Maximum loan serviceable from net income.
Maximum loan
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Monthly servicing capacity
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DSR cap on income
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A bank lends against your spare income, not your salary
When you apply for financing, the bank is not asking what you earn so much as what you can spare each month after your existing commitments. It caps your total monthly debt servicing at a fixed share of your net income, the debt-servicing ratio. Whatever room is left after your current loan payments is the largest new installment you can carry, and that installment, run backward through the markup rate and tenure, sets the biggest loan you qualify for. This calculator walks that exact chain so you can see your ceiling before a bank quotes one.
The idea of a debt-burden cap is not a number the bank invents on a whim. The State Bank of Pakistan, through its Prudential Regulations for consumer financing, requires lenders to keep a borrower's debt burden within limits, which is why every bank applies some version of this ratio. The 45 percent default here is a planning assumption, not a fixed rule, and individual banks set their own figure within the regulator's framework, so confirm the ratio your bank actually uses with the lender or against the latest State Bank of Pakistan Prudential Regulations.
Tracing one applicant's ceiling
Suppose you net PKR 300,000 a month, already pay PKR 40,000 on an existing loan, and the bank works to a 45 percent ratio. The markup rate is 22 percent a year over a five-year tenure. Apply the ratio first: 45 percent of 300,000 is PKR 135,000, the most the bank will let your total monthly debt reach. Subtract the PKR 40,000 you already owe and PKR 95,000 of capacity remains for a new installment. Discounting that 95,000 monthly payment back over sixty months at the monthly markup rate gives a maximum loan of roughly PKR 3,439,672.
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The chart shows the funnel. Gross income at the left narrows to the ratio cap, then narrows again once the existing payment is removed, leaving the capacity that supports the loan. Two things widen the final bar most: a higher income and, often overlooked, clearing an existing loan to free up capacity.
Why tenure and markup swing the answer hard
The same PKR 95,000 of monthly capacity buys very different loan sizes depending on the two financing terms. Stretch the tenure and each rupee of installment supports a larger loan, because there are more months to repay it, though you pay far more markup over the life of the loan. Raise the markup rate and the loan shrinks, because more of every installment goes to markup rather than principal. This is why the maximum loan figure should never be read as the loan you ought to take. It is the bank's outer limit, and borrowing right up to it leaves no cushion for a rate rise on a variable facility or a month when money is tight.
This calculator is for anyone sizing up a home, car, or personal loan before they walk into a branch: it lets you see whether your dream borrowing is even within reach and how much an existing EMI is costing your eligibility. A frequent mistake is forgetting to enter existing obligations honestly, which inflates the headline number. Banks will find those commitments on your credit report regardless, so model them here too.
Why does a longer tenure raise my maximum loan?
Because the maximum loan is the present value of all your future installments, and a longer tenure simply means more installments to add up. Spreading the same PKR 95,000 monthly payment over seven years instead of five supports a bigger loan today. The catch is total cost: more months of markup means you repay considerably more overall, so a longer tenure is not a free upgrade.
Will I definitely get approved for this maximum?
No. This figure is the affordability ceiling from income alone. Approval also depends on your credit history, the security or collateral offered, your job stability, age relative to the tenure, and the bank's own policy within the State Bank of Pakistan's framework. Treat the result as the most you could service, then expect the bank to offer that or less.