HOW DOES THE LENDER DECIDE THE MAXIMUM LOAN AMOUNT THAT YOUCAN AFFORD
The lender considers your debt-to-income ratio, which is a comparison of yourgross (pre-tax) income to housing and non-housing expenses. Non-housingexpenses include such long-term debts as car or student loan payments, alimony,or child support. According to the FHA, monthly mortgage payments should be nomore than 29% of gross income, while the mortgage payment, combined withnon-housing expenses, should total no more than 41% of income. The lender alsoconsiders cash available for down payment and closing costs, credithistory, etc. when determining your maximum loan amount.

WHAT IS EARNEST MONEY HOW MUCH SHOULD I SET ASIDE
Earnest money is money put down to demonstrate your seriousness aboutbuying a home. It must be substantial enough to demonstrate good faith and isusually between 1-5% of the purchase price (though the amount can vary withlocal customs and conditions). If your offer is accepted, the earnest moneybecomes part of your down payment or closing costs. If the offer isrejected, your money is returned to you. If you back out of a deal, you mayforfeit the entire amount.

HOW LARGE OF A DOWN PAYMENT DO I NEED
There are mortgage options now available that only require a down paymentof 3.5% or less of the purchase price. But the larger the down payment, theless you have to borrow, and the more equity you'll have. Mortgages with lessthan a 20% down payment generally require a mortgage insurance policy to securethe loan. When considering the size of your down payment, consider that you'llalso need money for closing costs, moving expenses, and - possibly-repairs and decorating.