The maths, with your numbers
What paying extra would do
Every dollar above the payment comes straight off the balance, so the interest stops being charged on it. These are worked out from the loan above.
How the balance falls
The same loan over different terms
| Term | Payment | Total interest | Total repaid |
|---|
A longer term lowers the payment and raises the interest. Your loan is highlighted.
Amortization schedule
Where each payment goes, from the first to the last.
Most loan calculators answer “what is the payment?”. This one starts from the payment you are comfortable with and tells you what that buys, which is the more useful direction when you are deciding what to look at.
What a payment buys
Three things move the answer: the rate, the term and the payment. A longer term lets you borrow more at the same payment, and costs more in interest. The table above prices every term so you can see the trade rather than guess at it.
What lenders will let you borrow
Your budget is one limit; the lender's rules are another. They look at debt-to-income, which compares all your monthly payments with gross income, and, for secured loans, at loan-to-value. Most conventional mortgage lenders stop around 45% of gross income, with automated underwriting stretching to 50%.
The gap between approved and affordable
Approval is based on gross income and required payments. It does not know about childcare, commuting, saving, or the fact that your income is not steady. Take the number this page gives you, then decide what you actually want to spend, which is usually less.
Quick answers
How much can I borrow on a $450 a month payment?
At 9.5% over five years, about $21,400. Over seven years the same payment borrows around $27,700, and costs considerably more in interest.
How much will a lender let me borrow?
Most conventional lenders stop around 45% of gross income once every monthly payment is counted, with automated underwriting stretching to 50%.
Does a longer term let me borrow more?
Yes, at the same payment, and it raises the total interest. The term table above shows both sides.
Is the maximum I am approved for what I should borrow?
No. Approval uses gross income and required payments; it knows nothing about childcare, commuting or saving.
Sources
- Fannie Mae Selling Guide B3-6-02, maximum debt-to-income ratios
- 12 CFR § 1026.43, ability to repay
- Federal Reserve G.19, average consumer loan rates