Loan Affordability Calculator — How Much Can You Borrow?
Free US loan affordability calculator. Estimate your maximum loan amount from gross income, existing debts, and lender DTI limits — with conservative (28%), standard (36%), and aggressive (43%) scenarios.
1. Income & Employment
Total income before taxes and deductions.
Side income, rental income, or other recurring earnings.
2. Monthly Expenses & Debt
Groceries, utilities, transport, etc. Not part of DTI.
Available Payment = (Gross Monthly Income × DTI) − Existing Monthly Debt
Maximum loan is derived from the available monthly payment using the standard present-value-of-annuity formula at the chosen rate and term.
Notes
Affordability analysis for home purchase
This calculation is for informational purposes. Actual loan approval depends on lender criteria, credit score, and other factors. Consult a financial advisor for personalized advice.
Prepared By
Date
GUIDE
How to Use This Loan Affordability Calculator
This free loan affordability calculator helps US borrowers estimate
how much they can borrow based on gross income, existing monthly debts,
and the lender's debt-to-income (DTI) limit. It shows your maximum loan amount at three
common DTI thresholds — 28%, 36%, and 43% — so you can compare conservative and
aggressive scenarios before you apply. Pair it with our
home loan calculator
to translate the affordability result into a full monthly mortgage payment with taxes,
insurance, and PMI.
1
Enter Income
Enter your annual gross income and any additional recurring monthly income, plus your employment status and income stability.
2
Add Debts & Expenses
Include rent or mortgage, car payments, credit card minimums, student loans, other debt, and typical living expenses.
3
Set Loan Preferences
Enter the interest rate you expect and the repayment term you're considering (10, 15, 20, or 30 years).
4
Review Scenarios
See maximum borrowing at 28%, 36%, and 43% DTI plus your front-end and back-end DTI ratios.
5
Save, Print or Export
Save a draft in your browser, print the results, or download a PDF for your records.
AFFORDABILITY EDUCATION
What Does a Loan Affordability Calculator Calculate?
A loan affordability calculator — sometimes called a
borrowing power calculator or how much can I borrow
calculator — converts your income and existing debt into a maximum loan
amount. It uses the lender's debt-to-income (DTI) limit as the primary constraint,
then solves for the loan principal that produces the resulting monthly payment.
Key affordability calculations
Gross Monthly Income: Annual gross income divided by 12, plus additional monthly income.
Housing payment includes rent or mortgage, plus taxes and insurance where applicable. Total monthly debt includes housing, car payments, credit card minimums, student loans, and any other recurring debt obligations.
3. Available monthly payment
Available payment = (Gross monthly income × DTI cap) − existing monthly debt
The calculator shows three DTI caps: 28% (conservative), 36% (standard), and 43% (aggressive, the general US Qualified Mortgage ceiling).
4. Maximum loan amount
The max loan is derived by solving for the principal whose fixed-rate amortizing payment
equals the available monthly payment:
P = Payment × (1 − (1 + r)−n) ÷ r
Where r is the monthly interest rate and n is the number of monthly payments. When the interest rate is zero, the formula reduces to P = Payment × n.
Important assumptions
Living expenses are shown for context but are not part of the DTI calculation.
The DTI caps (28%, 36%, 43%) are simplified thresholds. Actual lender limits vary by loan program and borrower profile.
The calculator does not model credit score, down payment, asset reserves, or collateral requirements.
Taxes, insurance, HOA fees, PMI, and closing costs are not included in this affordability estimate.
This is an educational estimate, not a pre-approval or credit decision.
MoneyTool separates calculation results from financial education and lender-specific
requirements. The calculator uses documented DTI and amortization mathematics for the
affordability estimate, while external lending information should be verified with
authoritative sources and the lender offering the loan.
Author and editorial responsibility
Methodology reviewed by the
MoneyTool Finance Expert Team,
a group of accountants, CPAs, and personal-finance analysts who maintain
MoneyTool's calculator library and financial education content.
Last reviewed:
| Fixed-rate monthly amortization
Next review: When calculation logic, supported inputs, or relevant guidance changes.
This calculator and its educational content are maintained as part of MoneyTool's finance
calculator resource library. Methodology is reviewed when the calculation logic or relevant
educational guidance changes.
Authoritative U.S. lending and affordability resources
Consumer Financial Protection Bureau (CFPB) — Debt-to-Income (DTI):CFPB: What is a debt-to-income ratio?
explains how lenders use DTI and how it affects loan approval.
Consumer Financial Protection Bureau (CFPB) — Owning a Home:CFPB Owning a Home
is the official consumer guide to buying and financing a home, including affordability tools.
Consumer Financial Protection Bureau (CFPB) — Loan Resources:CFPB Loan Resources
covers personal, auto, student, and mortgage shopping guidance.
Federal Trade Commission (FTC) — Consumer Credit:FTC Consumer Credit Resources
provides consumer guidance on shopping for credit and avoiding deceptive lending.
U.S. Small Business Administration (SBA) — Loans:SBA Loan Programs
covers SBA-backed financing and lender matching for business borrowers.
Internal Revenue Service (IRS) — Small Business and Self-Employed:IRS Small Business Tax Center
covers business expense treatment, including rules around interest and loan-related costs.
External resources are provided for education and verification. MoneyTool is not affiliated
with or endorsed by the CFPB, FTC, HUD, SBA, IRS, or any lender linked from this page.
SMART BORROWING
Tips for Smart Borrowing Decisions
Affordability is not only about what a lender will approve. Consider taxes, insurance,
HOA fees, maintenance, and future income changes when deciding how much to borrow.
📊
Know Your DTI
Aim for a back-end DTI below 36% for comfortable financial headroom. Above 43% may reduce approval odds.
💰
Build an Emergency Fund
Keep 3–6 months of living expenses saved before taking on new debt. It prevents small shocks from becoming big problems.
📈
Improve Your Credit
A higher credit score often qualifies you for a lower interest rate — which meaningfully increases what you can afford.
📋
Use the 28/36 Rule
Keep housing below 28% of gross income and total debt below 36% for a conservative, comfortable budget.
🔍
Shop Multiple Lenders
Even a 0.25% rate difference can shift your affordable loan amount by thousands. Get 3–5 quotes within a short window.
📝
Borrow Less Than the Max
The maximum a lender will approve is not the maximum you should take. Leave room for savings, retirement, and emergencies.
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Frequently Asked Questions About Loan Affordability
How much loan can I afford?
The amount you can afford depends on your gross income, existing monthly debt, credit profile, interest rate, and repayment term. Most US lenders use a debt-to-income (DTI) limit between 36% and 43% of gross monthly income.
What is the 28/36 rule?
The 28/36 rule is a common affordability guideline: housing costs should stay below 28% of gross monthly income, and total debt payments should stay below 36% of gross monthly income.
What is a good DTI ratio?
A back-end DTI below 36% is generally considered healthy. DTI up to 43% may still qualify for a Qualified Mortgage in the US, and some lenders go higher with compensating factors.
How is the maximum loan amount calculated?
The calculator determines the monthly payment capacity by subtracting existing debt from the allowed DTI. It then converts that monthly payment into a loan amount using the standard present-value-of-annuity formula based on the interest rate and term.
Does this calculator guarantee loan approval?
No. This calculator provides an educational affordability estimate. Actual approval depends on credit score, employment history, assets, collateral, and each lender's underwriting rules.
Is this loan affordability calculator free?
Yes. MoneyTool provides this loan affordability calculator free for educational and planning use.
Can I save my affordability analysis?
Yes. Save Draft stores the calculator inputs in your browser. Print Results and Download PDF can be used to keep a copy of the displayed analysis.
LEGAL
Loan Affordability Calculator Disclaimer
This loan affordability calculator provides estimates for informational and educational
purposes. It does not constitute financial, legal, tax, accounting, or lending advice.
Actual loan approval amounts depend on lender policies, credit history, income
verification, assets, collateral, and other underwriting factors.
Estimates only: Results depend on the inputs and assumptions described in the methodology.
Not a pre-approval: The calculator does not perform a credit check and does not constitute a loan pre-approval, approval, or commitment to lend.
Lender criteria vary: DTI limits, income treatment, and debt rules differ between lenders and loan programs.
Verify before borrowing: Confirm affordability with your lender and review the Loan Estimate and closing documents before accepting financing.
Last methodology review: .
Calculator logic and educational content should be reviewed again whenever the methodology,
supported inputs, or relevant external guidance changes.
