The Czech National Bank has the legal power to set the conditions for obtaining a housing loan. It sets the limits of DSTI, DTI and LTV and mortgage providers must follow them when assessing mortgage applications. Using the DSTI (Debt Service to Income) indicator, the lender assesses whether the applicant can manage to repay the mortgage without problems.
How is the DSTI calculated?
The DSTI expresses the ratio between the amount of monthly repayments of all loans and the net monthly income of the loan applicant. The formula for calculating the DSTI is as follows: DSTI = (monthly repayment amount of all loans / net monthly income of the loan applicant) x 100. The result is reported as a percentage.
For example, if you pay CZK 15,000 per month for all your loans, the DSTI will be 30% of your net monthly income of CZK 50,000.
Upper limit of the DSTI
With effect from 1 April 2022, the maximum DSTI is 45%. For mortgage applicants under the age of 36, the threshold is 50%.
The legislation allows that 5% of all newly granted mortgages do not have to meet the DSTI and DTI limits if the mortgage provider is convinced that the mortgage applicant will repay the loan without problems in the future.