Can I Afford a Mortgage? Calculator and Rules

"Can I Afford It?" — Most Important Question Before Loan

Mortgage is 20–30 year commitment. Before signing contract you must answer two questions: will bank give me loan (credit capacity) and can I really afford it (financial comfort).

These aren't the same thing.

Credit Capacity — What Bank Counts?

Net Income

Bank considers stable, documented income:

• Employment contract — easiest, need 3 recent pay slips
• B2B / business — average from 12–24 months, bank takes lower value
• Service contracts — harder, some banks don't accept

DTI Ratio (Debt-to-Income)

Installment of all loans (including new mortgage) shouldn't exceed:

• 40–50% of net income — general bank rule
• 25–30% — recommendation for financial comfort

With PLN 10,000 net income:

• Bank may accept installment up to PLN 4,000–5,000
• Comfortable installment max PLN 2,500–3,000

Other Obligations

Bank deducts from capacity:

• Other loan installments
• Credit card limits — even if you don't use them!
• Overdraft limits
• Alimony

Down Payment and LTV

Minimum down payment is 10–20% of property value. Higher down payment means:

• Lower interest rate (better margin)
• Lower LTV ratio
• Lower installment

Calculator — How Much Can I Borrow?

Example 1: Couple with PLN 15,000 net income

• No other loans
• Down payment: PLN 100,000
• Credit capacity: approx. PLN 550,000–700,000
• Comfortable loan (installment 30% of income = PLN 4,500): approx. PLN 500,000 for 25 years

Example 2: Single with PLN 8,000 net income

• Credit card with PLN 5,000 limit
• Down payment: PLN 60,000
• Capacity after deducting card limit: approx. PLN 300,000–380,000
• Comfortable loan (installment 30% = PLN 2,400): approx. PLN 280,000 for 25 years

5 Rules Before Taking Loan

1. Installment ≤ 30% of Net Income

This is golden rule. At 40%+ you become "house poor" — you have apartment but no money for life.

2. Emergency Fund 6+ Months

Before taking loan, save 6 months of installments + expenses. Job loss with mortgage and no savings is nightmare.

3. Test Yourself for 6 Months

Before going to bank, save planned installment amount monthly. If after 6 months it doesn't bother you — you're ready.

4. Count Total Costs, Not Just Installment

Add to installment: property insurance, administrative fee, renovation fund, property tax. That's additional PLN 500–1,500/month.

5. Variable Rate = Risk

With variable rate loan, installment can rise 50–100% when interest rates change. Check if you can afford installment at rate 3 percentage points higher.

Fixed vs Variable Rate

How Freenance Can Help

Freenance helps assess if you can afford loan:

• Budget simulation with installment — add planned installment to expenses and check impact on cashflow
• Stress test — what if rates rise? What if you lose income for 3 months?
• Down payment tracking — savings goal with progress bar
• Runway with loan — how many months you'll survive financially with mortgage installment

👉 Check your loan readiness with Freenance — freenance.io