Loan Eligibility Calculator
How much a lender will advance, working backwards from the payment your income supports. The tenure does most of the work, and stretching it buys a larger loan at a large cost in interest.
Also called: home loan eligibility, how much can i borrow.
$4,609,233.59 at 8.5% over 20 years, on an affordable payment of $40,000.00 a month. Your existing 10,000 of commitments already uses part of the 50% allowance.
An estimate, not an offer or a guarantee. Projected returns assume the rate you entered holds for the whole term, which no market does.
This is what the calculation gives for the numbers you entered. It is an estimate, not advice, and it knows nothing about your situation beyond those numbers. Rules for United States change on a published schedule; the effective date is shown on every rule-based tool.
How this is calculated
Lenders cap total debt payments at a share of gross income, commonly around half. Subtract existing commitments from that allowance to get the payment available for a new loan, then invert the annuity formula to find the principal it supports. Extending the tenure raises the eligible amount sharply because it spreads the same payment over more periods, which is why the ten-year comparison is shown alongside.
the annuity formula rearranged for principal: the loan an affordable payment supports- E
- Affordable payment (currency)
- i
- Monthly rate (decimal)
- n
- Months (months)
Method and limits
What it assumes
- Gross income, before tax, which is the convention lenders use.
- A fixed rate for the whole term.
What it deliberately does not model
- Lenders also apply a loan-to-value cap on the property, which often binds before income does.
- Credit history, age and employment type all move the actual offer.
Formula version 1.0.0 · definition 1.0.0 · United States · Report a problem with this calculator
Frequently asked questions
- Why does a longer tenure let me borrow so much more?
- Because eligibility is set by the payment, and a longer term spreads the same payment over more months. It raises the loan and raises total interest considerably, so it buys the house rather than saving money.