Loan Affordability Calculator
Calculate the maximum affordable loan amount from monthly income, existing debts, loan term, interest rate, and a target debt-to-income ratio.
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Max Affordable Loan Amount
$79,968
Max Monthly Payment
$1,660
How Maximum Loan Affordability Is Calculated
This calculator finds the biggest loan you can take on without exceeding a target debt-to-income (DTI) ratio. It multiplies your monthly income by the target DTI to find the total monthly debt payments you can carry, subtracts your existing monthly debts to find the room left for a new loan payment, then converts that payment capacity into a maximum loan amount using the loan term and interest rate.
Max Loan Amount = Max Payment × [1 − (1 + r)⁻ⁿ] / r
Example
With $6,000 monthly income, $500 in existing debts, a 36% target DTI, a 5-year term, and a 9% interest rate, the total allowed debt payment is $2,160, leaving $1,660 available for a new loan payment. At 9% over 5 years, that payment capacity supports a maximum loan of roughly $79,000.
Common Use Cases
- Finding out how much you could realistically borrow before applying for a loan.
- Checking how existing debts limit your available borrowing capacity.
- Testing how a shorter or longer term changes the maximum affordable loan.
- Preparing for a lender conversation with a realistic borrowing ceiling in mind.
FAQs
What DTI ratio do lenders typically use?
Many lenders cap total DTI (including the new loan) around 36-43%, though this varies by loan type and lender. Mortgage lenders often use the 28/36 rule, while personal loan and auto lenders may allow different thresholds.
Why do my existing debts reduce the loan amount so much?
The target DTI caps your total monthly debt obligations, not just the new loan. Every dollar already committed to other debts is a dollar less available for a new loan payment, which is why paying down existing debt can meaningfully raise how much you can borrow.
Does this include taxes, insurance, or fees?
No — this estimates borrowing capacity based on principal and interest only. Loan origination fees, insurance requirements, or other add-on costs specific to your lender aren't included and could affect the actual amount you qualify for.