Mar 27 2023
When considering taking out a mortgage in Hungary, it's important to understand the relationship between your income, location, and the amount of money you can borrow. Different regions in Hungary have different limitations on the amount of money you can borrow based on your income.
1. Borrowing limits based on income
The amount of money you can borrow from a bank in Hungary depends on your income, with high earners able to take advantage of lower interest rates. Middle-income earners will have higher interest rates but may still be able to obtain reasonable mortgages.
By using a mortgage calculator, you can determine how much money a bank is likely to lend you based on their interest rates and your income. For example, the Bank360.hu calculator indicates that someone in Budapest making the average income of 422,000 HUF could borrow up to 23.5 million HUF for 20 years with a 10-year interest period.
2. Geographic considerations
Geographic location also plays a role in borrowing limits. For instance, in Veszprém County, people making the average salary can only borrow up to 16.5 million HUF while people in Nógrád County can borrow up to 14 million HUF.
Borrowing limitations are typically established through the "affordability calculation" (JTM-szabály). This calculation establishes the monthly payment limits on loan settlements based on the borrower's income.
3. Down payment considerations
It's important to note that to purchase a property, a down payment of at least 20% is typically required. For example, those seeking to buy a typical panel apartment in Budapest (priced at 36.8M HUF) must provide a down payment of around 12-13 million HUF.
If you don't have this much saved up, you may need to bring on an additional borrower who has higher income and can help you meet the bank's borrowing requirements.
4. Conclusion
If you're considering purchasing property in Hungary and need to take out a mortgage, it's important to understand the relationship between your income, location, and the amount you can borrow. By using one of Hungary's many mortgage calculators, you can get a better sense of how much you can borrow and of your monthly payment obligations. However, it's essential that you do not exceed your financial capabilities, keeping repayment burdens manageable over time.
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