Finding a good lender that you can trust to have your best interest in mind is an important part of the homebuying process. Your lender will run your income, credit score, debts and assets, and should be able to determine how much you can borrow based on your ability to repay without breaking the bank. It’s not uncommon to talk to multiple lenders before making your decision on which to borrow from. But what should you do when two different lenders approve you for different amounts? Should you go with the one who will give you more, or the one who is being stricter, and in turn possibly more realistic? This is the question Marilyn Gabalon asked a First Time Home Buyers Facebook group, where many people at all stages of the home buying process gather virtually to help each other with situations like this. “I was told by a lender that I will not be approved for more than 200k, just based on my annual income,” Gabalon wrote. “However I called another lender she told me she can get me approved for 275k… There is nothing I can buy with 200k. Do you think I would have any issues? I have no debt owed, good credit, and annually bring in 35k.”  Gabalon isn’t alone. Lindsey Pickering chimed in that she had a similar issue: “I got numbers from $85,000 to $185,000,” she wrote. 

Be realistic and think about what you can afford

Many commenters warned to think critically about what you can really afford when it comes to these matters. “Remember [it’s] not about the lender that gives you the most, it’s about being able to afford it.” Paola Contreras said. “Ultimately, it's what you think you can afford. They can approve you for 275k, but can you afford the mortgage?” Shanequa Jones agreed. At the end of the day, it really does come down to how much you think you can afford. You shouldn’t let yourself swayed by a high number if it’s not realistic. It’s also important to factor taxes into the equation, which can add up and take much more from your income than you expect, compared to a monthly expense like rent. Many commenters warned against becoming “house poor.”  “Our lender is money smart in the sense that he doesn’t want us to fail or be house poor,” Kimberly Crutcher wrote. “Sure, we could buy a $300k house but would it be smart? Absolutely not.”  Che Franco advised to “be realistic.” “My point is be realistic with what you're looking for, be ready to sacrifice something for the budget you need, or move somewhere that has those kind of prices.” 

A cautionary tale

One group member, Megan Leotta, shared her own story about taking out a mortgage she couldn’t afford. “When I was a PVT in the Army, my husband and I made about 35k a year each. We stupidly bought a house at our first duty station. The house was beautiful and 250k, mortgage was 1500,” Leotta said. “We had a beautiful house but couldn't afford it really. Couldn't eat out, couldn't furnish it, couldn't get another car when we got put on opposite shifts. Then we had a baby and couldn't afford daycare, so for the first year of my daughters life my husband was on nights while I was on days. We only saw each other on Christmas, even our off days were different.”  It’s important to think about what your life will look like depending on how much of a loan you have to pay off. Remember that this is a big decision that will affect your future for years to come, and while you weigh your options, consider what is important to you. No matter what you get approved for and which lender you choose, there will always be options and a house that will work for you affordably. Don’t only think about the house; think about your quality of life.   Leotta left one final word of advice on the subject to sum it all up: “I know it is so tempting but please just consider. This is not the end all, be all.”