Getting pre-approved for a loan (especially a mortgage) is a crucial step in the borrowing process. It provides an estimate of how much a lender might be willing to lend you, based on a preliminary review of your financial information. This calculator offers a simplified estimation of your potential pre-approval status by considering key financial indicators. It's important to remember that this is not a guarantee of loan approval, as lenders conduct a thorough review during the full application process.
How This Calculator Works
This free pre-approval calculator uses a simplified scoring model to estimate your likelihood of being pre-approved. It takes into account several critical factors that lenders commonly assess:
Annual Income: Your yearly earnings are a primary indicator of your ability to repay a loan. Higher income generally improves your chances.
Credit Score: This three-digit number represents your creditworthiness. A higher score indicates a lower risk to lenders, making them more likely to approve your loan and offer better terms.
Existing Debt-to-Income Ratio (DTI): DTI is the percentage of your gross monthly income that goes towards paying your monthly debt obligations. Lenders prefer a lower DTI, as it shows you have more disposable income.
Desired Loan Amount: The amount you wish to borrow is compared against your income and creditworthiness.
Employment Stability (Years at Current Job): Lenders see stable employment as a sign of consistent income and reliability. More years at a job can be a positive factor.
Down Payment: For secured loans like mortgages, a larger down payment reduces the lender's risk and can significantly improve your pre-approval chances.
Simplified Scoring Logic
Our calculator assigns points based on the input values to arrive at an estimated pre-approval status. While actual lender algorithms are far more complex, this model provides a general idea. A "passing score" suggests a higher likelihood of pre-approval, while a "lower score" indicates potential challenges.
Disclaimer: This calculator is for educational and estimation purposes only. It does not constitute financial advice, nor does it guarantee loan approval. Consult with a qualified financial advisor or lender for accurate information specific to your situation.
function calculatePreApproval() {
var annualIncome = parseFloat(document.getElementById("annualIncome").value);
var creditScore = parseFloat(document.getElementById("creditScore").value);
var debtToIncomeRatio = parseFloat(document.getElementById("debtToIncomeRatio").value);
var loanAmountDesired = parseFloat(document.getElementById("loanAmountDesired").value);
var employmentYears = parseFloat(document.getElementById("employmentYears").value);
var downPayment = parseFloat(document.getElementById("downPayment").value);
var preApprovalResultElement = document.getElementById("preApprovalResult");
preApprovalResultElement.textContent = "–";
preApprovalResultElement.className = ""; // Reset classes
// Basic validation
if (isNaN(annualIncome) || annualIncome <= 0 ||
isNaN(creditScore) || creditScore 850 ||
isNaN(debtToIncomeRatio) || debtToIncomeRatio 100 ||
isNaN(loanAmountDesired) || loanAmountDesired <= 0 ||
isNaN(employmentYears) || employmentYears < 0 ||
isNaN(downPayment) || downPayment = 750) {
score += 20;
} else if (creditScore >= 700) {
score += 15;
} else if (creditScore >= 650) {
score += 10;
} else {
score += 5;
}
// Annual Income (assuming a base threshold and adding points for higher income)
if (annualIncome >= 100000) {
score += 20;
} else if (annualIncome >= 75000) {
score += 15;
} else if (annualIncome >= 50000) {
score += 10;
} else {
score += 5;
}
// Debt-to-Income Ratio
if (debtToIncomeRatio <= 30) {
score += 20;
} else if (debtToIncomeRatio <= 40) {
score += 15;
} else if (debtToIncomeRatio = 5) {
score += 10;
} else if (employmentYears >= 2) {
score += 7;
} else {
score += 3;
}
// Loan Amount vs Income Ratio (simplified – larger loan relative to income is riskier)
var loanToIncomeRatio = loanAmountDesired / annualIncome;
if (loanToIncomeRatio <= 3) { // Loan is 3x annual income or less
score += 15;
} else if (loanToIncomeRatio <= 4.5) { // Loan is up to 4.5x annual income
score += 10;
} else if (loanToIncomeRatio = 20) {
score += 10;
} else if (downPaymentPercentage >= 10) {
score += 7;
} else if (downPaymentPercentage >= 5) {
score += 3;
}
} else if (loanAmountDesired === 0) { // special case for zero loan amount
score += 5;
}
// Determine Pre-Approval Status based on score
var status = "";
var statusClass = "";
if (score >= 75) {
status = "Highly Likely to be Pre-Approved";
statusClass = "pre-approved";
} else if (score >= 55) {
status = "Likely to be Pre-Approved";
statusClass = "pre-approved";
} else if (score >= 35) {
status = "Possible Pre-Approval (May Require Further Review)";
statusClass = "pre-approved"; // Still in the pre-approved possibility
} else {
status = "Pre-Approval Unlikely (Consider Improving Financials)";
statusClass = "declined";
}
preApprovalResultElement.textContent = status;
preApprovalResultElement.className = statusClass;
}