The bank says you qualify for a $25,000 loan. Great news? Maybe not. Qualifying means you met their minimum criteria—not that you can comfortably afford the payments. This personal loan affordability calculator uses your Debt Service Ratio (DSR) to show what you can actually handle, not just what lenders will approve.

DSR measures how much of your gross income goes to debt payments. If you earn $5,000/month and pay $1,500 toward debts, your DSR is 30%. Lenders often approve up to 43%, but living at 43% leaves no room for emergencies, savings, or unexpected expenses.

Enter your income, existing debts, and the loan you're considering. The calculator shows your current DSR, how much room you have for a new payment, and whether the loan you want fits your budget—at both your comfort level and your absolute maximum.

Your income: Higher income means more room for debt. $6,000/month at 30% target DSR gives you $1,800 for all debt payments. $4,000/month gives you only $1,200. Same percentage, very different dollar amounts.

Existing debt obligations: Every dollar you already pay toward debt shrinks your capacity for a new loan. If you're at 25% DSR already, and your target is 35%, you only have 10% of income available for new debt.

Interest rate: The same monthly payment buys different loan amounts at different rates. $400/month at 8% over 5 years = ~$19,700 loan. At 15% = ~$16,800. Better credit = better rates = more borrowing power.

Loan term: Longer terms lower monthly payments, increasing how much you can borrow for a given payment capacity. But longer terms mean more total interest paid.

Borrowing the maximum approved: Lenders approve loans based on their risk, not your comfort. A bank might approve you at 45% DSR because they believe you'll pay. That doesn't mean you should live that way.

Gross vs. net income confusion: DSR uses gross (pre-tax) income. If your gross is $5,000 but you take home $3,800, a 35% DSR means $1,750 in debt payments—nearly half your take-home pay.

Forgetting about life: DSR doesn't account for childcare, medical costs, irregular expenses, or saving for retirement. A "safe" 35% DSR might still leave you cash-strapped.

Variable income assumptions: Commission workers, freelancers, and seasonal employees should calculate DSR using their lowest reliable income, not their best months. One slow quarter at 45% DSR becomes a crisis.

Missing debts in your calculation: Child support, alimony, BNPL payments, and that car loan you forgot all count. Underestimating existing debt inflates your apparent capacity.

Current DSR: Divides your total monthly debt payments by gross monthly income. This is your starting point.

Payment capacity: The gap between your current DSR and target/max DSR, converted to dollars. If you're at 20% and targeting 30% on $5,000 income, you have $500/month capacity.

Max loan amount: Uses the standard loan payment formula in reverse. Given your payment capacity and assumed rate/term, it calculates the maximum principal that capacity supports.

Assumptions: Fixed interest rate for the loan term, gross monthly income (not net), and all debt payments counted at their minimum required amounts.