How Much Can You Loan

Consider The Ongoing Costs

Now you own your home. You love it. You never want to leave it, and then the roof begins to leak. When youre deciding how much home you can afford, dont forget about ongoing repairs and maintenance.

A good rule of thumb is to set aside at least 1% of your homes value every year for repairs and maintenance. So, to keep a $250,000 home in great shape, that means you should plan to save $2,500 per year.

Also keep in mind that prices for everything tend to go up, not down. Property taxes, homeowners insurance and utilities these are expenses that will continue as long as you own your home.

Considering Paying Off Your Auto Loan Early

Most auto loan lenders allow borrowers to prepay on the principal balance of their loan without a prepayment penalty. .

If you can manage to either increase your payments, or apply a lump sum toward the principal balance, you can consider doing so by using this calculator by crunching some numbers. Paying off the auto loan early or adding a prepayment amount each month, shortens the period of time that the loan is in place and also decreases the total amount of interest that you will pay on the loan in the long run. While it may be difficult to part with a larger sum up front, or adding an additional amount each month to your payment, paying off your loan early can potentially save you thousands of dollars overall.

• FAQ: An auto loan early payoff calculator like this one can help you figure out how much.

Whats Behind The Numbers In Our How Much Can I Borrow Mortgage Calculator

When buying a home, the question How much can I borrow? should be the second question you ask. The most important consideration is, How much house can I afford? Thats because, even with all the angst involved in applying for and being approved for a home loan, lenders are often inclined to loan you more money than you expect.

Thats a surprising and important reality.

As much as you want to buy a home, lenders want to loan you money. And the bigger the loan, the happier they are. Youll know why when you see the estimate of the interest youll pay over the life of the loan. Its a really big number.

But if you know how much home you can afford, of course, youll want to learn how much you can borrow. The NerdWallet How much can I borrow? calculator can give you a solid estimate.

The calculator considers standard mortgage payment elements, such as principal and interest. Then, we take things a few steps further, factoring in taxes, insurance even homeowner association dues to help determine a real-life monthly payment.

We also examine your income and debt, just as a lender would, to determine the maximum home loan amount youre likely to qualify for.

Getting ready to buy a home? Well find you a highly rated lender in just a few minutes.

Enter your ZIP code to get started on a personalized lender match.

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How Much House Can I Afford With A Va Loan

Veterans and active military may qualify for a VA loan, if certain criteria is met. While VA loans require a single upfront funding fee as part of the closing costs, the loan program offers attractive and flexibleloan benefits, such as noprivate mortgage insurance premiums and no down payment requirements. VA loan benefits are what make house affordability possible for those who might otherwise not be able to afford a mortgage.

With VA loans, your monthly mortgage payment and recurring monthly debt combined should not exceed 41%. So if you make $3,000 a month , you can afford a house with monthly payments around $1,230 .

Use ourVA home loan calculatorto estimate how expensive of a house you can afford.

How Can I Qualify To Borrow More

If youre disappointed by the how much can I borrow results, remember that there are many factors at work. Small improvements in one or more can make a substantial difference:

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% Down Is Great But Not A Requirement

Theres a general perception that you have to put 20% down to get a mortgage. Thats just not true. There are many mortgage options with low or no down payment requirements.

Depending on the type of loan you choose and the amount of your down payment, you may be required to pay private mortgage insurance . PMI protects the lender against any loss if you fail to pay your mortgage. In some instances, mortgage insurance is required for the life of the loan. Other times, its only required until the loan is paid down to a certain percentage of the original amount. Mortgage insurance is known for its bad rap, but its not always the enemy. The benefit to you is that it allows you put less than 20% down.

Consider your options. Gifts or loans from relatives and programs like an 80/10/10 combination loan can help you avoid PMI. 80/10/10 loans consist of a first mortgage and a second mortgage that total 90% of the purchase price, and a 10% down payment. These loans allow you to put just 10% down while helping you avoid the mortgage insurance payments typically associated with conventional loans with down payments of less than 20%. Our down payment calculator can help you to understand the costs and benefits of different down payment amounts so you can decide what makes the most sense for you.

Which Is Better: A Personal Loan Credit Card Line Of Credit Or Home Equity Loan

While taking out a personal loan could be a good option in some circumstances, it isnt the right move for everyone. Heres how a few other options compare to personal loans so you can decide which is best for your situation:

If you decide to get a personal loan, remember to consider as many lenders as you can to find the right loan for you. Credible makes this easy you can compare your prequalified rates from multiple lenders in two minutes.

Ready to find your personal loan? Credible makes it easy to find the right loan for you.

• Free to use, no hidden fees
• One simple form, easy to fill out and your info is protected
• More options, pick the loan option that best fits your personal needs
• Here for you. Our team is here to help you reach your financial goals

Keep Reading: How Debt Consolidation Loans Can Help Your Credit Score

Taylor Medine is a Credible authority on personal finance. Her work has been featured on Bankrate, Experian, The Balance, Business Insider, Credit Karma, and more. Shes also the author of The 60-Minute Money Plan, a self-published intro to budgeting guide for people who hate budgeting.

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How Do Lenders Assess Affordability

The way lenders assess affordability wont be exactly the same for each provider, but essentially, they follow the same principles. Theyll look at your situation in more detail than our calculator does. Although our calculations give a good estimate, a lender may come to a slightly different conclusion.

Essentially, the mortgage lender have their own mortgage calculators and their scorecard will look at things like:

• The amount of money you want to borrow
• How much deposit you have
• Your employment status and job security
• Your income and lenders may view things like overtime, commission and bonuses differently from basic salary as theyre not guaranteed
• Your outgoings the money you spend on bills and on your lifestyle
• Any existing debts
• Your credit report

When looking at your credit report, its not just your overall score that potential mortgage lenders consider. Theyll also look in detail at:

Lenders are likely to look at your bank statements for the last three to six months to show them what your spending is going on and how well you manage your money and finances. Youll need your most recent P60 as proof of earnings too. You could also provide information about your savings accounts and other assets like shares, on your application form, as evidence of your ability to save and manage money.

Mortgage Calculator: How Much Can I Borrow

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How Much Can I Borrow

Personal loans generally range from $600 to $100,000 or more, depending on the lender. However, the amount youll actually be approved for will depend on your credit as well as your income and existing debt. Keep in mind that lenders might have more stringent requirements for large loan amounts.

With Credible, you can compare your prequalified rates as well as loan amounts from multiple lenders in just two minutes.

Ready to find your personal loan? Credible makes it easy to find the right loan for you.

• Free to use, no hidden fees
• One simple form, easy to fill out and your info is protected
• More options, pick the loan option that best fits your personal needs
• Here for you. Our team is here to help you reach your financial goals

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Does The Personal Loan Have Fees

Personal loan lenders may charge a sign-up, or origination, fee, but most don’t charge any fees other than interest.

An origination fee is a one-time upfront charge that your lender subtracts from your loan to pay for administration and processing costs. It’s usually between 1% and 5%, but sometimes it’s charged as a flat-rate fee. For example, if you took out a loan for $10,000 and there was a 5% origination fee, you would only receive $9,500 and $500 would go back to your lender. It’s best to avoid origination fees if possible.

Select’s list of the best 5 personal loans

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Banks And Credit Unions

Institutions with a banking license or charter are governed by the Federal Reserve, Federal Deposit Insurance Corporation , Office of the Comptroller of the Currency , and the National Credit Union Administration .

Local banks and are the first places many people think of when contemplating a personal loan. If you apply there, you will likely meet face to face with a loan officer, the experience will be personalized, and the officer can guide you through the application process smoothly. Compared to other options, banks tend to have higher loan qualification standards. If you are already a customer, the bank may cut you a break in that area, though.

The credit union qualification process tends to be less rigid than that of banks, and interest rates there are typically lower than at banks. You must, however, be a member in order to do business there. Neither banks nor credit unions typically charge loan origination fees, which is a plus.

How To Calculate Affordability

Zillow’s affordability calculator allows you to customize your payment details, while also providing helpful suggestions in each field to get you started. You can calculate affordability based on your annual income, monthly debts and down payment, or based on your estimated monthly payments and down payment amount.

Our calculator also includes advanced filters to help you get a more accurate estimate of your house affordability, including specific amounts of property taxes, homeowner’s insurance and HOA dues . Learn more about the line items in our calculator to determine your ideal housing budget.

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How Much Will I Pay In Interest

Your interest rate depends on a number of factors, including your , loan amount and your term . Interest rates can be as low as 3.49% and as high as 29.99% or more. Typically, you’ll get the lowest interest rate when you have a good or excellent credit score and you choose the shortest repayment term possible.

According to the Fed’s most recent data, the average APR for 24-month personal loans is 9.63%. This is often well below the average credit card APR, which is why many consumers use loans to refinance credit card debt.

Personal loan APR is most often fixed, which means it stays the same for the life of the loan.

Vehicles Last Longer As Well As Auto Loans

• Cars, SUVs, Trucks last a lot longer than they used to. 100,000 miles used to be considered a pretty good indication your vehicle was nearing the end of its useful life. These days it is not uncommon for a vehicle to go 200,000 miles or more.

Better engines and transmissions, improved corrosion protection, more durable components all add up to vehicles that hold up a lot longer than their predecessors.

• Consumers are also doing a better job of keeping up on auto maintenance schedules.

With cars lasting longer, lenders are willing to make longer auto loans as well. Auto loans of five, six, even seven years are increasingly common because the lender is confident the vehicle will keep running that long.

Longer loans mean lower monthly car payments, which is important when you’re looking at $25,000 or more for even a basic new vehicle. A good used car can easily run $10,000 or more.

• FAQ: Longer loans mean a lower monthly payment and a more affordable vehicle.

Unfortunately, those affordable monthly payments cost you money over the long run. Interest charges pile up over time and with the way loan amortization works, each additional year you add means disproportionately higher interest costs over the life of the loan.

• FAQ: In fact, you may be surprised by how small the difference in monthly payments can be between a six-year and a seven-year auto loan, due to the additional interest costs over the life of the loan.

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What Determines The Amount You Can Borrow

Income

Your income is the most important factor to calculate your borrowing capacity. The general rule of thumb is not to let your repayments exceed more than 30% of your after-tax salary.

Your regular expenses and debts

With fewer expenses, lenders and banks will have more confidence in your ability to make regular loan repayments. In the lead up to your loan application it may be worthwhile to trim any unnecessary expenses you have.

Dependents

The added cost of having dependents will impact how much lenders will lend you. In other terms, lenders want to make sure you’ll be able to comfortably afford your loan repayments and the costs involved with your family.

Purchasing costs

There are a number of fees and charges that come along with purchasing a property like Stamp Duty, loan establishment fees and legal costs. These costs and others can impact how much you can borrow. Read more about what fees and charges you can expect to pay when buying a property here.

Savings and equity

The amount of savings and/or equity you have in an existing property can substantially improve your borrowing power. This is a huge advantage for those purchasing a second home or an investment property.

Consider the future

Its worthwhile to plan your purchase around your future financial goals and cash flows. Many buyers are more comfortable purchasing closer to their maximum borrowing capacity if they are anticipating their income to grow or for a windfall of cash.

Use Our Mortgage Affordability Calculator

Use our Mortgage Affordability Calculator to estimate how much you can borrow.

They must also assess the monthly payment you can afford, after looking at your outgoings as well as your income.

This is called an affordability assessment.

The lender must also look ahead and stress test your ability to repay the mortgage.

This is to make sure youll still afford repayments if the interest rate rises or there is a change to your lifestyle, such as:

• redundancy
• having a baby, or
• taking a career break.

If the lender thinks you wont be able to afford your mortgage payments in these circumstances, they might limit how much you can borrow.

Work out your possible monthly repayments with our Mortgage calculator

Comparison websites are a good starting point for anyone trying to find a mortgage tailored to their needs.

Some of the biggest mortgage comparison websites are:

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How Much Can You Get In Federal Student Loans

The amount you can borrow in federal loans depends on a few factors, including your dependency status, your academic year, and whether youre an undergraduate or graduate student.

It also depends on the type of federal student loan you take out. The three main types of federal loans are:

• Direct Subsidized Loans Undergraduate students who demonstrate financial need typically qualify for this type of loan. The U.S. Department of Education pays the interest on Direct Subsidized Loans, as long as you meet the eligibility requirements.
• Direct Unsubsidized Loans Available to both undergraduate and graduate students, these loans arent based on financial need. Borrowers are responsible for paying all accrued interest. Your schools financial aid office determines how much you can borrow this amount is based on your cost of attendance and any other financial aid you receive.
• Direct PLUS Loans Parents of dependent undergraduate students, as well as graduate and professional students, can take advantage of these loans for expenses that arent covered by other types of financial aid. Youll need to go through a credit check, and your loan limit is your cost of attendance minus any other financial aid you receive.