what is the maximum loan amount 
a maximum loan amount or loan limit describes the total amount of money that an applicant is authorized to borrow maximum loan amounts are used for standard loans credit cards and line of credit accounts the maximum will depend on several factors including a borrower s creditworthiness loan length loan purpose whether the loan is backed by collateral and various criteria of the lender understanding the maximum loan amounta maximum loan amount for a borrower is based on a combination of factors and determined by a loan underwriter it is the maximum amount of money 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 1lenders must also consider their own risk parameters when determining a borrower s total principal thus maximum loan amounts can also be based on the risk diversification of a lender in addition to the applicant s debt to income ratio underwriters take into account a variety of factors including credit score and credit history in determining the maximum loan amount an applicant can borrow unsecured lendingcredit cards are an example of unsecured lending credit card issuers also use underwriting to determine how much they trust a borrower to repay the maximum loan amount or credit limit one of the primary factors they consider is credit history which includes repayment history the number of credit accounts on a report and the length of a person s credit history credit card issuers will also check the number of inquiries on a credit report and the derogatory marks which include bankruptcies collections civil judgments and tax liens they also may take into account an applicant s work history personal loans are also available unsecured banks peer to peer p p websites and other lenders use credit history debt to income ratio and other types of underwriting to set the rates at which they are willing to lend money the better your credit rating the better the rates you will be offered people with excellent credit are offered much lower rates than those with bad credit personal lines of credit loc are another form of unsecured loan which gives you access to money you can borrow when you need it and there s no interest until you borrow having better credit scores may help you qualify for a lower annual percentage rate secured lendingwith secured loans specifically mortgage loans lenders use an additional qualifying ratio called the housing expense ratio which compares the borrower s housing expenses to their pre tax income housing expenses generally include the potential mortgage principal and interest payments property taxes hazard insurance mortgage insurance and association fees lenders will typically look for a housing expense ratio no higher than 28 similar to standard loans secured lenders will also analyze a borrower s debt to income with 36 being the common threshold required they also base a maximum loan amount on customized loan to value thresholds secured lenders will often lend between 70 90 of a secured asset s collateral value mortgage loans generally follow standard underwriting procedures with these variables also a part of the decision on how much to lend to a borrower a home equity line of credit heloc is another form of secured lending as its name implies the maximum loan amount is based on the equity you have in your home if you need money it can be a better choice than a credit card because the interest rate may be lower and the amount you can borrow higher if you have trouble paying back what you borrow however you can risk losing your home government sponsored loansgovernment sponsored loans offer some exceptions to the underwriting requirements and maximum loan amounts for certain types of home loans these loans may accept borrowers with debt to income ratios of up to 50 2 in the mortgage industry the federal housing finance agency fhfa publishes the maximum amounts for loans sponsored by fannie mae 3 freddie mac also publishes loan limits annually since fannie mae and freddie mac guarantee a large percentage of mortgages originated in the united states the conforming loan limit that is loans that conform to these entities guidelines is an important number in the mortgage finance industry the maximum conforming loan limit for one unit properties in most parts of the u s the limit increased from 726 200 in 2023 4