Enter loan and stress assumptions
Example data table
| Loan amount | Rate | Term | Income | Debts | Housing | Stress | Outcome focus |
|---|---|---|---|---|---|---|---|
| 250,000 | 7.25% | 30 years | 90,000 yearly | 650 monthly | 350 monthly | +2 pts, -10%, +7% | Payment change and DTI under combined stress |
| 180,000 | 6.50% | 20 years | 72,000 yearly | 450 monthly | 300 monthly | +1 pts, -5%, +5% | Buffer check against a 43% planning limit |
Numbers are illustrative. Your results depend on inputs and stress assumptions.
Formula used
Monthly payment for a fully amortizing fixed-rate loan (principal + interest):
Debt-to-income ratio (DTI) is computed monthly:
Stress scenarios apply: rate shock (points), income drop (%), and expense increase (% on debts and housing costs).
How to use this calculator
- Enter your loan amount, rate, and term from your offer.
- Add your gross annual income and existing monthly debts.
- Include monthly housing costs like taxes, insurance, and fees.
- Set stress assumptions, or pick a preset for testing.
- Run the test and compare baseline versus stressed DTI.
- Download the CSV or PDF for recordkeeping.
Payment sensitivity under rate shocks
A fixed payment loan can still feel variable when rates move before locking. This calculator compares baseline terms with stressed rates such as +1, +2, and a custom shock. For a 250,000 balance over 30 years, even small point increases can lift the monthly payment meaningfully. Review the bar chart to see which scenario pushes payment beyond your comfort range. Lock timing matters, so test ranges before committing to a closing date.
Income stress and monthly capacity
Stress testing income is as important as testing pricing. The tool converts annual pay into monthly gross income and then applies an income drop percentage. If income falls 10%, the same loan payment consumes a larger share of cash flow. Compare the “Income -10%” row to baseline to quantify reduced headroom for savings, childcare, or emergencies. Use the presets for quick checks, then fine tune shocks to match your risk.
Expense buffers and obligation tracking
Rising costs often arrive together, so expenses are stressed as a percentage increase on other debts and housing costs. If credit payments are 650 monthly and housing costs are 350, a 7% rise increases obligations by 70. This scenario isolates cost pressure without changing interest rates, helping you see whether budgeting fixes can restore stability.
Interpreting the DTI threshold
Debt-to-income is calculated as total monthly obligations divided by gross monthly income. Many plans use a 36% to 43% range, but the right target depends on job stability and reserves. The table labels each scenario as within or over your chosen limit. A higher limit may approve more borrowing, but it also reduces resilience. Compare baseline and combined stress to decide a safe monthly payment ceiling.
Using results for safer borrowing choices
Use combined stress results to set guardrails before you borrow. If the combined row crosses the DTI limit or shows a large payment jump, consider lowering the loan amount, extending the term, or improving credit to reduce rate. Export CSV for spreadsheet modeling or PDF for discussions with a lender or advisor. A small principal reduction can outperform cutting discretionary spending when rates rise.
FAQs
What does a loan stress test show?
It compares baseline payments and debt ratios to tougher conditions, like higher rates, lower income, and higher expenses. The goal is to see whether your budget remains workable when multiple shocks hit together.
Why separate other debts from housing costs?
Separating them helps you test targeted changes. You can see how credit or loan payments affect DTI apart from housing costs like taxes, insurance, or fees, which may rise differently over time.
Does the payment include taxes or insurance?
No. The payment shown is principal and interest for the selected loan terms. Add taxes, insurance, HOA, or other recurring housing items in the housing costs field to reflect your full monthly obligation.
How does the rate shock work here?
Rate shock adds percentage points to your annual interest rate, then recalculates the fully amortized payment over the same term. For example, 7.25% with a +2.00 shock becomes 9.25%.
What DTI limit should I choose?
Many borrowers plan around 36% to 43%, but the safest target depends on savings, income stability, and other goals. If your income is variable, using a lower limit can improve resilience.
Can I export my results?
Yes. After running the stress test, use the CSV download for spreadsheets and the PDF download for sharing or saving. Exports include your inputs and the full scenario table.