How to Calculate Loan Amount From Payment

You can calculate what loan amount you can borrow from a lender based on the interest rate, term of the loan and the payments you would be able to make. The loan amount is the present value of the annuity, which is the stream of payments that will be made on the loan. Learn how to calculate the loan amount based on payments using three different methods: Microsoft Excel, a loan amount calculator and the loan amount formula.

Difficulty: Moderate

Instructions

Things You'll Need:

• Mircosoft Excel
• Calculator

1. Use Excel to calculate the loan amount based on payments made. In a cell, enter the formula =PV(interest rate,payment periods,payment amount). For example, if you are making $4,500 monthly payments on 30-year loan with an interest rate of 7 percent, the formula would be =PV(0.07/12,12*30,-4500), which gives you a value of $676,384.06.

2. Using a loan-amount calculator (see Resources), enter the annual interest payment, the number of months the loan is made for, the down payment, if any, and the monthly payment amounts. Click on the "Calculate Loan Amount" button to find out the loan amount. Using our example from above, enter 7, 360, 0 and 4,500 in the respective fields. The resulting loan amount is $676,384.06.

3. Use the formula PV=(C/(i/12)) x (1-(1/(1+(i/12))^n)), where
   
   C= payment
   i = interest rate
   n = loan term
   
   Using our example from above, PV=(4500/(.07/12)) x (1-(1/(1+(.07/12))^360)) = $676,384.04