Home Loan Eligibility Calculator
Determine your maximum home loan eligibility and borrowing capacity before shopping for real estate. Using standard mortgage underwriting guidelines and Fixed Obligation to Income Ratio (FOIR) limits, this tool calculates the largest loan balance and monthly payment banks will approve.
Pre-tax monthly household salary and reliable income
Current auto loans, credit cards, and student loan installments
Prevailing fixed mortgage interest rate
Amortization term duration in years
Fixed Obligation to Income Ratio cap permitted by lender
Estimated principal loan amount approved by lenders
How to Use This Calculator
- Enter your gross monthly income before taxes and payroll deductions.
- Enter existing monthly recurring debts (auto loans, credit cards, student loans).
- Set your target loan tenure (e.g., 30 years or 15 years).
- Review the maximum borrowing eligibility and maximum monthly installment capacity.
Formula & Calculation Methodology
Lenders establish a maximum debt-to-income threshold (typically 40% to 50% FOIR). After subtracting existing debt liabilities, the remaining allowable monthly repayment is discounted back to present value using the loan amortization factor.
Worked Example
Borrower earning $8,500/mo with $650 in car/student debt seeking a 30-year loan at 6.5%
Frequently Asked Questions
What is FOIR and why do lenders enforce it?↓
Fixed Obligation to Income Ratio (FOIR) measures what percentage of your gross income goes toward recurring debt obligations. Lenders enforce caps (usually 40% to 50%) to ensure borrowers retain sufficient funds for living expenses without defaulting.
How can I increase my maximum home loan eligibility?↓
You can increase eligibility by adding a creditworthy co-borrower (such as a spouse), paying off high-interest personal or auto debts to free up cash flow, or extending the loan tenure from 15 to 30 years.
Does this eligibility calculation guarantee final mortgage approval?↓
No. This calculates borrowing capacity based on stated income and debt ratios. Final mortgage underwriting also evaluates credit scores (FICO), property appraisals, verifiable down payment source funds, and employment stability.
What limitation should I consider regarding property taxes and insurance?↓
This calculation models principal and interest (P&I) capacity. When applying with an escrow account, property taxes, homeowners insurance, and HOA dues will reduce the net principal loan amount by approximately 15% to 20%.
Related Calculators
Mortgage Affordability Calculator
Open calculator →House Affordability Calculator
Open calculator →Mortgage Down Payment Calculator
Open calculator →Closing Cost Calculator
Open calculator →Rent vs Buy Calculator
Open calculator →Annual Salary Calculator
Open calculator →Debt Ratio Calculator
Open calculator →Salary / Take-Home Pay Calculator
Open calculator →Source Citation & Disclaimer
Informational tool only; not licensed tax, legal, or financial advice.