# Debt-to-Income Ratio

*Financial Supervisory Authority regulations FFFS 2018:10 (strengthened amortization requirement)*

## Definition

The debt-to-income ratio (skuldkvot) is the relationship between your total debt and gross income (income before tax). It's expressed as a multiple — for example, a ratio of 4 means you have debts equal to four times your annual income. The debt-to-income ratio is a central metric that banks and the Financial Supervisory Authority use to assess household debt risk.

Since 2018, a strengthened amortization requirement applies to borrowers whose debt-to-income ratio exceeds 4.5 times gross income — they must amortize an additional 1% per year on top of the standard amortization requirement. In practice, this means your maximum borrowing capacity is limited by your income. Banks also perform a KALP calculation (disposable income after living costs) that can further limit the loan.

## Key points

- Total debt divided by annual gross income — expressed as a multiple
- Above 4.5x gross income triggers strengthened amortization (+1%/year)
- Central metric in banks' credit assessments
- KALP calculation (disposable income) can further limit the loan
- Both mortgages and other debts are included in the ratio

## Practical tip

Calculate your debt-to-income ratio before applying for a mortgage: total debt (including student loans, car loans, etc.) divided by gross income. If it exceeds 4.5, this means higher monthly costs through additional amortization. Consider paying off other loans first.

## Legal basis

Financial Supervisory Authority regulations FFFS 2018:10 (strengthened amortization requirement)