Loan Affordability Calculator
Find the maximum loan amount you can afford based on your monthly budget and interest rate.
Max Loan Amount
$279,422
Total Paid
$540,000
Total Interest
$260,578
How to use this calculator
- Enter the maximum monthly payment you can comfortably afford.
- Enter the annual interest rate offered by your lender.
- Enter the loan term (e.g. 30 years for a mortgage).
- The result shows the maximum loan principal you can borrow within your budget.
⚠️ This estimate covers principal and interest only. Budget separately for property taxes, insurance, HOA fees, and maintenance.
Loan affordability: translating a monthly budget into principal
Affordability calculators invert the payment formula: given a target monthly outlay and rate, you solve for maximum principal. This matches “how much house/car can I buy if I refuse to exceed $X per month?”.
Reality checks: lenders also weigh DTI (debt-to-income), credit score, down payment, and reserves. Your comfort cap might be lower than the bank’s max—plan for taxes, insurance, maintenance, and emergency savings.
Pair with the loan repayment calculator to forward-test increases in rate or drops in income.
Related tools
These free tools pair well with this page — open them in a new tab to finish your workflow.
Frequently Asked Questions
How is loan affordability calculated?
Affordability is typically based on the debt-to-income (DTI) ratio — your total monthly debt payments divided by gross monthly income. Most lenders prefer a DTI below 36%, and the new mortgage payment alone should typically not exceed 28% of gross income.
What is the debt-to-income ratio?
DTI = total monthly debt payments / gross monthly income × 100%. It includes all recurring debts: mortgage/rent, car loan, student loan, credit cards. Lenders use DTI to assess whether you can manage the new payment alongside existing obligations.
Does this include property taxes and insurance?
The affordability estimate focuses on principal and interest. In practice, lenders also factor in property taxes, homeowners insurance, and HOA fees (often called PITI). Adding these typically increases the true monthly payment by 20–40% above P&I alone.
What credit score do I need for a mortgage?
Requirements vary by loan type: conventional loans typically require 620+, FHA loans 580+, and VA loans often have no minimum. A higher credit score usually means a lower interest rate and potentially a higher loan amount.
How much deposit do I need?
Conventional loans typically require 5–20% down; some lenders offer 3% for first-time buyers. FHA loans require 3.5% with a 580+ score. A larger down payment reduces the loan amount, monthly payments, and may eliminate private mortgage insurance (PMI).