Determine your buying power instantly. Our how much i can borrow for mortgage calculator analyzes your gross income, existing debt obligations, and current interest rates to estimate the maximum loan amount lenders are likely to approve.
how much i can borrow for mortgage calculator
how much i can borrow for mortgage calculator Formula
This calculator uses the Front-End and Back-End Debt-to-Income (DTI) ratios to determine the maximum monthly payment you can afford, then converts that payment into a loan amount.
Max Loan = PV(Rate, Term, Max Payment)
Variables
- Gross Monthly Income: Your annual income divided by 12.
- DTI Limit: The percentage of income lenders allow for debt. We use a standard 36% for conservative estimates (though some go up to 43%).
- PV (Present Value): The calculation that turns a monthly payment stream into a lump sum loan amount based on the interest rate.
Related Calculators
- What Can I Afford Calculator
- Debt-to-Income Calculator
- First Time Home Buyer Tool
- Lending Limit Calculator
What determines how much I can borrow?
When you ask how much i can borrow for mortgage calculator, the answer depends on three main factors:
- Income: Your stable, verifiable gross income.
- Debts: Your current monthly obligations (car payments, student loans, credit cards).
- Interest Rate: Higher rates reduce your buying power because more of your monthly payment goes toward interest.
How to Calculate Borrowing Capacity (Example)
- Calculate Monthly Income: $60,000 annual / 12 = $5,000/month.
- Apply DTI (36%): $5,000 * 0.36 = $1,800 total allowable debt.
- Subtract Current Debt: $1,800 – $300 (car loan) = $1,500 available for mortgage.
- Determine Loan Amount: A $1,500 payment at 6.5% interest over 30 years equates to a loan of approximately $237,000.
Frequently Asked Questions (FAQ)
Yes. A higher credit score usually qualifies you for a lower interest rate, which increases your borrowing power significantly.
Yes, if you are applying as co-borrowers, you can include both incomes. However, lenders will also look at both of your credit scores and debts.
“Max Loan” is what the bank lends you. “Max Price” is the Loan Amount plus your Down Payment.
Banks look at gross income (before tax). You should always create a personal budget based on your net income (take-home pay) to ensure you aren’t “house poor.”