1. What is Home Loan Eligibility?

This calculator determines the maximum loan amount you can qualify for based on your affordable monthly payment, credit score, and loan term. Your credit score significantly impacts the interest rate you'll receive.

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 (annual rate ÷ 12)
• \( n \) — Total number of payments (term in years × 12)

Explanation: The formula calculates the present value of a series of future payments (your monthly mortgage payments) discounted at your interest rate.

3. Importance of Credit Score

Details: Your credit score directly affects the interest rate lenders offer. Higher scores (750+) typically get rates 0.5-1.5% lower than lower scores (600-650), which can translate to tens of thousands saved over the loan term.

4. Using the Calculator

Tips: Enter your comfortable monthly payment, select your credit score range, and choose your desired loan term (typically 15-30 years). The calculator will show your maximum loan amount and the interest rate used.

5. Frequently Asked Questions (FAQ)

Q1: How accurate is this calculator?
A: It provides a good estimate, but actual loan offers may vary based on additional factors like debt-to-income ratio, property type, and lender policies.

Q2: What's considered a good credit score for mortgages?
A: 700+ is generally good, 750+ excellent. Below 650 may face higher rates or require larger down payments.

Q3: How can I improve my loan eligibility?
A: Improve credit score, reduce debts, increase down payment, or consider a longer loan term.

Q4: Are there other costs not included here?
A: Yes, this doesn't include property taxes, insurance, PMI, or closing costs which affect total monthly payments.

Q5: How often do mortgage rates change?
A: Rates can change daily based on market conditions. Lock your rate when you find a good offer.