Wondering “how much can I lend” (borrow) from the bank? Our how much can i lend mortgage calculator estimates your maximum purchasing power by analyzing your income and existing debts against standard lender Debt-to-Income (DTI) ratios.
how much can i lend mortgage calculator
how much can i lend mortgage calculator Formula
Lenders use Debt-to-Income (DTI) ratios to decide how much they can lend you. This calculator typically uses a conservative 36% ratio for total debt (including the new house).
Max Loan = PV(Rate, Term, Max Payment)
Variables
- Monthly Income: Annual Gross Income / 12.
- Max Payment: The highest monthly mortgage payment a lender will allow based on DTI.
- PV (Present Value): The math used to convert that monthly payment into a total loan amount based on interest rates.
Related Calculators
- Debt-to-Income Ratio Calculator
- Home Affordability Calculator
- First Time Home Buyer Calculator
- Closing Cost Calculator
What is “How Much Can I Lend”?
While technically banks “lend” and borrowers “borrow,” many users search for how much can i lend mortgage calculator when they want to know the bank’s lending limit for their income.
This figure is often called your “Borrowing Capacity” or “Pre-Approval Amount.” It is primarily driven by your income, your existing monthly debt obligations (like car loans), and the current interest rate environment.
How to Calculate Lending Limit (Example)
- Calculate Monthly Income: $96,000 / 12 = $8,000/month.
- Apply DTI Cap: $8,000 * 36% = $2,880 (Total allowed debt payments).
- Subtract Debts: $2,880 – $500 (car loan) = $2,380 available for mortgage.
- Convert to Loan: A $2,380 payment at 6.5% over 30 years supports a loan of roughly $375,000.
Frequently Asked Questions (FAQ)
Possibly. FHA loans and some conventional programs allow DTI ratios up to 43% or even 50% with strong credit. This calculator uses a conservative 36% ratio to be safe.
Indirectly, yes. A better credit score gets you a lower interest rate. A lower interest rate means your monthly payment buys you a larger loan amount.
No. The “Max Loan” is what the bank gives you. Your “Max Home Price” would be the Max Loan + Your Cash Down Payment.
If you have $0 in monthly debts, your borrowing power increases significantly because your entire DTI allowance can go toward the mortgage payment.