How Much Can I Borrow Calculator

Enter your gross monthly income, the debt payments you already make, the interest rate and the term you want. The calculator applies a debt-to-income (DTI) limit and works back to the loan that the remaining payment supports.

How to use the calculator

1. Gross monthly income: your income before tax and deductions. For a salary, divide the annual figure by 12. For hourly pay, multiply the hourly rate by your usual weekly hours, then by 52, then divide by 12. If you are applying with a co-borrower, add both incomes.
2. Existing debt payments per month: the minimum payments that show on your credit report, such as car loans, student loans, credit card minimums and personal loans. Include child support or alimony you pay. Leave out rent you will stop paying, utilities, phone bills and insurance.
3. Interest rate: the rate you expect on the new loan.
4. Term: the number of years for the new loan.
5. Debt-to-income limit: the share of gross income the lender lets your total debt payments reach. The default is 36%.

The result shows the largest loan the remaining room supports, the highest new monthly payment, the total interest on that loan and the income left after all debt payments.

How the estimate is worked out

The calculator takes your gross income times the DTI limit, subtracts what you already pay on other debts and treats what is left as the most you can pay on the new loan each month. It then runs the loan payment formula backward to find the loan amount that payment would cover at your rate and term.

With the defaults, $10,000 a month of gross income, no other debts, a 36% limit, 6.5% and 20 years:

• 36% of $10,000 is $3,600, the most you can pay each month.
• At 6.5% over 20 years, $3,600 a month supports a loan of about $482,850.

Now add a $500 car payment. The room for the new loan drops to $3,100 and the loan to about $415,788. That one car payment costs about $67,000 of borrowing power. Paying off a small debt before you apply often raises your limit more than you would expect.

Example: a couple applying together

Two borrowers earn $5,500 and $4,000 a month before tax, so they enter $9,500. They have a $350 car payment and $250 of student loan payments, $600 in total. At a 36% limit, 6.5% and 30 years:

• 36% of $9,500 is $3,420.
• Minus $600 of existing payments leaves $2,820 for the new loan.
• $2,820 a month supports about $446,155.

If they pay off the car loan before applying, the room grows to $3,170 and the loan to about $501,528, roughly $55,000 more. If they find a rate of 6.0% instead of 6.5%, without paying off the car, the loan rises to about $470,352. For this couple, clearing the car loan does more than half a point off the rate. Results like this are why it is worth running a few versions before you speak to a lender.

How lenders use DTI

Lenders look at two ratios:

• Front-end ratio: housing costs alone (principal, interest, property tax, homeowners insurance, mortgage insurance and HOA dues) divided by gross income. A common guideline is 28%.
• Back-end ratio: housing costs plus all other debt payments, divided by gross income. This is the one this calculator uses.

Typical back-end limits are:

Loan type	Typical maximum DTI
Conventional, standard guideline	36%
Conventional with strong credit and reserves	up to 45% to 50%
FHA	43%, sometimes higher with compensating factors
VA	41% as a guideline, with residual income also checked
Auto and personal loans	varies by lender, often 40% to 50%

At a 43% limit and a 30-year term, the same $10,000 income supports about $680,307 at 6.5%. That shows how much the limit and the term move the answer. Just because a lender will approve a payment does not mean it fits your budget.

The housing payment is more than the loan payment

For a mortgage, the payment that counts toward DTI includes property tax, homeowners insurance and any PMI or HOA dues, not just principal and interest. If those come to $600 a month, subtract $600 from the “maximum new monthly payment” and enter the rest as your budget for principal and interest. In the default example, $3,600 minus $600 leaves $3,000, which supports about $402,000 at 6.5% over 20 years. Taxes vary a lot by county, so check the actual tax bill on homes you are looking at.

What else lenders check

DTI is one test among several. A lender will also look at:

• Credit score. It affects both approval and the rate. A lower score can mean a higher rate, which lowers the loan your income supports.
• Employment and income history. Usually two years in the same line of work. Self-employed borrowers need tax returns, and lenders average the income over two years.
• Down payment and reserves. Larger down payments and savings left over after closing can offset a higher DTI.
• The property. For a mortgage, the appraised value caps the loan through the loan-to-value ratio.
• Residual income. VA loans check how much is left each month for living costs after all debts, by family size and region.

Treat the result here as the upper end of what is possible. The loan payment calculator shows the payment on a specific amount, and the amortization schedule shows how that loan would pay down.

How much should you borrow?

Lenders set limits to manage their risk, not to plan your budget. Many households are more comfortable with total debt payments closer to 30% of gross income, leaving room for retirement savings, childcare, repairs and emergencies. Before you settle on a figure:

• Work out your take-home pay and list fixed costs that are not debts, such as childcare, transport, insurance and utilities.
• Add a maintenance budget of around 1% of the home’s value a year if you are buying.
• Keep an emergency fund separate from the down payment.
• Try a higher rate in the calculator, in case rates rise before you lock.

How to raise the amount you can borrow

• Pay off or pay down small debts, especially ones with high minimum payments relative to the balance.
• Add a co-borrower’s income.
• Choose a longer term. It lowers the payment and raises the loan, at the cost of more interest.
• Improve your credit score before applying, which can lower the rate.
• Shop several lenders. Limits and rates differ, and a quarter point on the rate changes the result.

If you already own a home, a lower rate through refinancing can free up room in your budget. The refinance calculator works out whether it would pay.

A larger down payment does not change what your income supports, but it raises the price you can pay for the same loan, and putting 20% down on a conventional loan removes PMI, which frees up room in the monthly budget.

The estimate is calculated in your browser, and your income and debts are not sent anywhere.

Learn more

What is debt-to-income ratio explains how lenders count your income and debts. If the number is lower than you hoped, how to increase how much you can borrow lists what moves it.

Frequently asked questions

How much house can I afford on $100,000 a year?

At $100,000 a year, gross monthly income is about $8,333. A 36% DTI with no other debts allows about $3,000 a month in total housing costs. After roughly $500 for tax and insurance, $2,500 a month supports about $395,000 at 6.5% over 30 years. Add your down payment to get a price range.

Do lenders use gross or net income?

US mortgage lenders use gross income, before tax and payroll deductions. That is why DTI limits look low compared with your take-home pay. A 36% DTI on gross income can be close to half of what you actually take home, so check the payment against your real budget as well.

What debts count in debt-to-income?

Monthly payments on debts that show on your credit report: mortgages, car loans, student loans, personal loans, credit card minimums and installment purchases, plus child support and alimony. Utilities, phone bills, insurance, groceries and rent you will stop paying after the purchase are not counted.

How are student loans counted if they are in deferment?

Lenders still count them. Depending on the loan program, they use the payment on your credit report, a payment from your repayment plan, or a percentage of the balance, often 0.5% or 1% a month, when the reported payment is zero. Ask your lender which rule it applies, because it can change your limit noticeably.

Why does a longer term let me borrow more?

Because the same monthly payment is spread over more payments. At 6.5%, $3,600 a month supports about $482,850 over 20 years and about $569,559 over 30 years. The 30-year loan costs far more in total interest, so borrowing the maximum on a long term is expensive.

Is the result a pre-approval?

No. It is an estimate based on one rule. A pre-approval comes from a lender after it checks your credit and documents your income, assets and debts. Use this result to see where you stand and to compare scenarios before you talk to lenders.