What is the debt-to-income ratio?
The debt-to-income ratio (DTI) is the indicator banks use to determine whether you can afford a loan. It shows what percentage of your monthly net income goes towards debt payments.
What is DTI?
DTI compares your total monthly debt payments (mortgage, car loans, credit cards, etc.) with your monthly net income. A low DTI means you have a good balance between debts and income, signalling to the bank that you are a low-risk borrower.
How is DTI calculated?
The formula is: DTI = (Total monthly debt payments / Monthly net income) × 100. For example, if your monthly net income is 30,000 MDL and your monthly payment is 12,000 MDL, DTI = (12,000 / 30,000) × 100 = 40%. Moldovan banks take all active debts into account, not just the mortgage being applied for.
DTI limits in Moldova
The standard limit applied by most Moldovan banks for mortgages. This means the monthly payment cannot exceed 40% of net income.
Some banks may accept a higher DTI in exceptional cases with additional collateral or for clients with an excellent financial profile.
A DTI below 30% is considered excellent and significantly improves chances of approval on favourable terms.
Practical example
Monthly net income: 30,000 MDL. Maximum DTI 40%: maximum monthly payments = 12,000 MDL. If you have a car loan with a payment of 2,000 MDL/month, the bank will deduct this from the available budget: the mortgage payment can be at most 10,000 MDL/month, which reduces the eligible mortgage amount.
Tip
If your DTI is too high, consider paying off other debts before applying for a mortgage. Closing a small consumer loan can significantly increase the eligible mortgage amount.