Maximum Loan Amount Formula

Maximum loan amount with a given annuity, interest rate and duration Tag: personal finance Description This formula allows to calculate the maximum amout \( C \) which can be borrowed with a given loan duration \( N \), interest rate \( r \) and annuity \( m \).

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 · Your monthly interest (expressed in decimal form) is R, your loan tenor (expressed in months) is M, and the payment from your monthly income is P. The formula for calculating your maximum loan principal would look something like this: Maximum Loan Amount = P/R * {1 – [1 / (1+R)^M] }. This is just a rough estimate.