1. What is Home Loan Eligibility?

The home loan eligibility amount is the maximum principal (P) you can borrow based on what you can afford to pay monthly (PMT), the interest rate (r), and the loan term (n). This calculation helps determine how much house you can afford.

2. How Does the Calculator Work?

The calculator uses the home loan eligibility formula:

Where:

• \( P \) — Principal loan amount (USD)
• \( PMT \) — Affordable monthly payment (USD)
• \( r \) — Monthly interest rate (annual rate ÷ 12, as decimal)
• \( n \) — Total number of payments (term in years × 12)

Explanation: The formula calculates the present value of an annuity (the loan amount) based on regular payments, interest rate, and time period.

3. Importance of Loan Eligibility Calculation

Details: Knowing your maximum loan amount helps set realistic home-buying budgets, prevents overborrowing, and ensures you can comfortably make payments throughout the loan term.

4. Using the Calculator

Tips: Enter your comfortable monthly payment, the annual interest rate (as percentage), and loan term in years. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: Should I include taxes and insurance in the monthly payment?
A: This calculator uses principal and interest only. For a complete picture, consider adding estimated taxes and insurance to your monthly payment.

Q2: How does interest rate affect loan eligibility?
A: Higher rates decrease the amount you can borrow for the same payment, while lower rates increase borrowing power.

Q3: What's a typical loan term?
A: Most home loans are 15 or 30 years, but other terms may be available. Longer terms mean lower payments but more interest paid overall.

Q4: Does this include down payment?
A: No, this calculates only the loan amount. Your total purchase price would be loan amount plus down payment.

Q5: How accurate is this calculation?
A: This provides a good estimate, but actual loan amounts may vary based on credit score, debt-to-income ratio, and lender policies.