# Time Value of Money TutorialsTVM Calculations

## How to Calculate a Loan Amount — How Much Can I Borrow?Tutorial 6

This tutorial sets up the Ultimate Financial Calculator to calculate the loan amount for a conventional loan or mortgage with a specified regular payment amount, interest rate and a known term. Frequently, when structuring a loan, a borrower will be able to afford a specific payment at the prevailing interest rate. For this reason, using a financial calculator to calculate the loan amount is a very common financial calculation.

This example applies to our online Ultimate Financial Calculator. The C-Value! program for Windows works in a similar way and has a few more features including the ability to save your work.

All users should work through the first tutorial to understand basic concepts about the calculator.

To solve for an unknown loan amount and create a schedule, follow these steps.

1. Set "Schedule Type" to "Loan"
• Or click the [Clear] button to clear any previous entries.
• The top two rows of the grid will not be empty
• Delete the 2nd row by selecting it and clicking on the [Delete] button
2. Set "Rounding" to "Adjust last interest" by clicking on the {Settings} {Rounding Options}
3. In the header section, make the following settings:
1. For "Calculate Method" select "Normal".
2. Set "Initial Compounding" to "Monthly".
3. Enter 5.0 for the "Initial Interest Rate".
4. Create a "Loan" series in row one of the cash flow input area.
1. Set the "Date" to June 25, 2016
2. Set the "Amount" to "Unknown" by typing a "U"
3. Set the "# Periods" to 1
• Note: Since the number of periods is 1, you will not be able to set a frequency.
1. Click on the second row of the cash flow input area. Select "Payment" for the "Series"
1. Set the date to July 25, 2016 if it isn't already
2. Set the "Amount" to "450.00"
• This tells the calculator that the regular payment will be \$450.00 a month until the loan is paid off.
3. Use the [Tab] key to move to "# Periods". Set it to "48"
4. Set the "Frequency" to "Monthly"
• The "End Date" will automatically be calculated, 06/25/2020 (48 monthly periods is 4 years)
• Your calculator should now look like this: