How Much Can I Borrow? Debt-to-Income Ratio, Max Loan and True APR

With $6,000 of monthly income and a limit of 36% for loan repayments, you can afford $2,160 a month. At 6.5% over 30 years, that payment carries a loan of $341,735.37. Put 20% down and it buys a home of up to $427,169.21. Add a $400 car payment you already have, and the answer drops by anywhere from $22,782.36 to $63,284.33, depending on how your lender counts it.

That chain is the whole affordability calculation: a share of income becomes a monthly budget, the budget becomes a loan, the loan plus a down payment becomes a price. Each link has one input you control, and small changes to any of them move the result by tens of thousands.

Loan Calculator's Affordability & true rate screen runs that chain in one tap and, below it, turns any quote with fees into a True rate (APR). This guide walks through each input with worked numbers.

What should you compare?

Before you trust any "you can borrow up to" figure, check what went into it:

• Monthly income — lenders differ on whether they count income before or after tax. Use the same figure your lender uses, or the result will not match theirs.
• Loan repayments you already have — car loans, student loans, card minimums. How they are subtracted matters more than most people expect.
• Max repayment (% of income) — the debt-to-income (DTI) ratio. A rule of thumb, not a law of nature: lenders set their own limits.
• Rate and term — the same payment supports a very different loan at 5.5% over 30 years than at 7.5% over 20.
• Down payment (%) — it does not change the loan, only the price you can reach with it.
• Fees — an upfront fee or monthly insurance raises the real cost without changing the payment you were quoted. That is what the APR section is for.

Borrowing power at a glance

Here is the $6,000 example at 6.5% over 360 months with 20% down, for four repayment ratios you will often see quoted:

Every point of ratio is worth about $9,500 of loan here. The difference between a cautious 28% and a stretched 50% is more than $200,000 of borrowing power, paid for with $1,320 more every month for the next 30 years.

1. Repayment ratio: your monthly ceiling

Best for: setting the most you are willing to pay each month before you look at a single listing.

The first result is simple: Affordable monthly payment = income × ratio. At 36%, $6,000 becomes $2,160. The app rounds this down to the cent, so it never suggests a payment above your limit.

Which ratio? The app itself notes: "Lenders typically cap repayments at 30–50% of income and often ask for a 20–30% down payment." Beyond that, two rules of thumb are widely quoted:

• 28% of income for housing alone — a comfortable level that leaves room for savings and surprises.
• 36% for all debt payments together — a common ceiling for a household that also has a car loan or student loan.

A lender may approve a higher ratio; that does not make it comfortable. Remember that the ratio covers loan repayments only: taxes, insurance, utilities and repairs come out of what is left.

The screen starts at 50%, 20% down and 240 months. Change the ratio first; it is the input that reflects your own budget rather than the market.

2. Existing repayments: how the app counts them

Best for: anyone who already pays a car loan, a student loan or a card each month.

Suppose you already pay $400 a month on a car. There are two ways to account for it:

When you fill in Loan repayments you already have (per month), the app applies your ratio to the income left after those repayments: ($6,000 − $400) × 36% = $2,016. Many lenders instead cap all debt payments together, so the car payment comes straight off the $2,160 and leaves $1,760. The gap is only $256 a month, but over 30 years at 6.5% it is worth $40,501.97 of loan.

If your lender uses the total-debt cap, get its answer this way: leave existing repayments empty and lower the ratio by debts ÷ income × 100. Here that is 36 − 400 ÷ 6,000 × 100 = 29.33%. The budget becomes $1,759.80, the maximum loan $278,419.40 and the price $348,024.25 — within about $32 of the stricter last row, because 29.333… is rounded to 29.33.

3. Rate and term: the levers that change the loan

Best for: seeing how much a rate change or a longer term moves your borrowing power.

The budget stays at $2,160. What changes is how much loan that payment can carry:

At 6.5%, stretching from 20 to 30 years adds $52,025.37 of loan. It also stretches the interest: $228,689.94 over 20 years on the smaller loan against $435,864.72 over 30 years on the larger one. A longer term raises what you can borrow and, much faster, what you pay for it.

Rate works the other way. One point higher, from 6.5% to 7.5%, cuts the 30-year maximum by $32,817.30 with the same payment. If your rate is not fixed for the whole term, test your budget at a rate a point or two higher before you commit. The solve for rate, term, amount or payment guide shows how to run the same question backwards.

4. Down payment: from maximum loan to maximum price

Best for: turning a loan limit into a price range.

Maximum property price = maximum loan ÷ (1 − down payment %). With a 20% deposit the loan covers 80% of the price, so $341,735.37 ÷ 0.8 = $427,169.21 and the down payment is $85,433.84 in cash.

The loan is identical in every row; only your cash changes. Closing costs, moving and furniture come on top. Despite its label, the price works for anything bought with a loan and a deposit, such as a car. The down payment and LTV guide goes deeper into how the deposit changes a loan.

5. True rate including fees (APR)

Best for: checking what a quote really costs once fees and insurance are included.

The second half of the screen, True rate including fees (APR), asks for Loan amount, Annual interest rate (%/year), Term (months), Upfront fees and Fees and insurance each month, with both fees entered in money rather than percent. Upfront fees are treated as money you never receive; monthly fees are added to every payment.

Take $10,000 at 12% for 24 months with a $200 upfront fee and $10 a month of insurance. The payment is $470.73 plus $10. The app shows:

• True rate (APR): 16.19%/year
• Quoted rate: 12%/year
• Total fees: $440.00

Split the fees and each one alone adds about two points: the $200 upfront fee gives 14.04%, the $10 a month gives 14.13%. Together they turn a 12% loan into a 16% loan.

The app's own note gives the classic case: a "0% interest" plan with a 5% fee over 12 months is really about 9.6% a year. Enter $1,200 at 0% for 12 months with a $60 upfront fee and you get exactly 9.58%. On a large loan the same logic is gentler: $4,000 of fees on the $341,735.37 mortgage lifts 6.5% to 6.61%. If the fees are larger than the loan, or the payments would not even return the money, the app shows "Cannot compute an APR from these numbers." The true APR guide explains the calculation step by step.

6. How to use it in Loan Calculator

Best for: getting your own numbers in a minute.

1. Open Affordability & true rate from the Tools tab, or calculate a loan on the Calculator tab and tap the chip of the same name under the result.
2. The screen copies the rate of the loan you calculated last into both sections, and its amount and term into the APR section. The term for borrowing power starts at 240 months; change it to the term you want.
3. Fill in Monthly income, Loan repayments you already have (per month), Max repayment (% of income), Down payment (%), Annual interest rate (%/year) and Term (months), then tap Calculate.
4. Read Maximum loan at the top, then Affordable monthly payment and Maximum property price.
5. To price a quote, fill in the APR section and tap its own Calculate.

This screen is part of Pro. Unlike the loan comparison and the extra tools, it cannot be unlocked for 24 hours with credits. Your income and debts stay on your phone; nothing you type here needs a connection.

Which ratio should you use?

FAQ

What is a debt-to-income ratio?

It is the share of your income that goes to loan repayments. At $6,000 of income, $2,160 of repayments is 36%. Lenders use it to cap how much they lend; the app uses it to turn your income into an affordable monthly payment.

Why did adding my car loan lower the result less than I expected?

The app applies your ratio to income minus existing repayments, so $400 of car payments lowers the budget by $144 at 36%, not by $400. If your lender subtracts the full $400, leave the field empty and lower the ratio instead: 29.33% in the example.

Is the maximum loan what a bank will lend me?

No. It is the loan your chosen payment can carry at the rate and term you entered. A lender also looks at your credit history, the property's value and its own rules, and may lend less — or offer more than is comfortable.

Why is the maximum loan so sensitive to the term?

Because the same payment repays more principal the longer it runs. At 6.5%, $2,160 a month carries $289,710.00 over 20 years and $341,735.37 over 30, but the 30-year loan pays about $207,000 more interest.

Can I unlock this screen with credits?

No. Affordability & true rate is included with Pro only. Credits unlock other tools for 24 hours, such as the loan comparison and the credit card, savings and car lease calculators.