Borrowing Capacity
Borrowing Capacity
Estimate the maximum amount for your future mortgage.
Solvency Breakdown
Guide & Explanations
Borrowing Capacity Calculator: How Much Can You Borrow?
Before you start your property search, the fundamental question is: what is my maximum budget? Our universal borrowing capacity simulator provides a precise answer in seconds, based on the financial algorithms used by banks.
How is Your Borrowing Capacity Calculated?
A bank doesn't just look at your salary; it evaluates your repayment capacity. The calculation rests on three pillars:
- Debt-to-Income (DTI) Ratio: In many countries, the limit is set around 33% to 35% of your net income.
- Remaining Income: This is the amount you have left for daily expenses after paying all your fixed charges.
- Term and Interest Rate: The longer the loan term and the lower the rate, the higher the maximum borrowing amount.
The Mathematical Formula Used
Our tool uses the constant annuity formula to reverse the monthly payment calculation:
P = M * [(1+i)^n - 1] / [i(1+i)^n]
Where P is the maximum principal, M is the maximum allowed monthly payment, i is the monthly interest rate, and n is the number of months.
Optimize Your Financing Application
To increase your purchasing power, you can use several levers:
- Pay off small personal loans: This reduces your current charges and frees up capacity for your mortgage payment.
- Increase your down payment: This reduces the amount needed to borrow and can reassure the bank about your savings profile.
- Extend the loan term: Switching from 20 to 25 years allows you to borrow a larger sum for the same monthly payment.
Use our free Borrowing Capacity Calculator to set your search budget confidently and present a solid application to real estate agents.
Frequently Asked Questions
Q: Is Borrowing Capacity free to use?
R: Yes, the Borrowing Capacity utility is 100% free. All tools on Dolf.in are accessible at no cost and without intrusive ads.
Q: Is my data secure?
R: Absolutely. Dolf.in uses a 'Serverless' approach: your data is processed locally in your browser and is never sent to our servers.
Q: Do I need to install any software?
R: No, no download or installation is required. Everything works directly in your web browser.
Q: How is borrowing capacity calculated?
R: It is based on your monthly 'repayment capacity'. Usually, 33% to 35% of your net income is taken, from which your current charges are subtracted. This remaining amount becomes the maximum monthly payment for your new loan.
Q: Does down payment affect borrowing capacity?
R: Yes, the more down payment you have, the less you need to borrow for the same property. This reduces risk for the bank and can sometimes help secure a better rate, indirectly increasing your purchasing power.
Q: What income is accepted by banks?
R: Net salary is the foundation. Contractual bonuses and rental income (often at 70%) are also included. Social aid and unstable income are rarely factored into the debt-to-income calculation.