How much Loan I can Afford
Here is the saviour that finds the answer to the question How much Loan I can afford? You have to provide a monthly payment, loan term and interest rate as inputs for the Loan Affordability Calculator to get the total loan amount with step by step explanation.
Loan Affordability Calculator: Are you looking to buy a car or house and doesn't have enough money? Then take a car loan or home loan and check how much loan I can afford using the above given handy tool. It just takes the monthly possible payment value, loan tenure and interest rate given by the bank and gives the loan amount easily. Here you can check the formula and steps to calculate loan affordable amount with examples.
Process to check Loan Amount I can Afford
Loan You can afford is the amount of loan that you can afford to take. Get the simple and detailed steps to calculate the total loan amount that you can afford to take out easily.
- Check the monthly payment, number of months and interest rate.
- Add 1 to the interest rate.
- Get the loan term times of the result.
- Subtract 1 from the inverse of the result.
- Multiply it with the ratio of monthly payment to the interest rate to find the loan amount.
Loan Affordability Calculations
The total loan affordability amount by loan tenure, monthly payment and bank interest rate can be calculated using this formula:
Loan Amount PV = (PMT/i)[1 - 1/(1+i)n]
Where,
PMT is the monthly amount you want or can afford to pay for a loan payment
i is the annual interest rate of your loan
n is the what is the term of your loan
Example:
If a person can pay a monthly amount of $350 for 96 months. And the bank gives an interest rate of 3% for a home loan. How much home loan he/she can afford to take out?
Solution:
Given that,
Monthly payment PMT = $350
Interest rate i = 3% = 0.03/12 = 0.0025
Loan term n = 96 months
Amount of loan that you can afford is PV = (PMT/i)[1 - 1/(1+i)n]
= (350/0.0025)[1 - 1/(1+0.0025)96]
= 29,839.11
Therefore, you can afford $29,839.11 for a home loan.
How to Use Loan Affordability Calculator
- Give loan term, monthly payment and interest rate as inputs.
- Press the calculate button.
- You can check the total loan amount or amount of the loan you can afford to take.
Whether it is a car loan, EMI, home loan, sample loan or any other, you can calculate with the free calculators provided at Arithmetic Calculators
FAQ's on Loan Affordability Calculator
1. How much loan can I get on $35000 salary?
If you are taking a salary of $35000 without any fixed monthly obligation, then you can pay a maiximum of $17,500 as EMI considering 50% for FOIR. If the interest rate is 5% per annum, the loan amount eligibility can be $26,38,644 for 24 months.
2. How to calculate Loan affordability?
You can easily find the home or car loan affodability using free online Loan Affordability Calculator provided over this page.
3. What is the rule of thumb for how much house I can afford?
The common thumb rule to find how much you can afford to spend on house is that it should be not more than 30% of your gross monthly income, which is total income before taxes and other deductions are taken out.
4. What is the 28/36 mortgage rule?
28/36 mortgage rule states that if you should spen a maximum of 28% of your monthly income towards housing expenses and a maximum of 36% of your monthly income towards the overall debt whether its personal loan, car loan, credit cards, etc.
