For us to understand how a loan can be deemed “unaffordable”, we first need to know the basic concept of debt relative to Economics. Economics comes from a Greek word that means management of a household. A household has its own budget and there are basic needs or expenses to be met like food, utilities, mortgage or rent, etc. A family needs to manage the finances wisely, so it can survive and does not run out of funds. Now, a household will not always have enough budget for every expense along the way, that is why it will need to incur debt at some point. From this concept alone, we can learn that once a household incurs a debt, it means that it is already filling a gap caused by a lack of resources.