Work backward from an affordable payment to estimate the loan principal it could support.
Home Affordability Calculator
Form
Results
Maximum loan
0
Table of Contents
1
What is Home Affordability?
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How to Use This Calculator
- Enter or select Maximum payment, Loan term, Interest rate.
- Check the unit beside each measurement. For a percentage or rate, use the scale and time period stated in the form.
- Choose Calculate, then compare the output with the formula and example below. If you change a value or option, calculate again to update the result.
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Formula Used
Payment = P × r/(1−(1+r)^−n); at zero interest, payment = P/n. P is financed principal, r is the rate per payment period and n is the number of payments.
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Variables Explained
| Input | What it means |
|---|---|
| Maximum payment | Use the measured or stated value for this item, with the unit or category shown beside the field. |
| Loan term | The planned repayment duration, in the selected years or months. |
| Interest rate | The quoted rate for the time basis shown in the form; an annual rate is not a monthly rate. |
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Worked Example
A principal of 10,000 at 6% annual interest over 12 monthly payments gives r=0.06/12 and a payment of about 860.66 before fees.
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Why Use This Calculator?
Look at both the payment and total interest. A longer term can lower the regular payment while increasing the amount paid overall.
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Common Mistakes
- Match the interest period to the payment period. Taxes, insurance, fees and extra payments affect the total only when included in the form.
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Frequently Asked Questions
Does the payment include every borrowing cost?
The principal-and-interest formula covers the loan itself. Add the fees and other costs shown in the form, and compare the estimate with the lender’s actual schedule.
Does the payment include every borrowing cost?
The principal-and-interest formula covers the loan itself. Fees and other costs are included only where the form explicitly adds them; compare the estimate with the lender’s actual schedule.
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Sources & References
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