Viewing a house is often the fun part. Until the real estate agent asks if you already know what you can borrow. Then you do not want to guess. Whoever takes calculating the maximum mortgage as a first-time buyer seriously, prevents disappointment, loss of time, and bids that turn out to be unfeasible afterwards.
For first-time buyers, that initial calculation often feels simple – fill in your income, look at monthly costs, done. In practice, it is slightly different. An online tool quickly provides an indication, but your actual borrowing capacity depends on more than just your salary. Exactly for that reason, it is smart to know what is and is not included in such a calculation.
Calculating maximum mortgage as a first-time buyer: what does a lender look at?
The foundation is your income. With a permanent contract, that is usually more straightforward than with a temporary contract, on-call work, or entrepreneurship. Holiday pay, a thirteenth month, or structural allowances can also count, but only if they are allowed to be included according to the rules. That varies per situation and sometimes also per lender.
In addition, it matters whether you buy alone or together. If you buy with a partner, both incomes are usually considered. That often increases the possibilities, but not automatically as much as people think. If one of the two incomes is lower or less certain, that has an effect on the total.
Financial obligations also play a major role. Think of a student debt, private lease, a continuous credit, or a credit card limit. Even if you hardly notice them in your monthly budget in practice, a lender views them as a fixed expense. As a result, the maximum amount you can borrow sometimes drops considerably.
The interest rate is another important factor. The higher the interest rate, the lower the maximum mortgage usually is. That is because your monthly costs increase faster. First-time buyers often primarily look at the purchase price of a home, but the interest rate largely determines how much room is left on paper.
Why an online calculation is handy, but not enough
An online calculator is useful as a first step. You quickly get a range and can search more specifically on Funda or with a purchasing agent. Especially in a tight market, that helps. You then know better whether a home of 325,000 euros is realistic or out of reach.
However, such a result remains an indication. The tool does not know your situation completely. It usually calculates with standard data, while exactly the details make the difference. Do you just have a new contract? Is there irregular income? Do you have a student debt that you have almost paid off? Then the result can turn out higher or lower in reality.
There is something else. The maximum mortgage is not the same as a comfortable budget. What you can borrow is something different from what feels pleasant in your monthly costs. Especially when you are just starting out on the housing market, you also want to keep room for saving, maintenance, furnishing, and unexpected costs.
Which costs first-time buyers often forget
Many first-time buyers focus entirely on the amount they can borrow. Understandable, but you are not there yet. You also need your own money for costs that do not always fit into the mortgage. Think of notary costs, valuation, advice and mediation costs, and sometimes the costs for a structural inspection.
For first-time buyers under a certain age, the exemption from transfer tax can be a major advantage, as long as you meet the conditions. That saves on purchase costs. But even then, other costs remain that you must pay yourself.
If you bid above the asking price, it is extra important to look closely. If the home is valued lower than your bid, you usually cannot fully finance that difference. You often have to cover that amount from your own resources. In the Eindhoven region, where bidding quickly is the rule rather than the exception, that makes a world of difference.
Calculating maximum mortgage as a first-time buyer with student debt
This is one of the most underestimated topics. Many first-time buyers have a student debt and think that it hardly counts as long as the monthly repayment is low. Unfortunately, it does not always work that way. Lenders do not only look at what you pay now, but at the registered debt and the current standards.
That does not mean that a student debt makes buying impossible. It does mean that you must look at it honestly and early. Concealing it has no point and only causes delays. Exactly when you have clarity in advance, you can search more specifically and you prevent disappointment after an accepted bid.
If you have an old debt under different conditions or if you have already paid off a lot, that can make a difference in the calculation. This is exactly such a point where a general calculation tool is often too rough.
What if you do not have a permanent contract yet?
Even without a permanent contract, there are possibilities, but the substantiation becomes more important. A declaration of intent from your employer can help. With that, an employer indicates the intention to convert the temporary contract into a permanent employment contract, if circumstances remain the same.
If you work via multiple contracts or if you have just started a new job, the picture becomes less standard. Sometimes more is possible than you expect, sometimes less. It depends on the nature of your income and the documents that are available.
For entrepreneurs, it is different again. Then the figures from multiple years are usually considered. If you have just started, the route is often more complicated. Not impossible, but more specialized.
How first-time buyers smartly determine their search budget
The temptation is great to immediately assume your maximum mortgage. Especially when the supply is scarce. Yet that is not always the wisest starting point. Your monthly costs must also fit your life now and later.
Perhaps you want to be able to travel, save, or be less vulnerable if your energy costs rise. Perhaps you are expecting family expansion or want to keep room for renovations. Then it is pleasant if you do not buy at the absolute limit.
Therefore, it is smart to work with two amounts: what is technically possible and what feels pleasant for you. That gives peace of mind while searching. You then do not have to recalculate or doubt at every viewing.
The difference between calculating quickly and true insight
A first-time buyer usually does not want a pile of jargon, but simply wants to know where he stands. That is logical. Yet true insight only arises when someone completely reviews your situation. Not only income and interest rate, but also your plans, obligations, and the feasibility of a bid.
That is exactly the difference between calculating quickly and entering the market well-prepared. With only a rough outcome, you can orient yourself. With a personal check, you know better what fits your situation, which documents are needed, and where potential bottlenecks lie.
For many first-time buyers, that primarily provides peace of mind. You do not have to figure out during a bidding process whether a lease contract throws a spanner in the works or whether a bonus counts or not.
When should you have your maximum mortgage checked?
The best moment is earlier than most people think. Not just after your dream home comes online, but already in the orientation phase. Then you can act faster as soon as something truly interesting passes by.
That applies even stronger in a market where homes are sold quickly. If you know in advance what is feasible, you stand firmer in conversations with the real estate agent, seller, and advisor. You save time and prevent having to back out afterwards.
A first calculation is therefore fine to start. But if you seriously want to buy, it is wise to have that indication checked against your actual situation. That does not have to be complicated. It primarily saves a lot of uncertainty.
What you truly want to pay attention to as a first-time buyer
When calculating the maximum mortgage as a first-time buyer, it ultimately does not just revolve around the highest amount. It revolves around clarity. Can you quickly see what is realistic? Do you know which obligations count? Have your contract type, student debt, and additional costs been taken into account?
If that is clear, you search more specifically and with more confidence. And that makes the difference between endless orientation and actually taking a step towards your first owner-occupied home.
A good initial calculation provides direction. A personal elaboration provides peace of mind. Especially with your first home, that is often exactly what you need.
Do you want to know what your possibilities are?
Do you want to know exactly where you stand? Then schedule a free and non-binding first conversation with me immediately.
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Niels de Jong