1. What is the Home Loan Calculator?

The Home Loan Calculator determines the maximum loan amount you can afford based on your monthly payment capacity, interest rate, and loan term. It also considers your salary for eligibility assessment.

2. How Does the Calculator Work?

The calculator uses the present value of annuity formula:

Where:

• \( P \) — Principal loan amount (USD)
• \( PMT \) — Affordable monthly payment (USD)
• \( r \) — Monthly interest rate (decimal)
• \( n \) — Total number of payments (months)

Explanation: The formula calculates the lump sum amount (P) that can be paid off with regular payments (PMT) at a given interest rate over a specified period.

3. Importance of Loan Calculation

Details: Accurate loan calculation helps determine how much house you can afford, prevents overborrowing, and ensures your mortgage payments align with your budget.

4. Using the Calculator

Tips: Enter your comfortable monthly payment, current interest rate, desired loan term, and optionally your annual salary for eligibility assessment.

5. Frequently Asked Questions (FAQ)

Q1: What percentage of my salary should go to mortgage?
A: Typically no more than 28% of gross monthly income should go to housing expenses (PITI - Principal, Interest, Taxes, Insurance).

Q2: How does interest rate affect loan amount?
A: Higher rates reduce the loan amount you can afford for the same monthly payment. Even 1% difference can significantly impact affordability.

Q3: What is the standard loan eligibility ratio?
A: Lenders typically use 28/36 rule - 28% of income for housing, 36% for total debt including housing.

Q4: Should I include taxes and insurance?
A: For precise calculation, yes. This calculator focuses on principal and interest only.

Q5: How accurate is the salary-based eligibility?
A: It uses a general 3x salary rule. Actual approval depends on credit score, debts, down payment, and lender policies.