Maximum loan amount,
Definition of Maximum loan amount:
A maximum loan amount for a borrower is based on a combination of factors and determined by a loan underwriter. It is the most that will be provided to a borrower if the loan is approved. Lenders consider a borrower’s debt-to-income ratio during the underwriting process, which helps to determine how much they believe the borrower would be able to repay and therefore what the maximum loan amount should be. Lenders generally seek borrowers with debt-to-income ratios of 36% or less.
A maximum loan amount describes the total amount that an applicant is authorized to borrow. Maximum loan amounts are used for standard loans, credit cards, and line-of-credit accounts.
The dollar limit to which a borrower can secure loans. This limit is set by the lender according to various factors related to the borrower and the purpose of securing the loan. The included factors may be the loan program selected, the value of the asset needing the loan and the borrowers credit history. There are usually different limits set to different classes of borrowers. For example, conforming loans, those that conform to the standards set out by Fannie Mae and Freddie Mac, allow consumers to buy housing mortgages that are limited to the amount of $417,000.
How to use Maximum loan amount in a sentence?
- In determining an applicant's maximum loan amount, lenders consider debt-to-income ratio, credit score, credit history, and financial profile.
- A maximum loan amount describes the total sum that one is authorized to borrow on a line of credit, credit card, personal loan, or mortgage.
Meaning of Maximum loan amount & Maximum loan amount Definition