Loan Prequalification Calculator
Estimate the loan you could prequalify for from your income, existing debts and a lender’s debt-to-income limit — before you apply.
A worked example
Running this tool on current national benchmarks (Federal Reserve / Freddie Mac via FRED (St. Louis Fed)) — swap in your own numbers to see how the result moves.
- Gross monthly income
- $6,000
- Existing monthly debt payments
- $500
- Max debt-to-income ratio
- 40%
- Interest rate
- 8%
- Loan term (years)
- 5
at $1,900.00/mo within a 40% DTI
- Affordable payment$1,900.00
- Maximum loan$93,705
- Current DTI8.3%
How the loan you may prequalify for changes with gross monthly income
Holding the other inputs at the example above, here is how the result moves as gross monthly income changes.
| Gross monthly income | Loan you may prequalify for | Affordable payment |
|---|---|---|
| $4,000 | $54,250 | $1,100.00 |
| $6,000 | $93,705 | $1,900.00 |
| $9,000 | $152,887 | $3,100.00 |
| $12,000 | $212,069 | $4,300.00 |
The math behind it
The calculator estimates the loan you might prequalify for from your income and a lender's debt-to-income limit. It multiplies your gross monthly income by the maximum DTI to find the total monthly debt allowed, subtracts your existing debt payments, and treats the remainder as the payment you can put toward a new loan. It then works backward from that affordable payment, at your rate and term, to the loan amount it supports. If existing debts already meet the limit, there is no room for a new payment.
Assumptions & limits
- Affordable payment equals income times the max DTI, minus your current monthly debt payments.
- The maximum loan is the amount that affordable payment amortizes at the rate and term you enter.
- It uses gross (pre-tax) monthly income, which is what most lenders use for DTI.
- Prequalification is an estimate only — lenders also weigh credit, employment history and assets before approving.
Common questions
Is prequalification the same as approval?
No. Prequalification is a rough estimate of what your income and debt-to-income ratio might support. Actual approval depends on a fuller review — credit score, employment, assets and the lender's own rules — and the final amount and rate can differ. Treat this as a planning figure, not a commitment.
What is debt-to-income and why does it cap my loan?
Debt-to-income (DTI) is your total monthly debt payments divided by your gross monthly income. Lenders cap it to be confident you can handle the new payment. The calculator applies your chosen DTI limit, subtracts existing debts, and the leftover room is what a new loan payment — and therefore the loan size — can be.
How can I qualify for a larger loan?
Lower your existing monthly debt payments, raise your income, or choose a longer term or lower rate so a given payment supports more principal. Keeping your DTI comfortably below the limit also tends to improve both your approval odds and the rate you are offered.