Calculate your potential loan amount based on your monthly payment, interest rate, and loan term.
Loan Details
Your Estimated Maximum Loan Amount
$0.00
Understanding the Loan Amount Calculator
This calculator helps you determine the maximum loan amount you can afford given a specific monthly payment, an annual interest rate, and the desired loan term (in years). It's a crucial tool for financial planning, especially when considering major purchases like a home or a car.
How the Calculation Works
The calculator uses the standard loan payment formula to work backward and find the principal loan amount (P). The formula for the monthly payment (M) of an amortizing loan is:
M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1]
Where:
M = Monthly Payment
P = Principal Loan Amount (what we want to find)
i = Monthly Interest Rate (Annual Rate / 12)
n = Total Number of Payments (Loan Term in Years * 12)
To find the Principal Loan Amount (P), we rearrange the formula:
P = M [ (1 + i)^n – 1] / [ i(1 + i)^n ]
Example Calculation
Let's say you want to know the maximum loan amount you can get with the following parameters:
Desired Monthly Payment (M): $1,500
Annual Interest Rate: 6.0%
Loan Term: 25 Years
First, we need to calculate the monthly interest rate (i) and the total number of payments (n):
So, with a desired monthly payment of $1,500, an annual interest rate of 6.0%, and a 25-year loan term, you could potentially borrow approximately $232,848.63.
When to Use This Calculator
Mortgage Pre-Approval: Estimate how much house you can afford by setting your target mortgage payment.
Car Loans: Determine the maximum vehicle price based on your car payment budget.
Personal Loans: Understand how much you can borrow for other financial needs.
Financial Planning: Budget effectively by knowing your borrowing capacity.
Remember, this calculator provides an estimate. Actual loan amounts offered by lenders may vary based on your credit score, income, debt-to-income ratio, and current market conditions. It's always recommended to consult with a financial advisor or lender for personalized advice.
function calculateLoanAmount() {
var monthlyPaymentInput = document.getElementById("monthlyPayment");
var annualInterestRateInput = document.getElementById("annualInterestRate");
var loanTermYearsInput = document.getElementById("loanTermYears");
var loanAmountResultDiv = document.getElementById("loanAmountResult");
var errorMessageDiv = document.getElementById("errorMessage");
// Clear previous error messages
errorMessageDiv.style.display = 'none';
errorMessageDiv.innerHTML = ";
// Get input values and convert them to numbers
var monthlyPayment = parseFloat(monthlyPaymentInput.value);
var annualInterestRate = parseFloat(annualInterestRateInput.value);
var loanTermYears = parseFloat(loanTermYearsInput.value);
// Validate inputs
if (isNaN(monthlyPayment) || monthlyPayment <= 0) {
errorMessageDiv.innerHTML = 'Please enter a valid desired monthly payment greater than zero.';
errorMessageDiv.style.display = 'block';
loanAmountResultDiv.innerHTML = '$0.00';
return;
}
if (isNaN(annualInterestRate) || annualInterestRate < 0) {
errorMessageDiv.innerHTML = 'Please enter a valid annual interest rate (0% or greater).';
errorMessageDiv.style.display = 'block';
loanAmountResultDiv.innerHTML = '$0.00';
return;
}
if (isNaN(loanTermYears) || loanTermYears <= 0) {
errorMessageDiv.innerHTML = 'Please enter a valid loan term in years (greater than zero).';
errorMessageDiv.style.display = 'block';
loanAmountResultDiv.innerHTML = '$0.00';
return;
}
// If interest rate is 0, the calculation is simpler
if (annualInterestRate === 0) {
var principal = monthlyPayment * loanTermYears * 12;
loanAmountResultDiv.innerHTML = '$' + principal.toFixed(2).replace(/\B(?=(\d{3})+(?!\d))/g, ",");
return;
}
// Calculate monthly interest rate and total number of payments
var monthlyInterestRate = annualInterestRate / 100 / 12;
var numberOfPayments = loanTermYears * 12;
// Calculate the maximum loan amount (Principal) using the rearranged formula
// P = M [ (1 + i)^n – 1] / [ i(1 + i)^n ]
var numerator = Math.pow(1 + monthlyInterestRate, numberOfPayments) – 1;
var denominator = monthlyInterestRate * Math.pow(1 + monthlyInterestRate, numberOfPayments);
// Avoid division by zero if somehow denominator is zero (very unlikely with valid inputs)
if (denominator === 0) {
errorMessageDiv.innerHTML = 'Calculation error. Please check your inputs.';
errorMessageDiv.style.display = 'block';
loanAmountResultDiv.innerHTML = '$0.00';
return;
}
var principal = monthlyPayment * (numerator / denominator);
// Display the result, formatted as currency
loanAmountResultDiv.innerHTML = '$' + principal.toFixed(2).replace(/\B(?=(\d{3})+(?!\d))/g, ",");
}