Take a first-time buyer household with 75,000 euro of gross income and 50,000 euro saved. The Central Bank loan-to-income limit for first-time buyers is 4 times income, so the maximum mortgage is 300,000 euro. The 90% loan-to-value rule means the loan can cover at most 90% of the price, so by that test the highest price is 300,000 divided by 0.9, about 333,333 euro, needing a 33,333 euro deposit. The buyer has 50,000 euro saved, which is more than enough, so the loan-to-value cap is the binding constraint here, not the deposit. The borrower would put down about 33,333 euro and borrow 300,000 euro.
How it is calculated
Two Central Bank rules set the ceiling. The loan-to-income limit caps the mortgage at 4 times gross income for first-time buyers and 3.5 times for second and subsequent buyers. The loan-to-value limit caps the loan at 90% of the purchase price, so you need at least a 10% deposit. The tool computes the maximum loan from your income, then works out the highest price two ways: the price at which that loan is 90% of value, and the price your savings plus that loan can actually fund. It takes the lower of the two, since both rules must hold at once. Your real offer also depends on whether the monthly repayment is affordable given existing debts, and lenders are allowed to breach these limits for a limited share of their lending.
Frequently asked questions
How much can I borrow in Ireland?
The Central Bank loan-to-income limit is 4 times gross income for first-time buyers and 3.5 times for second and subsequent buyers, with a 90% loan-to-value cap (so a 10% deposit). Lenders can exceed these for a limited share of lending. Your actual offer also depends on affordability of repayments and existing debts.
What is stamp duty on a home purchase in Ireland?
Stamp duty is charged at 1% on the first 1,000,000 euro of the purchase price and 2% on any amount above that for residential properties. First-time buyers are not exempt from stamp duty, but the Help to Buy scheme can refund income tax and DIRT paid over up to four years to help fund the deposit on a new-build. Stamp duty is collected by Revenue at the time of transfer.
Does the Help to Buy scheme affect how much I can borrow?
The Help to Buy scheme is a Revenue refund of income tax and DIRT of up to 30,000 euro (or 10% of the purchase price of a new-build, whichever is lower) for qualifying first-time buyers. Because it increases the deposit available, it can allow you to meet the 10% LTV requirement with less savings of your own. It does not directly change the loan-to-income limit; the maximum mortgage is still based on gross income.
Can lenders exceed the Central Bank mortgage rules?
Yes, lenders are permitted to breach the loan-to-income and loan-to-value limits for a defined share of new lending each year. For first-time buyers the LTI allowance lets banks lend above 4x income on up to 15% of the value of their FTB lending. Second and subsequent buyers have a smaller allowance. Exceeding the limits is at the lender discretion and requires a strong credit and affordability assessment.