Loan Affordability Calculator

Find the maximum loan amount you can afford based on your monthly income, debts, interest rate, and loan term.

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Enter your values and click Calculate

Before applying for a mortgage, auto loan, or personal loan, you need to know how much you can realistically borrow. This calculator works backwards from what you can afford to pay each month — factoring in your gross income, existing debt obligations, interest rate, and loan term — to show your maximum loan amount, the safe payment range based on standard debt-to-income ratios, and how much of your income different payment amounts would consume.

How It Works

We use the reverse amortization formula to solve for principal: P = PMT × [1 − (1 + r)^−n] / r, where PMT is the maximum monthly payment, r is the monthly interest rate (annual ÷ 12), and n is the number of months. The maximum payment is determined by your debt-to-income (DTI) limit: Max Total Debt = Gross Income × DTI%. Max New Payment = Max Total Debt − Existing Monthly Debt. Total interest equals (monthly payment × months) − principal. DTI is a key metric lenders use; 36% is the most common approval threshold.

Examples

$7,500/month income, $500 existing debt, 30-year at 7%
A typical first-time homebuyer scenario estimating mortgage affordability at a standard 36% DTI.
Result: Maximum loan of ~$266,000, max monthly payment of $2,200, total DTI at 36% with the new loan.
$5,000/month income, $200 debt, 5-year auto loan at 6.5%
Checking how much car loan someone with a tight budget can afford at a conservative 28% DTI.
Result: Maximum auto loan of ~$53,700, max monthly payment of $1,200, keeping total debt at 28% of income.
$10,000/month income, $1,000 debt, 15-year mortgage at 7.5%
A higher earner with existing debt estimating mortgage capacity at the FHA 43% DTI limit.
Result: Maximum loan of ~$265,000, max new payment of $3,300/month after existing debt, DTI at 43% with new loan.

Frequently Asked Questions

What is a debt-to-income (DTI) ratio?
DTI is the percentage of your gross monthly income that goes toward debt payments. Lenders calculate it as: Total Monthly Debt Payments ÷ Gross Monthly Income × 100. A ratio of 36% or below is considered healthy by most lenders. Above 43% typically disqualifies you from a qualified mortgage.
What is the difference between front-end and back-end DTI?
Front-end DTI (also called the housing ratio) includes only housing-related costs — mortgage principal, interest, taxes, and insurance (PITI). The guideline is ≤ 28%. Back-end DTI includes all monthly debt payments (housing + car loans + student loans + credit cards). The guideline is ≤ 36–43%. This calculator uses back-end DTI.
Should I use gross or net income?
Lenders always use gross income (before taxes) for DTI calculations. This calculator does the same. Using net income would give you a stricter, more conservative affordability estimate — which can actually be useful for personal budgeting even if lenders don't require it.
What counts as existing monthly debt?
Include: minimum credit card payments, car loan payments, student loan payments, personal loan payments, child support or alimony, and any other recurring debt obligations. Do not include: utilities, insurance, groceries, subscriptions, or other living expenses — lenders exclude these from DTI.

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