What this calculator does
Lenders start from your income and work down to a loan size. This calculator works the other way: you name the repayment you are comfortable with, and it reports the largest loan that repayment supports. That is usually the more useful direction, because affordability is a decision you make rather than one made for you.
It also reports what your capacity would be if rates rose two percentage points. Lenders apply a similar buffer during assessment, and the gap between the two figures is a good measure of how exposed a loan would leave you.
The formula
This inverts the loan payment formula. Rather than deriving a repayment from a loan amount, it derives the principal whose scheduled repayment equals the amount you can afford: the present value of the repayment stream at the loan rate.
| Term | Meaning |
|---|---|
| P | The maximum loan the repayment supports. |
| PMT | The monthly repayment you can afford. |
| i | Monthly interest rate: annual rate ÷ 12 ÷ 100. |
| n | Number of monthly payments across the term. |
The inputs explained
| Field | What to enter |
|---|---|
| Repayment you can afford per month ($) | What you can comfortably pay each month. For a home loan, remember that rates, insurance and maintenance sit on top of this figure. |
| Annual interest rate (%) | The interest rate on the loan. |
| Term (years) | The loan term. Longer terms raise capacity but increase total interest substantially. |
| Deposit available ($) | Cash you have available as a deposit. Added to the maximum loan to give the property price you could reach. |
When to use it
Setting a realistic price range before you look
Decide the repayment first, then read off the price. Searching within a range you set yourself is far more comfortable than searching within one a lender set for you.
Testing your exposure to rate rises
Compare the headline capacity against the figure at two percentage points higher. If you borrow to your maximum at today’s rate, that gap is the shortfall you would have to absorb.
Deciding on a loan term
Extending from 25 to 30 years raises capacity by roughly 7%, at a large cost in total interest. Whether the extra capacity is worth it is a genuine trade-off rather than an obvious win.
Working out how much more deposit is worth
Every dollar of deposit adds a dollar to the price you can reach, without adding any interest cost. It is the only lever here that increases buying power for free.
Worked examples
Every figure in the tables below is produced by this page’s own calculator at build time, so the numbers and the tool always agree. Select any row to load that scenario.
What a $3,000 monthly repayment buys
A $3,000 monthly repayment over a 30-year term, at a range of interest rates, with a $150,000 deposit.
| Interest rate | Maximum loan | Property price you could reach | Total interest |
|---|---|---|---|
| 3% | $711,568.14 | $861,568.14 | $368,431.86 |
| 4% | $628,383.72 | $778,383.72 | $451,616.28 |
| 5% | $558,844.85 | $708,844.85 | $521,155.15 |
| 6% | $500,374.84 | $650,374.84 | $579,625.16 |
| 7% | $450,922.70 | $600,922.70 | $629,077.30 |
| 8% | $408,850.48 | $558,850.48 | $671,149.52 |
How the term changes capacity
The same repayment at a fixed rate, across different loan terms.
| Term | Maximum loan | Property price you could reach | Total interest | Total repaid |
|---|---|---|---|---|
| 15 years | $351,000.29 | $501,000.29 | $188,999.71 | $540,000.00 |
| 20 years | $412,078.35 | $562,078.35 | $307,921.65 | $720,000.00 |
| 25 years | $456,911.64 | $606,911.64 | $443,088.36 | $900,000.00 |
| 30 years | $489,820.73 | $639,820.73 | $590,179.27 | $1,080,000.00 |
| 35 years | $513,977.07 | $663,977.07 | $746,022.93 | $1,260,000.00 |
| 40 years | $531,708.61 | $681,708.61 | $908,291.39 | $1,440,000.00 |
Capacity at different repayment levels
What various monthly repayments support at a fixed rate and term.
| Monthly repayment | Maximum loan | Property price you could reach | Total interest |
|---|---|---|---|
| $1,500 | $244,910.36 | $394,910.36 | $295,089.64 |
| $2,000 | $326,547.15 | $476,547.15 | $393,452.85 |
| $2,500 | $408,183.94 | $558,183.94 | $491,816.06 |
| $3,000 | $489,820.73 | $639,820.73 | $590,179.27 |
| $4,000 | $653,094.30 | $803,094.30 | $786,905.70 |
| $5,000 | $816,367.88 | $966,367.88 | $983,632.12 |
Questions
Will a lender actually lend me this much?
Not necessarily. Lenders assess income, expenses, existing debts, dependants and credit history, and they apply a buffer above the current rate. This calculator answers a narrower question: what loan does this repayment support at this rate?
What is a serviceability buffer?
An assessment margin, commonly around three percentage points, added to the actual rate to check you could still cope if rates rose. The figure shown here at two points higher is a rough equivalent.
Should I borrow my maximum?
Rarely wise. Borrowing at capacity leaves no room for rate rises, income interruption or unexpected costs. Most people are better served by choosing a repayment that leaves genuine slack.
Does this include property costs?
No. The repayment covers principal and interest only. Rates, insurance, strata and maintenance are additional: the mortgage calculator includes them.
For the full monthly housing cost, use the mortgage calculator. To check serviceability, see the debt-to-income calculator.