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Debt-to-income ratio, and why 40% is a guideline, not a rule

Your debt-to-income ratio (DTI) is the share of your gross monthly income that goes toward debt payments — including the new mortgage you're considering. Lenders use it as a cap on how much of your income they're comfortable seeing committed to debt, on the logic that the rest needs to cover everything else you spend on and still leave a margin if your circumstances change.

This calculator defaults the ratio to 40%, a figure that turns up often in Kenyan lending discussions. It is a common guideline, not a universal rule or a single bank's fixed policy — different lenders apply different thresholds, which is why the field is editable rather than fixed. The calculator takes your gross income, multiplies it by the ratio, subtracts your existing debt payments, and treats what's left as the maximum new mortgage payment your income can support. That payment is then converted into a loan amount at your assumed rate and term, and your down payment is added on top to arrive at a maximum home price.

Worked example: KES 250,000 monthly income

Using the calculator's own defaults — KES 250,000 gross monthly income, KES 20,000 in existing debt payments, a 40% maximum DTI, a KES 1,000,000 down payment, a 14.5% rate and a 20-year term — the maximum monthly mortgage payment works out to KES 100,000 (40% of income) minus the KES 20,000 already committed, or KES 80,000. Amortized over 20 years at 14.5%, that payment supports a maximum loan amount of KES 6,250,011. Adding the KES 1,000,000 down payment brings the maximum home price to KES 7,250,011.

This is a guideline estimate, not a mortgage pre-approval. Your actual borrowing capacity depends on your specific lender's policy, your credit history, and other debts or commitments not captured here — treat the figures above as a starting point for a conversation with a lender, not a number to plan a purchase around.