Discover Otopeni · · 3 min read
Mortgages: the deposit, the debt-to-income limit and pre-approval
What deposit the bank asks for, how much of your net income the instalment can reach, and why pre-approval comes before you start looking at houses — the rules, briefly.
The most expensive way to buy a house is to fall in love with it before you know whether you can finance it. The rules are public and simple; the problem is that most people find them out after they have paid the deposit on the preliminary contract.
The debt-to-income limit: how big the instalment can be
The National Bank of Romania limits how much of your net income can go into loan instalments:
- 40% for loans in lei;
- 20% for loans in foreign currency;
- +5 percentage points for a mortgage for the first home you will occupy — so up to 45% in lei.
The calculation includes every existing instalment: a store card, a lease, a personal loan, even if you do not use them. A card with an unused limit can reduce the amount you are able to borrow.
The deposit: 15% or 25%
- 15% minimum deposit for a first home, loan in lei (that is, financing of at most 85% of the value);
- 25% for a second or subsequent home;
- 5% through the “Noua Casă” programme, where the state partially guarantees the loan.
Watch out for one detail that surprises everybody: the bank finances a percentage of the value in the valuation report, not of the price you negotiated. If the valuation comes in below the price, you cover the difference yourself, on top of the deposit.
The negotiated price and the value used for financing are not automatically the same thing. — Laurențiu Duinu, mortgage broker, in the conversation about financing
Pre-approval: the first step, not the last
Pre-approval means the bank reviews your financial situation before there is a specific property involved. It gives you a realistic budget rather than an assumed one, and it makes you a credible buyer in the seller’s eyes. For me, as an agent, a pre-approved buyer is a buyer I can negotiate seriously for.
Fixed or variable interest?
There is no universal answer. Fixed means predictability for the period it is fixed; variable follows the reference index and the terms of your contract. What matters is understanding the scenarios, not just the instalment in the first month — and comparing the total cost, not only the advertised rate.
Frequently asked questions
What deposit do I need for a first home?
At least 15% of the value for a loan in lei, that is financing of no more than 85%. Through the “Noua Casă” programme the deposit can come down to 5%, with a partial state guarantee.
How much of my salary can the instalment be?
At most 40% of net income for loans in lei, with 5 percentage points more for the first home you will occupy. For loans in foreign currency the limit is 20%.
What is pre-approval and how long does it take?
It is the review of your financial situation before you choose a property. It shows you the real budget and the deposit required. It is done quickly, with your income documents, and it saves you pointless viewings.
What happens if the bank’s valuation is below the negotiated price?
The bank finances a percentage of the valuation, not of your price. You cover the difference from your own funds, or the price is renegotiated — which is why it is important not to stretch every last resource.
Looking in Otopeni and want to start from a realistic budget? Tell me what you are after and I will help you with the steps, including with the broker.
Sources
- NBR Regulation no. 17/2012 on certain lending conditions for loans granted to individuals, as subsequently amended — maximum debt-to-income ratio 40% (lei) / 20% (foreign currency), +5 percentage points for a first home; minimum deposit 15% for a first home, 25% for subsequent ones.
- The “Noua Casă” programme — minimum deposit 5%, with a partial state guarantee.
- The conversation with Laurențiu Duinu, mortgage broker (Estima Finance).
