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How Much ‘Home’ Can I Afford in Dubai? Affordability Calculator

Dubai Mortgage Calculator Dubai

Are you actually ready to buy a property in Dubai? It’s important to know beforehand just how much upfront cash you’ll need and how much you can borrow (using a Dubai mortgage calculator) before you begin your search. You don’t want any surprises later on and end up with ‘too much’ house.

Cash Buyer’s Up-Front Cost

Aside from the property price, you will need to account for extra associated upfront costs. In Dubai, this is typically 7-8% of the property value (more on this here), and knowing what the potential property’s monthly expenses are, will also help you focus on looking for home prices within your budget.

Don’t forget, you will also need to factor in wire and exchange rate fees if you plan to transfer funds from abroad. These miscellaneous fees can often add up more than you expected, so plan for them.

Buying with a Mortgage

To figure out how much you can afford for a property, we need to do a few simple calculations.

1. Use the 30% Rule

Generally speaking, never spend more than 30% of your monthly income on monthly home payments. This rule safeguards you from overspending.

Let’s say your salary is AED 15,000 a month. Your monthly home payment should be no more than AED 4,500 a month. (This includes mortgage payment, service charges, insurance, etc)

Stick to this amount.

Keep in mind:
1. Minimum monthly income requirement for a mortgage in UAE is AED 15,000 (salaried) and AED 25,000 (self-employed). However, we have seen lower monthly income requirements, it really depends on the bank.
2. Under Central Bank laws in UAE, no more than 50% of your total income should be committed to paying off your debts (i.e. mortgage payments, credit card payments, car loans, etc.)

2. Determine Down Payment with Dubai Mortgage Calculator

This is the cash you pay up-front, a percentage of the home price. According to Mortgage Cap limits by UAE Central Bank, the minimum cash down payments for non-UAE nationals can range from 20% to 50%, depending on the property type and its value.

UAE Mortgage Cap’s Loan-To-Value Ratios

UAE Nationals

 Property ValueMax. Loan-To-ValueMin. Down Payment
First PropertyUnder AED 5 million80%20%
First PropertyOver AED 5 million70%30%
Subsequent PropertyAny Price65%35%
Off-Plan / Under Construction PropertyAny Price50%50%

Expats (UAE Residents and Investor Overseas)

 Property ValueMax. Loan-To-ValueMin. Down Payment
First PropertyUnder AED 5 million80%20%
First PropertyOver AED 5 million65%35%
Subsequent PropertyAny Price60%40%
Off-Plan / Under Construction PropertyAny Price50%50%

With these criteria in mind, i.e. your monthly income, your monthly property budget, and how much cash to put in as a down payment, we can figure out your property budget with a mortgage calculator online.

We particularly like this Dubai Mortgage Calculator as it calculates all the up-front costs, shows you the recurring monthly cost, and customizes your service charge based on the size of the property.

Remember: Stick to your monthly home payment budget.

Let’s go back to our example.

If your monthly salary is AED 15,000, your monthly home payment should be no more than AED 4,500 a month. (This includes mortgage payment, service charges, insurance, etc)

With a 20% down payment at a 3.99% interest rate for a 25 years loan period, your maximum property price should be around AED 628,000. This is for a 2,009 sq. ft apartment with a service charge of AED 10 / sq. ft.

You’ll need to adjust the property price in the calculator to figure out which combination works best with your budget. A mortgage pre-approval from a bank or mortgage broker will also help determine properties within your price range and help avoid any potential budget discrepancies.

Bottom line: If you can’t afford to buy a property and pay for all these extra interests and fees, don’t buy one yet.

Find Out if You Qualify for a Mortgage

Can a UAE residents and overseas investors get a mortgage in Dubai? Absolutely.

UAE residents will need to pass banks’ credit checks and must show proof of monthly income to ensure affordability of loan amount.  

Overseas investors may also qualify for a mortgage when buying property in Dubai, with some restrictions. For example, non-residents can borrow a non-resident loan up to 50% of the purchase price. The criteria for non-resident mortgages in Dubai vary between banks, and factors such as the country of residence and monthly income requirement will be a part of the assessment.

Get Pre-Approval Mortgage

If you plan to apply for mortgage, you will need to get a mortgage pre-approval from the bank or a mortgage broker. This pre-approval guarantees the bank will offer you a mortgage later on.

The pre-approval is a must-have, and here’s why:

1. If you don’t have a pre-approval and someone else does, the seller will choose that potential buyer over you. Sellers like serious buyers!

2. Bank may reject to lend you the necessary funds for your new home. This can create a lot of problems especially if you’ve already initiated a buying process with the seller.

3. When you have a pre-approval in place, agents and sellers ‘treat your request’ better and more seriously. They know they can sell their property faster.

To get pre-approved, banks and mortgage brokers will check your credit history and finances to ensure that you have sufficient funds and a good track record of paying back.

The pre-approval will be valid for 60 days.

Next: What Homebuyers Wish They Knew About Mortgages in Dubai

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