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.
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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 ~$20,100; at 30% annual ~$18,700. 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.