells you exactly what price range you should target, saving time and avoiding disappointment.
2. Get a Competitive Edge in the Housing Market
In competitive markets, sellers often prefer buyers who have pre-approval letters. This proves you’re serious, financially ready, and can move quickly when you find the right home.
3. Understand Your Loan Options Early
By speaking with a lender first, you can explore different mortgage products, such as:
Fixed-rate mortgages
Adjustable-rate mortgages (ARM)
FHA loans
VA loans
Conventional loans
Knowing these options can help you choose the best mortgage for your financial goals.
How to Find Out How Much Banks Will Loan You
Check Your Credit Score — Higher scores often mean better rates.
Calculate Your Debt-to-Income Ratio (DTI) — Lenders prefer a DTI under 43%.
Get Pre-Qualified or Pre-Approved — Pre-qualification is a quick estimate, while pre-approval requires documentation and gives you a verified amount.
Shop Multiple Lenders — Rates and terms can vary widely between banks.
The Bottom Line
Before you start house hunting, know your numbers.
The first step to buying a home isn’t scrolling through Zillow — it’s talking to a bank to see how much you can borrow. With a clear budget and pre-approval in hand, you’ll shop with confidence and have a stronger negotiating position.
