Loan Affordability Calculator
Determine how much you can safely afford to borrow.
Your Financial Details
e.g., car payments, student loans, credit card minimums
New Loan Details
Lenders typically prefer a DTI of 36% to 43%.
You Can Afford a Loan Of Approximately
$0.00
Estimated Monthly Payment
$0.00
Total Monthly Debt (with new loan)
$0.00
How Much Loan Can You Really Afford?
What is Debt-to-Income (DTI) Ratio?
Your Debt-to-Income (DTI) ratio is a key financial metric that lenders use to assess your ability to manage monthly payments and repay debts. It’s calculated by dividing your total monthly debt payments by your gross monthly income. This number is one of the most important factors in determining how much money you can borrow. Our Loan Affordability Calculator uses this principle to estimate your borrowing power.
Why is Your DTI Ratio So Important?
Lenders view your DTI ratio as an indicator of your financial health. A low DTI shows you have a good balance between debt and income, while a high DTI can signal that you may have trouble making payments on a new loan.
- 36% or less: Generally considered ideal by lenders. You are in a strong position to handle additional debt.
- 37% to 43%: Manageable. You will likely still be approved for a loan, but you may have less flexibility in your budget.
- 44% or higher: High-risk. Lenders may see you as overextended and may be hesitant to approve a new loan.
Using this Loan Affordability Calculator helps you see where you stand before you even apply, so you can make adjustments if needed.
How to Improve Your Borrowing Power
If the affordable loan amount is lower than you’d like, there are two main ways to improve it:
- Increase Your Income: While not always easy, a higher income is the most direct way to lower your DTI and increase your borrowing power.
- Reduce Your Existing Debt: Paying down or paying off existing debts like credit cards or personal loans frees up more of your income, which allows you to take on a larger new loan payment.