Home possible income limits, also known as home affordability limits, are a threshold set by banks and other financial institutions to determine if a borrower is eligible for a mortgage. These limits are based on the borrower’s income relative to the home’s purchase price and other expenses. For instance, if a program establishes income limits within a certain neighborhood, a potential homebuyer in that area might be required to have an annual income below a certain level to qualify for a mortgage.
Income limits play a crucial role in preventing housing instability and ensuring that buyers can afford their homes. They help to promote responsible lending and mitigate the risk of foreclosures. Historically, the concept of income limits gained prominence during the subprime mortgage crisis of 2008, highlighting the need for stricter lending standards.
