Loan Affordability Calculator

This calculator answers the question lenders won't answer for you: not "how much will someone lend me?" but "how much can I carry without strain?" It produces a safe monthly payment — the tighter of two independent ceilings — and then the loan amount that payment supports at your expected rate and term.

The two ceilings matter because they fail differently. The 36% debt-to-income rule is what underwriters check; the cash-flow cap is what your actual bank account experiences. A payment can pass the DTI test on paper while leaving you nothing after rent and groceries — this calculator takes whichever ceiling is lower, so the result respects both.

The calculator computes two independent ceilings on a new monthly payment. Ceiling one is the standard 36% back-end DTI cap: 36% of gross monthly income, minus the debt payments you already carry. Ceiling two is pure cash flow: income minus essential expenses minus existing debt. The safe payment is the smaller of the two (never below zero), and that payment is then converted into the loan amount it supports at your expected rate and term.

The reverse amortization is: loan amount = safe payment × (1 − (1 + r)^−n) ÷ r, where r is the monthly rate (APR ÷ 12) and n the term in months — the standard fixed-rate payment formula solved for principal. The affordable-loan figure is rounded to the nearest $100 for readability.

Assumptions: a fixed APR for the full term, the 36% back-end DTI convention, and a 28% single-obligation comfort line that triggers the caution flag. The result is deliberately presented as a ceiling — borrowing right up to any maximum leaves no margin for surprises, and lenders may approve you for more or less than this estimate.

A healthy result leaves daylight between the two ceilings and your intended payment. If the safe payment covers the loan you actually need with room to spare, you're borrowing comfortably. If the number barely covers it — or the caution flag appears — the honest reading is that the loan doesn't fit yet, however an approval letter might read.

Watch which ceiling binds. When the cash-flow cap is the tighter one, your expenses are the constraint and a cheaper rate won't fix it — reducing fixed costs or increasing income will. When the DTI cap binds, existing debt is the constraint, and paying off a small loan or card first can raise your safe payment substantially. And a good rule regardless: keep the new payment under about 28% of income even when 36% would technically pass.