Start with your monthly take-home income and subtract essential expenses such as housing, utilities, food, insurance, transportation, existing debt payments, and regular savings. The amount remaining gives you a starting point for determining how much additional loan payment your budget can handle.
Don’t use every dollar of your remaining income for a new loan. Leave room for emergencies, irregular expenses, and changes in your financial situation. If a payment would require you to rely on credit cards or skip essential bills whenever an unexpected expense occurs, the loan is probably too large.
Once you’ve established a comfortable monthly payment, work backward using a loan calculator to estimate how much you could borrow at different interest rates and repayment terms.
Our monthly loan payment calculator can help you test different loan amounts and terms. Remember that affordability is more important than the maximum amount a lender says you qualify for.
