How Much Mortgage Can I Afford?
Buying a home is likely the largest financial commitment you’ll ever make. Before you start browsing listings, it’s crucial to understand how much you can realistically borrow – and more importantly, how much you should borrow. This guide covers the key factors that determine your mortgage affordability.
Key Factors That Determine Affordability
1. Your income
Banks look at your gross household income (before tax). A higher income means you can service a larger loan. Most lenders want your total housing costs (interest + amortization + fees) to stay below 30–40% of your gross income.
2. Down payment
In Sweden, you need at least 15% down payment (kontantinsats). From April 2026, the LTV cap is being raised to 90% for new construction, meaning you’d only need 10% down for newly built homes.
3. Other debts
Car loans, student loans, and credit card debt all reduce your borrowing capacity. Banks assess your total debt-to-income ratio – if it exceeds 4.5x your annual income, stricter rules may apply.
4. Interest rate
Banks stress-test your affordability at higher rates than the current market rate. Even if today’s rate is 3.5%, they might test at 6–7% to ensure you can handle rate increases.
The Swedish KALP Assessment
Swedish banks use a calculation called KALP (Kvar Att Leva På) to assess affordability. It calculates how much money you have left to live on after all housing costs:
KALP = Net income − Housing costs (interest + amortization + fees) − Living costs
Banks typically require at least SEK 8,000–10,000 remaining per adult and SEK 3,000–5,000 per child. This is more conservative than just looking at income ratios.
Quick Affordability Rules of Thumb
| Rule | Guideline |
|---|---|
| Max loan | 4–5x gross annual income |
| Housing cost ratio | Below 30–40% of gross income |
| Down payment | At least 15% (10% for new construction from April 2026) |
| Debt-to-income | Below 4.5x annual income |
Run exact numbers with our mortgage calculator to see monthly cost, LTV, and KALP margin.
April 2026 Rule Changes
Sweden is implementing significant mortgage rule changes from April 1, 2026:
- LTV cap raised to 90% for new construction (was 85% for all properties)
- Mandatory amortization removed – the legal requirement for minimum amortization rates is being eliminated
- Banks still perform their own credit assessments and may require amortization as a condition
These changes make it easier to enter the housing market, especially for first-time buyers. However, borrowing the maximum doesn’t mean you should – leave room for rate increases and unexpected costs.
How to Improve Your Borrowing Capacity
- Pay off consumer debt before applying
- Save a larger down payment (more equity = better terms)
- Apply with a co-borrower to increase household income
- Choose a less expensive area or property type
- Negotiate a lower interest rate by comparing multiple banks
Frequently Asked Questions
How much can I borrow on a salary of SEK 40,000/month?
At 4.5x annual income, a gross salary of SEK 40,000/month (SEK 480,000/year) could support a loan of roughly SEK 2.1–2.4 million. The exact amount depends on other debts, interest rates, and the bank’s KALP calculation.
Can I buy a home with only 10% down?
From April 2026, yes – but only for new construction. For existing properties, the minimum remains 15%. Some banks may still require 15% regardless.
What is amortization and do I have to pay it?
Amortization is repaying the loan principal. The legal mandatory requirement is being removed from April 2026, but most banks will still require some level of amortization as part of their lending terms.
Should I fix my interest rate?
It depends on your risk tolerance. Fixed rates provide certainty but are typically higher. Variable rates are lower but can increase. Many Swedish borrowers split their loan into fixed and variable portions.