Loan Affordability Calculator Kenya - How Much Can You Borrow?

What is Debt-to-Income Ratio?

DTI ratio is the percentage of your monthly income that goes towards debt payments. Lenders typically prefer DTI ratios below 40% for personal loans.

Affordability Guidelines

• • Excellent: DTI ≤ 30% - Very comfortable
• • Good: DTI 30-35% - Manageable
• • Fair: DTI 35-40% - Acceptable but tight
• • Poor: DTI > 40% - High risk

Key Considerations

• • Emergency fund (3-6 months expenses)
• • Job stability and future income
• • Interest rate changes
• • Lifestyle changes or unexpected expenses
• • Credit score impact

Improving Your Affordability

• • Increase your income (side hustle, promotion)
• • Reduce unnecessary expenses
• • Pay off existing high-interest debt
• • Build emergency savings
• • Improve your credit score

When to Borrow

• • For investments that generate income
• • To consolidate high-interest debt
• • For essential needs (education, healthcare)
• • When you have stable income
• • After building an emergency fund

Warning Signs

• • DTI ratio above 40%
• • No emergency savings
• • Unstable income
• • Borrowing for consumption
• • Ignoring interest costs