Maximum loan amount with a given annuity, interest rate and duration formula

Tag: personal finance

Description of the Maximum loan amount with a given annuity, interest rate and duration formula

This formula allows us to calculate the maximum amount $C$ which can be borrowed with a given loan duration $N$ , interest rate $r$ and annuity $m$ .

C = \frac{m \cdot (1 - (1 + \frac{r}{n})^{- N})}{\frac{r}{n}}

C

Start capital

m

Annuity

n

Number of payments per year

N

Total number of annuities (number of years times number of payments per year)

r

Nominal annual interest rate