You can likely qualify for a bigger and more expensive new home than you think. Whether you choose to make that large a purchase is another matter.

A combination of factors has made real estate purchases more affordable, particularly for first-time buyers, and the result may add to Atlanta's strong housing market, even in the face of rising interest rates.

Many years ago, the key factor limiting the spending of buyers was the maximum loan amount they could borrow. This was determined by calculating the proposed housing payment and other monthly obligations as a percentage of a borrower's gross income. Known as "debt-to-income ratio," this method is still used, but savvy lenders use other criteria to boost your borrowing power, whether or not you want to boost it.

The interest rate charged by lenders for home mortgage loans is the most important factor making houses more affordable. Long-term fixed rates remain extremely attractive even though interest rates have been slowly rising for much of the year. Pundits predict these rates will remain stable or rise only slightly in the coming months, and that spells expanded affordability for buyers.

Fixed loans are at rates lower than they have been for most of the past two decades, with around 6 percent being common. This translates into a monthly payment of $5.99 for each $1,000 borrowed. Thus a 30-year loan of $100,000 would have a monthly payment of $5.99 times 100, or about $599. Add a relatively small down payment of 5 percent or less, and the dream of homeownership comes into sharper focus.

Beyond payment affordability, lenders now rely most heavily on an applicant's credit score, the three-digit number assigned by credit bureaus to all consumers based on their credit habits.

Most lenders will be glad to check your credit over the phone and will take into account other details of your personal financial picture. This is called an informal prequalification. While this process does not obligate the lender to make you a loan, it does give you a more accurate assessment of your borrowing power.

Another factor helping buyers afford more house is the arrival of "zero down payment" mortgage programs, especially for first-time buyers. Programs such as the Nehemiah loan allow borrowers to borrow their down payment from a community organization, provided the seller makes certain financial concessions in the sales agreement.

Finally, the acceptance of nontraditional credit sources, such as payment of utility bills, as evidence of satisfactory credit has broadened consumer borrowing ability. This change, designed to encourage homeownership, has worked well to expand economic opportunity.

Also contributing to a buyer's strength is availability of adjustable-rate "interest only" mortgages. These loans often feature rates based on the LIBOR index, and sometimes can change rate and payment as often as once a month. While they meet a legitimate need for some borrowers, many first-timers are drawn to the lure of extremely low monthly payments, making it possible to buy more house than they might otherwise afford.

With these loans, borrowers give up the stability of a permanent fixed rate for lower initial rates, sometimes called "teaser" rates because they are set artificially low to attract buyers.

Six-month LIBOR loans are available in Atlanta in the low 3 percent range, giving people a shot at buying ever more expensive homes. It is important to remember that these loans can adjust upward (or downward) monthly, and some carry no lifetime maximum. Because fixed rates are at such reasonable levels now, this is probably not the best time to choose an adjustable rate.

Another plan that increases affordability is the FHA mortgage program. FHA loans are most attractive to buyers with past credit problems, unstable job histories or small down payments. FHA guidelines are more flexible than most conventional programs, but they have added expenses for FHA mortgage insurance.

All this affordability begs this question: If I qualify to borrow this amount of money, is it wise to do so?The answer depends on your financial situation.

If you are financially disciplined, in the early stages of your career, and can reasonably anticipate increased earnings, then borrowing to your capacity may be fine.

But if you are new to the responsibilities of homeownership or if you are looking forward to retirement and a possible decline in household income, it might be wise to borrow less than you might be able to afford.

Over the next few years, I expect interest rates to rise, and those with adjustable mortgages will see higher monthly payments. But owners who have selected fixed rates will enjoy the security of stable monthly loan payments and can avoid fluctuations in their housing expense.

As always, it's smart to talk to your financial adviser before making any major money decision, and the amount and type of your mortgage is no exception.

John Adams is a broker and investor. He hosts the "John Adams Radio Show," a call-in program dealing with homeownership and real estate, from 1 to 3 p.m. Saturdays on NewsRadio 640 (WGST). For more real estate information, visit www.money99.com.