Borrowing power calculator
You enter monthly gross income, current debts, an assumed interest rate, and a repayment term. The calculator first estimates how large a monthly payment fits under a DTI cap (debt to income — payments as a share of income), then turns that payment into a loan amount. At income 8,000, debts 1,500, 7%, 25 years, and a 40% cap, the payment is 1,700 and the loan is about 240,528. This is educational guidance, not a credit decision.
Result
Enter income, debts, rate, and term, then click Calculate. DTI cap 40%. The result will show here.
The result comes from income, a DTI cap, and debts, then from converting a fixed payment into a loan amount. It is not a lender decision. For the ratio alone, use the DTI calculator.
How the result is calculated
Monthly gross income is multiplied by the DTI cap. DTI means debt to income — payments as a share of income. At 8,000 and a 40% cap, that is 3,200. After subtracting debts of 1,500, the available payment is 1,700. From that payment, at 7% for 25 years, the loan is about 240,528. With combined incomes of 6,000 and 5,000, debts of 2,000, 6.5%, and 30 years, the payment is 2,400 and the loan is about 379,706.
The calculator does not know a credit score, credit history, or a lender’s minimum down payment. Housing costs reduce the same limit before the payment is turned into a loan amount. At 9,000, debts 500, a 40% cap, tax 6,000, insurance 2,400, and a 250 fee, the available payment falls to 2,150, because 3,600 − 500 − 950 = 2,150. A 2 percentage-point buffer raises 6.5% to 8.5% only when the loan amount is calculated, so the loan is about 279,615. An 80,000 down payment raises the purchase budget to about 359,615 — it does not raise the payment.
Required fields are monthly gross income, current monthly debts, assumed annual rate, term in years, and the DTI cap (default 40%). Optionally you can add co-borrower income, living expenses, housing costs, a down payment, annual tax, annual insurance, a monthly fee, a front-end housing target, and a rate buffer. Living expenses lower the payment only when leftover income after those costs is below the DTI payment.
The DTI ratio alone, without converting it into a loan amount, is on the DTI page. The payment on a known 400,000 at 7% for 25 years — 2,827.12 — is on the mortgage page. A 20% down payment on 400,000, which is 80,000, is on the down-payment page. This page covers only the DTI limit and an estimate of loan size from the payment.
Header currency only labels the amounts. A comma and a period in 6.5 mean the same rate. You need positive income and non-negative debts, rate, term, and cap. The result is educational guidance — not a credit decision and not full underwriting.
How to use
- Enter monthly gross income, for example 8,000, and current monthly debts, for example 1,500.
- Enter the assumed annual rate and term in years, for example 7 and 25. Keep the 40% DTI cap, or choose Conventional 36% or FHA 43% above the fields.
- Optionally add co-borrower income, living expenses, housing costs, a down payment, a front-end housing target (often 28%), and a rate buffer.
- Click Calculate. At 8,000, 1,500, 7%, 25 years, and 40%, the payment is 1,700 and the loan is about 240,528. Below the result you will see how income is split and three DTI variants.
- The payment-to-income ratio alone is on the DTI page. A payment from a known loan amount is on the mortgage page.
DTI, annuity, and capacity
Available payment is income times the DTI cap, minus debts. From that payment the calculator estimates a loan amount. At 8,000, 1,500, 7%, 25 years, and 40%, the payment is 1,700 and the loan is about 240,528.
- DTI
- The payment-to-income limit used here. 40% of 8,000 minus 1,500 leaves a payment of 1,700 and a loan of about 240,528.
- Annuity
- Turning a fixed monthly payment into a loan amount. Payment 1,700 at 7% for 25 years gives about 240,528. That is an estimate, not underwriting.
- Capacity
- The estimated loan amount from this calculator. Combined income 6,000 + 5,000 with debts 2,000, 6.5%, and 30 years raises the loan to about 379,706.
One example, three DTI bands
With income 8,000, debts 1,500, a 7% rate, and a 25-year term, the same situation produces different loan amounts when only the overall DTI cap changes. At 36% the payment is 1,380 and the loan is about 195,252. At 40% the payment is 1,700 and the loan is about 240,528. At 43% the payment is 1,940 and the loan is about 274,485. Those are not three lender offers — they are three caps in one simple model.
In the United States, conventional guidance often cites a 28% housing share of income and a 36% overall DTI; FHA lending commonly allows a higher overall ratio. This calculator still turns the overall payment into a loan amount. Optional housing costs and a front-end target help you see whether housing stays under the classic 28% rule. The result remains educational guidance, not a pre-approval.
| Overall DTI | Available payment | Loan at 7% / 25 years | Band |
|---|---|---|---|
| 36% | 1,380 | about 195,252 | conventional |
| 40% | 1,700 | about 240,528 | mid-range |
| 43% | 1,940 | about 274,485 | FHA-style |
The table uses the same base case as Example 1 on this page. It illustrates how a DTI cap changes estimated loan size at a fixed income and rate — it is not a bank ranking.
Usage examples
Example 1
- Gross income: 8,000
- Debts: 1,500
- 7%, 25 years, 40% cap
Payment ≈ 1,700
Loan ≈ 240,528
Income 8000, debts 1500, 40% DTI, 7% / 25 years: payment 1700, loan about 240528.
Example 2
- Income: 6,000 + 5,000
- Debts: 2,000
- 6.5%, 30 years, 40% cap
Payment ≈ 2,400
Loan ≈ 379,706
Incomes 6000 + 5000, debts 2000, 6.5% / 30 years: payment 2400, loan about 379706.
Example 3
- Income: 9,000, debts: 500
- Down 80,000; tax, insurance, HOA; 2 pp buffer
Payment ≈ 2,150
Loan ≈ 279,615
Budget ≈ 359,615
With housing costs the payment falls to 2150; a 2 pp buffer yields about 279615, and an 80000 down payment raises the purchase budget to about 359615.
Example 4
- Income: 12,000
- Debts: 2,000
- 6.5%, 20 years, 35% cap
Payment ≈ 2,200
Loan ≈ 295,075
At a 35% cap, with no housing costs, the payment is 2,200 and the loan is about 295,075.
Example 5
- Income: 6,000
- Debts: 800
- 7%, 25 years, 40% cap
Payment ≈ 1,600
Loan ≈ 226,379
At a 40% cap, with no housing costs, the payment is 1,600 and the loan is about 226,379.
How to read the result
- The result shows an indicative payment and loan amount from a DTI cap and from turning that payment into a loan size.
- The calculator does not replace a lender decision. Lenders also look at credit scores, income type, and risk policy.
- Treat the result as a starting point for a budget conversation, not as a promise of financing.
Related calculators
Frequently asked questions
What is a borrowing power calculator on this page?
The calculator estimates an available payment from a DTI cap, then a loan amount from that payment. At income 8000, debts 1500, 7%, 25 years, and 40% DTI, the payment is 1700 and the loan is about 240528. Educational guidance, not underwriting or a credit check.
How is borrowing power calculated from a DTI cap?
The available payment is 1,700, because 8,000 × 0.40 − 1,500 = 1,700. From that payment, at 7% for 25 years, the loan is about 240,528.
How is capacity calculated with two incomes?
Combined income of 11,000 at a 40% cap gives 4,400. After subtracting 2,000 of debts, the payment is 2,400. At 6.5% for 30 years the loan is about 379,706.
How do housing costs and a rate buffer change the loan?
From the 9,000 × 0.40 cap the calculator subtracts debts of 500 and housing costs of (6,000 + 2,400)/12 + 250, which is 950, leaving payment 2,150. With a 2 pp buffer the loan amount is calculated at 8.5% for 30 years, about 279,615. An 80,000 down payment raises the purchase budget to about 359,615.
What does DTI, debt to income, mean here?
It is payments as a share of income. In this calculator a 40% cap sets the available payment. The percent alone, without converting it into a loan amount, is on the DTI page.
Is 240,528 a credit decision?
No. The calculator does not include a credit score, a lender’s minimum down payment, or full underwriting. The result is guidance from a DTI cap and an estimate of loan size from the payment.
Does this replace a lender pre-approval?
No. The calculator does not check credit scores, employment type, or a bank’s risk policy. It shows a DTI-based payment and an estimated loan size only.
Is this a mortgage affordability calculator with taxes and insurance built in?
Only if you enter those housing costs in the optional fields. The loan size still comes from the overall DTI payment converted to an annuity — not a full house-affordability engine with taxes and insurance built in by default.
How does the rate buffer work?
It adds percentage points to the assumed rate only when the loan amount is calculated. From 6.5% with a 2 pp buffer you get 8.5%, so the same 2,150 payment supports a smaller loan.
Does an 80,000 down payment raise the payment?
No. The down payment adds to the purchase budget: loan plus down. The payment still comes from the DTI cap.
Does a comma in 6.5 work?
Yes. 6,5 and 6.5 are the same rate. Header currency only labels the result.
Where do I calculate the payment on a known 400,000?
On the mortgage page: 7% for 25 years is 2,827.12. Here you do the reverse — estimate a loan amount from an available payment.
Do living expenses of 2,500 always cut the 2,150 payment?
Only when leftover income after those costs is below the DTI payment. In example 3 the payment stays 2,150, because housing already took 950 off the cap.
Knowledge sources
The calculator estimates a payment from a DTI cap and a loan amount from that payment. This is guidance, not a credit decision.
Page updated October 29, 2026