Calculator Inputs
Use monthly values where applicable. The model assumes a standard reducing balance repayment structure.
Example Data Table
These sample cases illustrate how income strength, obligations, and lender limits can change the final approved amount.
| Profile | Net Monthly Income | Existing Obligations | Interest Rate | Term | Indicative Approved Loan |
|---|---|---|---|---|---|
| Entry level analyst | $3,400.00 | $450.00 | 10.20% | 36 months | $18,950.00 |
| Mid career manager | $5,900.00 | $850.00 | 11.50% | 60 months | $58,300.00 |
| Senior specialist | $8,100.00 | $1,250.00 | 9.80% | 72 months | $94,700.00 |
Formula Used
1. Adjusted Monthly Income
Adjusted monthly income = net monthly salary + other verified income + (annual bonus × bonus utilization percent ÷ 12).
2. DTI Based EMI Limit
DTI based EMI limit = (adjusted monthly income × maximum DTI ratio) - existing monthly obligations.
3. Surplus Based EMI Limit
Surplus based EMI limit = adjusted monthly income - existing monthly obligations - living expense buffer.
4. Affordable EMI Used
Affordable EMI = lower of DTI based EMI limit and surplus based EMI limit.
5. Payment Capacity Loan
Loan by payment capacity = EMI × (1 - (1 + monthly stress rate)-n) ÷ monthly stress rate.
6. Salary Cap Loan
Salary cap loan = gross monthly salary × salary multiplier cap.
7. Approved Principal
Approved principal = lower of payment capacity loan and salary cap loan.
8. EMI
EMI = P × r ÷ (1 - (1 + r)-n), where P is principal, r is monthly interest rate, and n is total months.
How to Use This Calculator
- Enter gross and net monthly salary values.
- Add any stable verified side income and annual bonus.
- Set the usable bonus percentage your lender accepts.
- Enter all current monthly obligations, such as cards or leases.
- Add a living expense buffer to protect take-home cash flow.
- Choose the lender’s maximum DTI ratio and salary multiplier cap.
- Enter the annual interest rate, stress margin, and loan term.
- Add fees to estimate net disbursed funds and repayment costs.
- Press the calculate button to see the result above the form.
- Use the CSV or PDF buttons to export the output.
FAQs
1. What does salary based lending mean?
It means the lender sizes the loan around income strength, repayment capacity, existing obligations, and internal caps tied to salary multiples or debt ratios.
2. Why does the calculator use both gross and net salary?
Gross salary helps apply salary multiplier caps, while net salary better reflects spendable cash available for installments after payroll deductions.
3. Why is there a stress rate margin?
A stress margin checks affordability under tougher borrowing conditions. It helps prevent overestimating approval size when rates later rise or lender policy tightens.
4. What is the living expense buffer for?
The buffer reserves cash for rent, food, transport, utilities, and other essentials, so the projected EMI does not consume all remaining income.
5. Can bonus income improve eligibility?
Yes, but many lenders only count a portion of variable income. That is why this calculator lets you apply a bonus utilization percentage.
6. Why is the approved loan sometimes lower than expected?
The result can be restricted by the lower of two limits: payment capacity under stress testing or a lender’s salary multiplier cap.
7. Does net disbursed equal the approved principal?
Not always. Processing fees, insurance fees, and administrative charges may be deducted before funds reach the borrower.
8. Is this calculator suitable for final loan approval?
No. It is a planning estimate. Actual approval also depends on credit score, employer stability, documentation, policy rules, and underwriting review.