Loan Affordability Calculator
Work backwards from your budget. Enter the monthly payment you can afford, plus rate and term, to find the maximum loan amount.
Lenders quote monthly payments; this calculator reverses the math. Tell it what you can comfortably pay each month and it computes the largest loan that payment supports — useful before you shop for a car, a personal loan, or any financed purchase.
How to use this calculator
- Enter the monthly payment that fits comfortably in your budget.
- Enter the APR you expect to qualify for.
- Choose the loan term in years.
- Click Calculate to see the maximum loan amount that payment supports.
- Shop with that ceiling in mind — and consider borrowing less for a safety margin.
The formula
Maximum loan = monthly payment × ((1+r)^n − 1) ÷ (r(1+r)^n), where r is the monthly rate (APR ÷ 12) and n the number of monthly payments.
Worked example
With a $1,000 monthly budget at 7% APR over 5 years, the maximum loan is $50,501.99. Financing exactly that amount at 7% for 5 years gives a payment of $1,000.00 — the math checks both ways.
Frequently Asked Questions
How does this calculate the maximum loan?
It's the inverse of the standard loan payment formula: max loan = payment × ((1+r)^n − 1) ÷ (r(1+r)^n). You can verify it yourself — financing the result at the same rate and term gives back your exact monthly budget, which the calculator's own round-trip check confirms.
Should I borrow the maximum?
Usually not. The maximum assumes every spare dollar goes to the loan. Lenders also cap your debt-to-income ratio, often around 36–43% of gross income across all debts. Leave a cushion for insurance, maintenance, fees, and the unexpected — aim to borrow comfortably less than the ceiling.
How do rate and term change what I can afford?
Both matter enormously. At $1,000/month and 7% APR, a 5-year term supports about $50,502 while 7 years supports about $66,257 — but adds two more years of interest. A lower rate helps even more: at 4% over 5 years the same $1,000 supports about $54,299.
Does this include taxes and fees?
No — it covers principal and interest only. A car loan's real monthly cost also includes insurance and possibly an extended warranty; a mortgage adds taxes, insurance, and PMI. Budget for those separately and reduce your input payment accordingly.
What's the difference between this and a mortgage calculator?
The math is identical; only the typical inputs differ. This tool works for any amortizing loan — personal, auto, or mortgage. For home buying specifically, the mortgage calculator adds amortization detail tailored to home loans.