Loan Affordability Calculator: How Much Loan Can You Safely Borrow?
Quickly calculate your borrowing capacity based on income, monthly expenses, and planned EMI payments.
Understand your debt-to-income ratio and maintain financial safety.
Analysis
Can You Comfortably Afford This Loan?
0%
of your monthly income will be used to pay this loan
This means that for every 100 you earn each month, 0 will go toward loan
payments.
● Below 30% → Comfortable
● 30–45% → Tight but manageable
● Above 45% → Risky
✅
VERDICT...
Available Surplus0
Total Debt Load0%
Professional Tips to Avoid Overborrowing
The 30% Safety Limit
Financial experts suggest keeping loan EMIs below 30% of take-home pay to ensure you have enough for daily
expenses and savings.
Stress-Test Interest Rates
Before taking a variable-rate loan, calculate affordability if the interest rate rises by 2-3% to avoid
financial strain.
Maintain a 6-Month Reserve
Have at least 6 months of expenses saved before borrowing to manage emergencies safely.
Frequently Asked Questions About Loan Affordability
1. How much loan can I afford with my current income and expenses?
Subtract monthly expenses from income to see how much you can safely allocate for EMIs. A safe loan leaves
room for savings and emergencies.
2. What is a good debt-to-income ratio for loan approval?
Safe DTI: below 36% gross income or 30% net income. DTI = (Total Monthly Debt ÷ Monthly Income) × 100.
3. How do I calculate my debt-to-income ratio?
Add all monthly debts (EMIs, credit cards, personal loans) and divide by monthly income, then multiply by 100
to get your DTI %.
4. Is 30% of my income safe for EMIs?
Yes, keeping EMI payments at 30% or less ensures you can cover expenses, savings, and emergencies.
5. How much monthly surplus should I maintain?
Maintain at least 20% of income after EMIs and expenses for emergencies and unexpected costs.
6. Can I afford a home loan if my DTI is above 40%?
High DTI (40%+) is risky. Consider paying off debts or increasing income before applying for a home loan.
7. Should I use gross or net income for affordability calculations?
Use net income for personal budgeting; gross is used by banks for approval, but actual cash flow matters for
safety.
8. How does a longer loan tenure affect affordability?
Longer tenure lowers monthly EMIs but increases total interest paid. Always check total cost.
9. How do rising interest rates impact my loan affordability?
Higher rates increase EMIs. Stress-test your loan assuming rates increase by 2–3% to ensure affordability.
10. Can combining incomes improve loan affordability?