How much can I borrow for a home?
Before viewing homes, it helps to know how much a lender is likely to offer. It depends mainly on your income, existing debts, the interest rate and the term.
The principle: about a third of income
Lenders look at how much of your net income goes on debt repayments each month: the debt-to-income ratio. A common rule is to stay around one third.
Maximum payment = net income × ratio − other debt payments
From that payment, the loan amount follows from the interest rate and the term.
Worked example
A household earns 3,500 net a month with no other debt. At 33%, the maximum payment is 1,155. At 3.5%:
| Situation | Max. payment | Borrowing capacity |
|---|---|---|
| 25 years, no other debt | 1,155 | ≈ 230,700 |
| 20 years, no other debt | 1,155 | ≈ 199,200 |
| 20 years, with a 300/month car loan | 855 | ≈ 147,400 |
A 300 car loan cuts capacity by about 50,000 over 20 years. Paying off small loans before applying for a mortgage can make a real difference.
Other things lenders check
- Deposit: most lenders want you to fund part of the price yourself, plus the buying costs.
- Income multiple: in the UK, lenders often cap the loan at around 4 to 4.5 times annual income.
- Stress test: they check you could still pay if rates went up.
- What is left to live on each month after the loan is paid.
Don't forget buying costs
Taxes and fees come on top of the price. If you are buying in Belgium or France, see Belgium registration fees or France notary fees.
Work out your figure
The borrowing capacity calculator runs this with your income, debts, rate and term. Then the loan calculator gives the amortization schedule, and Rent or buy? compares buying with renting.
Frequently asked questions
How much can I borrow on 3,500 a month net?
At a 33% debt-to-income ratio with no other debt, about 230,000 over 25 years at 3.5%, or about 199,000 over 20 years.
What debt-to-income ratio do banks accept?
Usually around 33 to 35% of net income for all loan payments, though rules vary by country and lender.
Do I need a deposit?
Almost always. Lenders rarely fund 100% of the price, and buying costs usually have to be paid from savings.
This information is for guidance only and does not replace professional advice.