How it is calculated
- Maximum payment = monthly income × DTI ratio − existing debt payments.
- Maximum loan = the present value of that payment over the term: P = M × (1 − (1+r)^−n) ÷ r
- Maximum price = maximum loan + available down payment (banks also cap the loan-to-value ratio).
DTI limits differ by country and lender, typically 33–45% of net income.
Worked example
Net income 15,000 with a 40% DTI and no debts: maximum payment 6,000. At 5% over 25 years the maximum loan is about 1,026,000; with 150,000 down the maximum price is about 1,176,000.
Frequently asked questions
What DTI ratio do lenders use?
It varies: many stop at a third or 40% of income; some allow more for mortgages.
Can couples combine incomes?
Many banks accept joint applications — enter total household income.
Is affording the payment enough?
Leave room for emergencies, maintenance, taxes and insurance — bank capacity is not the same as comfort.