How Much Loan Can I Afford?
The amount of loan you can afford depends mainly on your income and how much you can comfortably pay each month.
Simple rule
A common rule is that your monthly loan payment should not exceed 30% of your monthly income.
Example
If your monthly income is $4,000:
30% = $1,200 maximum monthly payment
What loan does this allow?
With a $1,200 monthly payment, at 5% interest for 10 years, you can afford a loan of approximately $113,000.
What affects affordability
Interest rate, loan term, and income all affect how much you can borrow.
Related guides
Read our loan payment example and loan factors guide.
Key takeaway
Your loan affordability depends on what you can safely pay monthly—not just how much lenders approve.