7 Main Factors That Determine Loan Amounts

How much do you want to borrow? What’s the interest rate on your loan? It’s not just these two questions that you need to answer before you can determine how much of a loan you qualify for; there are other factors at play too. This personal loan calculator will show you the 7 main factors that determine the amount of your loan so that you know what to expect from the process ahead of time and can work towards reaching your goals with confidence.

1) Income

The amount of income you earn has a direct impact on your ability to qualify for loans. Lenders will look at your gross monthly income to determine how much you can afford to pay in terms of monthly payments.

2) Age

The older you are, generally speaking, and assuming you have good credit and a steady income, the more money lenders will be willing to lend you. As your age goes up, lenders will feel more confident that they can collect their money at the end of your loan term.

3) Credit score

Lenders will likely want to know your credit score, which determines whether you qualify for a loan and how much you’ll be able to borrow. The more information you enter into your personal loan calculator—such as recent interest rates, your yearly income, and other debts—the more realistic an estimate it can provide.

4) Home loan amount

The down payment on your home, which can come from savings or cash gifts from family members, affects your home loan amount. A lower down payment means you’ll be responsible for a higher monthly payment—and in some cases, you might not qualify for as much of a loan. On the other hand, you could choose to put more money down to secure a larger loan and pay less each month. Either way, that’s one less thing to worry about when buying a house.

5) Down payment amount

As a rule of thumb, experts say you’ll need to make a down payment of at least 20% of a home’s value. The size of your down payment affects not only how much you borrow but also what type of loan you qualify for.


6) Property type

Different properties have different value and purchase prices. Your home loan calculator will take your property type into account when determining how much you can borrow. For example, it’ll help you determine whether or not you’re likely to be able to afford a home that’s worth $500,000 and priced at $450,000. Of course, there are other factors to consider beyond price, but calculating your estimated borrowing capacity based on price alone is an easy way to get started.

7) LTV ratio

The LTV ratio (loan-to-value ratio) indicates what percentage of a home or personal loan is funded by debt. In other words, if you’re buying a $200,000 house with a $20,000 down payment and a $180,000 mortgage loan, your LTV is 90 percent ($180k / $200k). The higher your LTV ratio, in most cases, the higher your interest rate will be.


Many factors determine how much money a lender will give you for a home loan or personal loan. The main factors that go into determining your loan amount include your credit score, income, down payment, and outstanding debt. The more of these areas you have covered, the higher your chances of obtaining a large home loan or personal loan. If you’re thinking about taking out a new mortgage, using a home loan calculator can help point you in different directions in terms of how much money to spend on a house.