The three largest purchases you’ll make in a lifetime are most likely your home, your education and your car. Before you start looking at any of these, you’ll have to ask yourself “How much can I borrow?” In each case, you’ll probably want to buy more than you can afford, so you’ll need these basic guidelines to bring you back down to earth.

These are, by the way, the same guidelines lenders follow, but they’ll also factor in your credit score and previous payment history. That means, while you’re asking yourself “How much can I borrow,” the lenders will be looking at how much you can afford to borrow.

How much can I borrow for a house?
The first place to start is with your down payment. The rule of thumb is that you should have a down payment equal to 10 to 20% of the home’s price. Since the median price of a new home is currently $204,000, you need to save roughly $30,000. Consider consolidating debt with a personal loan a year in advance.

To get the best deal on your mortgage, you need a good excellent credit score, and that mean your debt to income ratio (DTI) should less than 36% of your gross income. If your annual earnings match the median salary of $70,000 for a family of four, that means you should have no more than $25,200 in debt, not counting your housing costs.

Your monthly payment should be no more than 28% of your monthly gross income. Again, if you’re that Average Joe all our numbers are based on, your monthly payment—including principal, interest, taxes and insurance—should be no more than $1,633.

How much can I borrow for my education?
Your monthly payments should be no more than 10% of the projected monthly income of your first job out of college. For instance, the average student loan debt for an undergraduate education is $21,000. Paying 8% interest on those student loans for a 10-year term will cost $250 a month. If your first job out of college pays at least $30,000, you should be able to make the payments without too much trouble, IF you avoid amassing a lot of credit card debt while you’re in school.

How much can I borrow for a car?
When you’re asking yourself what you can afford, be sure to add in expenses like insurance, gas, maintenance and depreciation, which add a lot to the cost of car ownership. For instance, the manufacturer’s suggested retail price for a gas-sipping 2010 Toyota Prius is $22,400; add in those addition expenses and the real cost is $35,307. Before you buy, check out the True Cost to Own™ calculator at Edmunds.com. And remember, you can’t let your monthly car payment push you over that 36% DTI.

The decision making process for all purchases should always begin with “How much can I afford?” instead of “How much can I borrow?” By using these guidelines, you’ll know what to expect from your lender, and avoid getting in over your head if you run into an unscrupulous loan officer.

As new businesses evolve, their financial needs change, too. Once they’ve made it through those rough early years of scrambling for seed money and start up money and are showing a positive cash flow, it’s time to obtain business lines of credit.

Banks will only grant business lines of credit to well-capitalized businesses with good collateral, but once acquired, they can make the difference between success and failure.

Business lines of credit are amazingly flexible, but come with immutable restrictions:

• They are to be used only for short-term needs, and never for major purchases like equipment or real estate.
• Business lines of credit must be paid back as soon as possible.
• Business lines of credit are typically granted for a year at a time, but can be renegotiated annually.
• Business lines of credit are required to be paid in full for a minimum of 30 or 60 days during each annual cycle.

Credit lines can be lifesavers when accounts payable temporarily exceed accounts receivable. A good example of this is purchasing seasonal inventory months before it will be sold. Another example of wise usage is bridging the gap while waiting months for payment on government contracts that require considerable investment.

Despite all the benefits, business lines of credit have some negatives. Banks almost always charge fees for start-up, transactions and annual usage. And they aren’t easy to obtain. Prepare to present an updated business plan and personal and business financial statements.