How Much Can I Borrow?
Before going to the bank, it is essential to know how much you can borrow based on what you can afford to pay each month. This calculator does the reverse of a standard loan calculation: given the maximum monthly payment you can handle, the interest rate, and the loan term, it tells you exactly what the maximum capital you can finance is.
Maximum financeable amount
Total to repay
Total interest
Suggested net monthly income (30% rule)
Mathematical result. The bank will also assess your credit history and financial profile.
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How it works
The formula is the inverse of PMT: P = payment × (1 − (1+r)^−n) / r, where payment is the maximum monthly payment, r is the monthly rate (annual rate / 12 / 100), and n is the total number of payments. As a general rule, lenders recommend that the monthly payment should not exceed 30–35% of your net monthly income. Worked example: you earn $3,000 net per month and apply the 30% rule, so your maximum payment is 3,000 × 0.30 = $900. With a reference rate of 6% annual (0.5% monthly) over 20 years (240 payments), the formula factor is 139.58, so the maximum financeable capital is 900 × 139.58 ≈ $125,600. Stretch the term or secure a lower rate and that ceiling rises; if the rate goes up, it drops.
How much you can borrow by income (30% rule, 6% over 20 years)
The table applies the 30% rule to net monthly income and a reference rate of 6% annual over 20 years (240 payments). It is indicative: with a different rate or term the capital changes considerably.
| Net monthly income | Maximum payment (30%) | Approx. capital over 20 years |
|---|---|---|
| $1,500 | $450 | ≈ $62,800 |
| $2,000 | $600 | ≈ $83,700 |
| $2,500 | $750 | ≈ $104,700 |
| $3,000 | $900 | ≈ $125,600 |
| $3,500 | $1,050 | ≈ $146,600 |
| $4,000 | $1,200 | ≈ $167,500 |
| $5,000 | $1,500 | ≈ $209,400 |
| $6,000 | $1,800 | ≈ $251,200 |
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Preguntas frecuentes
- What percentage of my income can I allocate to a loan payment?
- The general rule is that the monthly payment should not exceed 30–35% of your net monthly income. Some lenders apply a 40% threshold for mortgage loans. If you already have other debts, the total of all payments (including the new one) should not exceed that percentage.
- How does the interest rate affect how much I can borrow?
- The rate has a huge impact. With a monthly payment of $1,000 over 24 months: at 10% annual you can borrow ~$21,700; at 20% annual ~$19,648; at 30% annual ~$17,885. A lower rate lets you access more financing with the same monthly payment.
- Will the bank always lend me what this calculator shows?
- Not necessarily. The bank also evaluates your credit history, employment seniority, employment type, available collateral, and other internal criteria. This calculator gives you the mathematical ceiling; the bank decides whether you reach that ceiling based on your profile.
- What if I borrow less than I can afford?
- Borrowing less than you can afford is generally good financial practice. It reduces your risk in case of unexpected events (job loss, medical expenses) and you pay less total interest. Always leave a margin between your theoretical maximum payment and your actual payment.
- How can I increase my borrowing capacity?
- Options include: extending the loan term (more payments, lower monthly payment, but more total interest), securing a lower rate (better credit profile, comparing lenders), adding a co-borrower who adds income, or simply increasing your income before applying.
- What is the debt-to-income (DTI) ratio?
- It is the percentage of your net monthly income that goes toward paying debts. You calculate it by adding up all your monthly payments (credit cards, loans and the new payment) and dividing by your net income. Lenders typically approve with a DTI up to 30–35%; above 40% they consider it risky. If you already spend 20% on other debts, you only have 10–15% of headroom left for the new payment.
- Is a longer term worth it just to borrow more?
- It raises the capital you can borrow, but at a high cost. With a $900 payment at 6% annual, going from 10 to 20 years lifts the financeable capital from about $81,000 to $125,600, but the total interest almost doubles. A longer term unlocks more loan today in exchange for paying much more in total; it is worth it only if you need the lower payment, not to maximize the amount.