Financial advisors and most banks in Kenya use a simple rule to determine whether a borrower can safely handle a new loan: your total monthly debt payments should not exceed 40% of your net monthly income.
How to calculate your debt-to-income ratio
- Add up all your monthly loan repayments (existing loans + the new one you are considering)
- Divide by your net monthly income (take-home pay after tax and statutory deductions)
- Multiply by 100 to get a percentage
Example
- Net monthly income: KES 60,000
- Existing loan payments: KES 10,000
- New loan monthly payment: KES 12,000
- Total monthly debt: KES 22,000
- Debt-to-income ratio: 22,000 ÷ 60,000 = 36.7%
This borrower is within the 40% limit. Adding the new loan is manageable.
What happens above 40% Banks will often decline your application automatically. But more importantly, you genuinely risk not having enough money for rent, food, and other essentials — making a late payment or default more likely, which damages your CRB record.
The smarter approach Use the affordability checker on this site before applying for any loan. It tells you exactly where you stand and what monthly payment your income can safely support.