Starting with a monthly budget? Use this mortgage calculator reverse tool to calculate the maximum loan amount (Principal) you can afford based on your desired monthly payment and interest rate.
Mortgage Calculator Reverse
Mortgage Calculator Reverse Formula
To find the loan amount (Principal) based on a fixed monthly payment, we rearrange the standard amortization formula to solve for P:
Variables
- P: Total Principal (Loan Amount).
- M: Desired Monthly Payment.
- i: Monthly Interest Rate (Annual Rate / 12).
- n: Total Number of Months (Years × 12).
Related Calculators
- Home Affordability Calculator
- Debt-to-Income (DTI) Calculator
- Maximum Mortgage Qualifier
- Standard Mortgage Calculator
What is Mortgage Calculator Reverse?
A mortgage calculator reverse tool works backward from your budget to tell you “how much house” or “how much loan” you can afford. While most calculators ask for the loan amount to give you a payment, this tool takes your target monthly payment and computes the maximum principal you can borrow.
This is particularly useful for buyers who have a strict monthly budget limit (e.g., $2,500/month) and want to know the corresponding price range for homes, factoring in current interest rates and loan terms.
Note: This calculator determines the loan amount based on Principal & Interest (P&I). For a true affordability picture, ensure your “Desired Monthly Payment” input accounts for taxes and insurance costs that will be deducted from your total budget.
How to Calculate Mortgage Calculator Reverse (Example)
Imagine you can afford $2,000 per month for Principal & Interest:
- Desired Payment (M): $2,000.
- Interest Rate (r): 6.0% annually.
- Term (t): 30 years.
- Monthly Rate (i): 0.06 / 12 = 0.005.
- Total Months (n): 360.
- Calculation: Using the reverse formula, the maximum loan amount (P) is approximately $333,586.
Frequently Asked Questions (FAQ)
No. This tool performs a “reverse calculation” of a standard mortgage (finding Principal from Payment). A HECM Reverse Mortgage is a specific product for seniors (62+) that releases equity, which requires a different calculation based on age and home value.
The result shown is the Loan Amount. To find the total Home Price you can afford, you must add your cash down payment to this Loan Amount result.
Because a higher portion of your fixed monthly payment goes toward interest rather than principal. As rates increase, your purchasing power (the amount you can borrow for the same monthly cost) decreases significantly.
Lenders typically prefer that your total monthly housing payment (PITI) does not exceed 28% of your gross monthly income, and your total debt payments do not exceed 36%.