What Loan Amount Can You Afford Based On Monthly Payments?
When you are looking into getting a loan, it is easier to estimate the amount you can pay monthly, based on your current financial situation, as opposed to the total loan amount you can borrow, depending of course on its interest rate and its term. It is a common situation when you shop for a car or a home. In fact, knowing the total amount of the monthly payment is vital when applying for a loan.
This important number, the monthly payment, will inform you from the start if a cash down on the loan would be required on the transaction. For example, if you want to buy a house at $300,000.00 and you calculate that you can afford a mortgage of $240,000.00, you know that you require a cash down of $60,000.00 in order to be accepted by the lender, or at least, to avoid being refused automatically.
This approach can protect your credit score from decreasing since you would avoid making potential multiple credit applications.
With the following calculator, you can predict the possible total loan amount, based on your monthly payments, the interest rate and the term.
Please change the suggested values with your own amounts in the blue text boxes.