Before you apply for a loan, it helps to know how much your budget can really carry. Lenders answer that question with debt-to-income limits; you may prefer to start from a payment you know you can manage. This calculator does both: it converts your income and existing debts, or a chosen monthly payment, into the largest loan that payment can repay at a given rate and term.
How to use the loan affordability calculator
- Choose to base the result on income and debts or on a monthly payment.
- For income, enter your gross annual income, your current monthly debt payments and the maximum debt-to-income ratio to stay within. For a payment, enter the amount you can afford each month.
- Enter the expected interest rate and loan term.
- Optionally add an origination fee to see the cash you would actually receive.
- Compare the result with the tables of loan amounts by term and by rate.
The affordability formulas
In income mode, the payment available for a new loan is whatever room is left under the DTI limit:
That payment, M, is then converted into the largest loan it can repay over n months at monthly rate r — the present value of the payments:
Worked example
You earn $60,000 a year and already pay $1,200 a month toward rent and a car. You want to stay at or below a 36% debt-to-income ratio, and you are offered 9% APR for 5 years.
DTI limit: 60,000 ÷ 12 × 36% = $1,800 a month
Room for a new payment: 1,800 − 1,200 = $600
Loan: 600 × (1 − 1.0075−60) ÷ 0.0075 = 600 × 0.3613 ÷ 0.0075 = $28,904.02
Total repaid: $36,000, including $7,095.98 of interest
If a lender accepted a 43% ratio, the available payment would rise to $950 and the loan to about $45,765 — but that leaves much less breathing room in the monthly budget.
Term and rate trade-offs
The same $600 payment at 9% supports very different loans:
| Term | Loan amount | Total interest |
|---|---|---|
| 2 years | $13,133.49 | $1,266.51 |
| 3 years | $18,868.08 | $2,731.92 |
| 5 years | $28,904.02 | $7,095.98 |
| 7 years | $37,292.38 | $13,107.62 |
| 10 years | $47,365.02 | $24,634.98 |
Rates matter too. At 6% the five-year loan grows to $31,035.34; at 11% it shrinks to $27,595.82. Improving your credit score before applying can be worth thousands of dollars of borrowing power.
Borrowing less than the maximum
Leave room for the unexpected
The DTI ratio ignores groceries, utilities, insurance and savings. A payment that pushes you right to the limit can make an emergency hard to absorb, so many people aim for a payment well below the maximum.
Match the term to the purpose
Short-lived purchases deserve short loans. Financing a vacation or a computer over seven years means paying for it long after it is gone.
Compare total cost, not just the payment
Use the loan calculator to see the full schedule for any amount, and the APR calculator to compare offers that charge different fees. For a mortgage, the house affordability calculator adds property taxes and insurance.
Estimates only, not a credit decision. Lender rules, rates and fees vary, and your approved amount may differ.
Frequently asked questions
How do lenders decide how much I can borrow?
Most start with your debt-to-income ratio: total monthly debt payments, including the new loan, divided by gross monthly income. Personal lenders often look for 36% or less, though some accept 40–50% for strong applicants. Credit score, income stability and the loan's purpose also matter.
What counts as debt in the DTI ratio?
Rent or mortgage payments, car loans, student loans, minimum credit card payments, other personal loans and court-ordered payments such as child support. Living costs like utilities, groceries and insurance are not counted, even though you still have to pay them.
How does the loan term change how much I can borrow?
A longer term spreads the same payment over more months, so the loan amount rises — but interest rises faster. At $600 a month and 9%, a 5-year term supports about $28,900, while 10 years supports about $47,400 at more than three times the interest.
Why is the cash I receive less than the loan amount?
Many personal loans charge an origination fee, typically 1% to 8%, that is subtracted from the proceeds. You repay the full loan amount, so if you need a specific sum in hand, borrow enough to cover the fee.