How Much Loan Can I Afford?

It depends on your income, existing debts, the interest rate, and the term — connected through your debt-to-income (DTI) ratio. As a verified example: an $80,000 salary, $500 a month in existing debts, 10% APR, a 5-year term, and a 36% DTI cap gives a maximum payment of $1,900 a month, which supports a loan of about $89,424. Enter your own numbers in the calculator above.

Your debt-to-income ratio is your total monthly debt payments divided by your gross monthly income, expressed as a percentage. It is one of the main numbers lenders use to judge whether you can handle more debt. A DTI of 36% or less is generally considered healthy, while many lenders treat 43% as a common upper limit for approval.

36% is the widely cited ideal: it leaves room for savings and unexpected expenses. 43% is the common lender ceiling — a loan that pushes your DTI to 43% may still be approved, but it leaves almost no margin. This calculator shows results at 36% by default and also compares 28% and 43% so you can see the trade-off.

First it computes your payment ceiling: gross monthly income times the DTI cap, minus your existing monthly debts. Then it reverses the standard amortization formula — from an affordable payment P, monthly rate r, and n payments, the maximum loan is P × (1 − (1+r)^−n) ÷ r. That is how the calculator turns a monthly budget into a loan amount.

No — this tool is for generic personal loans only. Mortgages add property tax, insurance, and PMI and use the 28/36 rule, so use the home affordability calculator instead. Car loans add ownership costs like insurance and fuel and follow the 20/4/10 rule, so use the car affordability calculator instead.

Every dollar of existing debt reduces your new loan payment dollar-for-dollar. For example, with an $80,000 salary and a 36% DTI cap your total debt budget is $2,400 a month; if you already pay $2,000 a month in debts, only $400 a month remains, which at 10% APR over 5 years supports a loan of only about $18,826. Paying down existing debt is the fastest way to raise your borrowing capacity.

A higher rate means more of each payment goes to interest, so the same payment supports a smaller loan. For example, with a $1,900 monthly payment and a 5-year term, 8% APR supports a loan of about $93,705 while 12% APR supports only about $85,415. Improving your credit score before borrowing can meaningfully raise what you can afford.

A longer term stretches the same monthly payment over more months, so it supports a bigger loan — but you pay far more interest. For example, a $1,900 payment at 10% APR supports about $58,883 over 3 years versus about $114,450 over 7 years. Choose the shortest term whose payment still fits your DTI budget.

Then the calculator shows zero borrowing capacity — and that is the honest answer. Borrowing more on top of an over-budget debt load is how borrowers get into trouble. The right move is to pay down existing debt or raise income until your DTI falls back under your cap, then re-run the numbers.

Enter your gross annual income (before taxes and deductions). Lenders define the debt-to-income ratio on gross monthly income, so this calculator divides your annual gross by 12. Using take-home pay instead would understate your DTI and inflate the result.

Not necessarily. This is an estimate of what fits a standard DTI guideline — not a loan approval. Real approval also depends on your credit score and history, employment, the lender's own rules, and fees not modeled here. Use the result as a planning ceiling, then shop offers and compare the actual APR and terms.

No. This calculator is an educational estimate based on the numbers you enter — it is not professional financial advice, and it is not a loan offer or approval. For decisions about borrowing, talk to a qualified financial professional or a licensed lender.