1. What is the Home Loan Calculator?

The Home Loan Calculator By Salary determines how much you can borrow based on your affordable monthly payment, interest rate, and loan term. It helps potential homebuyers understand their purchasing power.

2. How Does the Calculator Work?

The calculator uses the present value of an annuity formula:

Where:

• \( P \) — Principal loan amount (USD)
• \( PMT \) — Affordable monthly payment (USD)
• \( r \) — Monthly interest rate (decimal)
• \( n \) — Number of months (loan term × 12)

Explanation: The formula calculates the maximum loan amount you can afford based on what you can pay monthly, the interest rate, and the loan duration.

3. Importance of Loan Calculation

Details: Accurate loan calculation helps prevent overborrowing, ensures comfortable repayments, and assists in financial planning for home ownership.

4. Using the Calculator

Tips: Enter your comfortable monthly payment, current interest rate, and desired loan term. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What percentage of my salary should go to home loan?
A: Financial advisors typically recommend keeping housing expenses below 28-35% of your gross monthly income.

Q2: How does interest rate affect loan amount?
A: Higher interest rates reduce the loan amount you can afford for the same monthly payment, and vice versa.

Q3: What's better - shorter term with higher payments or longer term with lower?
A: Shorter terms mean less interest paid overall but higher monthly payments. Choose based on your financial flexibility.

Q4: Should I include other costs in my calculation?
A: Yes, consider property taxes, insurance, and maintenance which typically add 25-40% to housing costs.

Q5: How accurate is this calculator?
A: It provides a good estimate, but actual loan amounts may vary based on credit score, lender policies, and other factors.