Glossary

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Maximum Financing
Potential buyers will want to know what the maximum financing amount is on a home that they are considering buying. The maximum financing amount is the highest dollar amount that the lender will finance for a home. It typically is no more than 5 percent of the maximum loan-to-value amount that is permitted for the home. One reason that the maximum financing amount is important to a buyer is because it may affect the amount of their down payment. For example, if a home's maximum financing amount is lower than expected, a buyer may need to contribute a larger down payment to make up for the gap in financing. Of course, the buyer always has the option of simply finding another home that may be a better fit for his or her budget. The maximum financing amount assures one that he or she is not extraordinarily exceeding the home's value when they finance.