How much personal loan can I qualify for?

If you’re wondering how much personal loan you might actually qualify for, you’re already asking the right questions. Lenders look at several factors when deciding what to offer you. Understanding what they look for can help you set realistic expectations and apply with more confidence.

Personal loans are unsecured loans, meaning they're not backed by collateral like a home or vehicle. This means borrowing limits are based on your qualifications instead of the value of your collateral.

The amount you can borrow using a personal loan depends on your credit score, debt-to-income ratio, and the lender's set caps. Many lenders offer loans ranging from $1,000 to $50,000, although some may lend up to $100,000 to well-qualified borrowers.

How do you know where you fall in that range? We’ll go through typical personal loan limits and the factors that affect how much you can borrow.

What lenders look at when deciding your personal loan amount

Lenders base your loan amount on three factors:

• How much you ask for in your application.

• How much the lender thinks you can afford to repay.

• How risky the lender thinks it is to lend to you.

To figure these out, lenders look at your:

• Credit score and profile. Lenders look at your credit profile and scores to gauge how  you've handled debt in the past. They like to see a long history of on-time payments.

• Employment stability. Steady income and employment helps show lenders you can make loan payments over the long term.

• Plans for the money. Lenders may offer more leeway if they know you're using the funds for consolidation instead of adding to your debt load, especially if they can pay off your creditors directly.

Then, they crunch the numbers using your income and existing debts to see what you can afford. Lenders use your debt-to-income (DTI) ratio to figure this out.

Your DTI is your total monthly debt payment—plus housing—divided by your pre-tax monthly income. Most lenders prefer you to have a DTI below 43%—including the new loan. If a large loan payment will push your DTI over the lender's limit, you might not qualify for it.

How to estimate how much personal loan you might qualify for

You can get a general idea of how much loan you might qualify for by crunching your own DTI numbers. Here are the steps you need to estimate your personal loan amount:

1. Estimate monthly income. Use your gross income, which is the amount you’re paid before taxes come out. 

2. Calculate your debt-to-income ratio. Add up your monthly debt and housing payments. Next, divide that by your gross monthly income to get your DTI. 

For example, say you pay $1,500 towards debt and housing every month, and you have $5,000 in pre-tax monthly income. 

Your DTI would be: $1,500 / $5,000 = 0.4 = 30%.

1. Determine if you have room for a new monthly loan payment. Most lenders prefer a DTI below 43%, though some have a stricter 36% cap. If your DTI is already over 43%, you might not qualify for a personal loan at all. In the example above, a monthly loan payment of $650 would put you at a 43% DTI.

How to estimate monthly loan payments

You can use an online personal loan calculator to estimate the monthly payments and total cost of different loan amounts and terms. You put in your loan amount, loan term, and interest rate to find out what your monthly payments will be. 

Different rates and terms affect the size of your monthly payments. For example, here's how the monthly payment and cost varies if you take out a five-year, $10,000 loan at different interest rates:

If you borrowed the same $10,000 for a three-year term, here’s how your payments and total interest would look:

Typical loan amounts by credit score and income

There are no hard-and-fast rules on how much loan you can get at a specific credit score or income level. Lenders look at your full credit profile and financial situation. However, you can get a general idea of how your qualifications will impact your loan terms by checking your credit scores and calculating your DTI. 

A higher credit score generally means you've paid your debts on time and as agreed. This makes you look less risky to the lender, so you may qualify for a higher amount. 

Here's a general look at how credit score could affect your ability to borrow based on data from TransUnion:

• Poor. Credit scores below 580; approval challenging, average personal loan amounts under $2,000

• Fair. Credit scores from 580 to 669; approval possible, average personal loan amounts around $4,000

• Good. Credit scores from 670 to 739; approval likely, average personal loan amounts around $9,000

• Very Good/Excellent. Credit scores 740+; approval very likely, average personal loan amounts above $14,000

There's no easy chart to see loan sizes versus income since it's not simply about how much money you make; it's more about how much money you make compared to your total debt. And each lender will have its own maximum DTI for personal loans.

You can look at different loan payments and terms to see how they might affect your personal DTI. Compare this to the lender's DTI cap to see what might be approved. You want to borrow an amount you can afford to comfortably repay. Any other debts will also have to be factored in when calculating your DTI for personal loan eligibility.

Maximum loan amounts lenders may offer

Lenders have minimum and maximum loan amounts.  Even if your income and DTI mean your budget could accommodate payments for a $60,000 loan, if a lender's max loan is $50,000, then that’s the top amount you can borrow.

Different lenders have different maximum loan amounts. Many lenders have maximum loans of $30,000 or $50,000, and some lenders allow loans up to $100,000.

No matter the cap, you can only borrow as much as your income allows. If your lender has a maximum $100,000 but your salary only qualifies you for a $40,000 loan based on your lender's DTI, then that's your maximum loan size.

To put it simply, you can borrow whichever is less: your lender's top limit or the maximum limit based on your DTI ratio and credit scores.

How to increase the amount you may qualify for

You can improve your qualifications to boost the loan amount you qualify for. You could work on some of them before you submit your loan application. Some tips to qualify for a larger personal loan include: 

• Reduce your debt-to-income ratio. You can do this by paying down existing debt. 

• Improve your credit score. A higher credit score means you could qualify for personal loans from more lenders. You may be able to get a loan from a lender offering higher loan limits by boosting your score. 

• Apply with a co-borrower or co-signer. Adding someone with better credit and/or more income to your loan application could help you get approved for more money. Co-signers and co-borrowers are equally liable for the debt, so be sure you can repay the loan in full before asking someone to co-sign.

• Choose a loan with a longer repayment term. A loan with a longer term reduces your monthly payments. Since monthly payments determine if you meet your lender's DTI requirements, a longer term may lower your payment enough to qualify. This will increase your total borrowing costs, though, since you'll pay more in interest. It might also mean a higher interest rate.

Should you borrow the maximum amount?

You don’t have to borrow the maximum amount your lender is willing to offer. In fact, you shouldn't borrow any more than you really need. The more debt you take on, the more strain you’re putting on your budget. 

Only borrow the minimum needed to hit your goals. Scout your budget and be sure you’ve got plenty of room for loan payments while still being able to save for your emergency fund or accomplish other goals.

To evaluate a loan, use a personal loan calculator. Check what your payments will be. Then check your budget to confirm making the payments won't prevent you from doing other important things. If a loan isn't affordable, wait to borrow until you can find a lower rate, increase your income, or reduce the amount of your loan

Prequalify to see real quotes

While you can estimate your loan size using the tips above, the best way to see what a specific lender might offer you is to prequalify. Most lenders offer prequalification using a soft credit check that won't impact your credit scores.

Ready to get started? See what you could get through Achieve Personal Loans now.