French Mortgage Eligibility: How Much Can You Borrow?

 

Essential Reading

French Mortgage Eligibility: How Much Can You Borrow?

With historically low-interest rates and full-term fixed-rate products, taking out a French mortgage is an attractive option for many international buyers and foreign investors. But can you afford a French mortgage? Is it possible to get a French mortgage over 60? How much will you be able to borrow as a foreign buyer? Let’s break down the key factors in French mortgage eligibility.

Are You Eligible For a Mortgage in France?

Each mortgage application in France is considered on an individual basis, but there are some general guidelines that can help you determine right off the bat whether or not you are a serious candidate.

Your age

While there is not an official age limit, most French lenders will only lend until the oldest lender is 75. If you are over 70, taking out a French mortgage isn’t going to be an option. For over 60s, while it’s still possible, it does mean you will be limited by the term of the mortgage.

For example, a 65-year-old borrower could expect to be offered a maximum mortgage term of 10 years. This would naturally increase the monthly payments required to pay off the mortgage and accordingly, the minimum income requirements (more about that in a minute). You will likely be required to pay additional insurance premiums too, which needs to be factored into the cost.

Your place of residence

Not being tax-resident in France is not necessarily a barrier to getting a French mortgage—many lenders are happy to consider non-resident applications. However, it does limit the Loan-to-Value (LTV) rate of your mortgage. 100% mortgages are only an option for French residents and the maximum LTV for non-residents depends on your country of residence.

For EU buyers and British buyers post-Brexit, the maximum is 85% (a 15% deposit), although a more likely scenario would be 75-80% (a 20-25% deposit). With mortgage lenders tightening conditions post-Covid, we recommend budgeting for a 25% deposit. For American, Australian, and other non-EU buyers, the maximum is 60% (a 40% deposit).

The price of the property you want to buy

There are two main factors here to consider. The amount you want to borrow and the amount you have to invest. The minimum amount that lenders will consider lending foreign buyers is €100,000 (remember that’s the minimum loan value, not the property price). For US buyers and other non-EU residents, this is more likely to be €150,000. However, in the wake of the Covid pandemic, it’s more realistic to expect a minimum loan amount of €150,000 for all international buyers (including UK and EU buyers).

In effect, this means there is a minimum property price required for a foreign buyer to be able to qualify for a mortgage. It’s important therefore to carefully calculate and assess the LTV and total loan value against your property budget.

For a British buyer taking out the minimum mortgage loan of €150,000 at an LTV of 80%, this would mean a minimum property purchase of €180,000 (comprised of a €150,000 mortgage and a €30,000 deposit). It would not be possible to take out a mortgage on a €100,000 property (whereby the mortgage loan value would be €80,000). If you were looking at a more expensive property, the deposit would naturally be higher. For example, on a €500,000 property, the minimum deposit required would be €100,000.

For an American buyer, taking out the minimum mortgage loan of €150,000 at an LTV of 60%, this would mean a minimum property purchase of €250,000 (comprised of a €150,000 mortgage and a €100,000 deposit). It would not be possible to take out a mortgage on a €150,000 property (whereby the mortgage loan value would only be €90,000). If you were looking at a more expensive property, the deposit would naturally be higher. For example, on a €500,000 property, the minimum deposit required would be €200,000.

Your monthly income

While there is not a minimum income requirement per se, there are strict legal requirements in France that your financial liabilities—including any other mortgages, rental expenses, or other loans you have—must not total more than 33% of your net household income. This debt-to-income ratio is also accounted for in Euros, so you need to account for exchange rates too, which may or may not work in your favour.

To take a British buyer for example, for a minimum loan of €100,000, you would need a minimum annual income of around €25,000 with no other debts. If you already had a UK mortgage or rental payments, a car loan, and other small loans, you could quickly find that minimum becomes more like €40,000 or €50,000. These are very rough estimates too—don’t expect French lenders to be so lenient! Your mortgage application will need to be accompanied by detailed documentation of your entire financial situation including bank statements.

Your financial situation

Speaking of your financial situation, French lenders are notoriously risk-averse, so expect to have all of your income, assets, and debts scrutinised! In general, lenders prefer to see some degree of liquidity rather than all of your money tied up in assets.

The kind of income you receive and its sustainability are also taken into account. Income from a pension is eligible, but income from a Self-Invested Personal Pension (SIPP) or Small Self-Administered Scheme (SSAS) are counted as capital rather than income. Some rental income (especially if it is deemed unsustainable or you’ve been receiving it for less than 3 years) may not be counted either.

Self-employed borrowers or small-business owners need to be able to demonstrate a minimum of 3 years of revenue and be able to prove stability and sustainability of their income.

It’s also worth noting that post-Covid-19, lenders are becoming increasingly wary of lending to those who work in more vulnerable sectors (for example, the travel, leisure, aviation, and hospitality industries). This doesn’t necessarily mean a mortgage won’t be possible, but it may mean you need to provide additional reassurance as to your financial stability.

Your Property Choice

Finally, the property itself is also taken into account. Lenders are looking for low-risk properties, i.e. properties that would be easy to sell on in the event that you couldn’t pay your mortgage. Newer properties in popular real estate areas such as Paris, the Alps, or along the Côte d’Azur will be much more likely to have a mortgage approved over an old farmhouse in a remote rural area.

Increase Your Chances of Getting a French Mortgage

Many of the above points are non-negotiable—if you are over 70, don’t meet the minimum income requirements, or want to borrow less than the required amount, you will not be a viable candidate for a French mortgage. Read our articles Remortgage vs. French mortgage for foreign property buyers and UK or French mortgage for British property buyers? for an idea of your other options.

However, if you do meet these requirements, but are unsure about other criteria (for example, you are self-employed or have assets split between different countries), there may be other options available. The best advice is to consult an international mortgage broker who can look at your individual situation and advise on the potential mortgage options. Brokers will also be able to advise you on how to make your application more appealing to French lenders. Factors that you might not have considered such as consolidating debts or freeing up liquidity could make all the difference.

See our article Using a Mortgage Broker in France.

French Mortgages: How Much Can You Borrow?

How much you can borrow will always depend on your individual situation, but to get an idea of how much you might be able to borrow:

  1. Consider how much you able to put down as a deposit. This will give you an idea of your property budget, when taking into account LTV rates and minimum loan amounts.
  2. Use our mortgage calculator to estimate monthly payments for your desired loan amount. You can then assess your monthly finances to see whether you fall within the necessary debt-to-income ratio.

Read more about the Costs of a French Mortgage.

Ready to Apply for Your French Mortgage?

From finding the best mortgage rates to making your mortgage application—FrenchEntrée is here to guide you through the whole process. Learn all about French mortgages with our Essential Reading guides, keep up-to-date with the French mortgage market through our latest posts, then sign up to become a FrenchEntrée member for free access to our property, currency, and mortgage experts.

Once you’re ready to kick-start your French mortgage search, fill out our mortgage application form. Our independent mortgage advisors can advise you on the best options for you and put you in touch with mortgage brokers and lenders all around France.

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Comments

  • Mary Burnett
    2021-07-12 11:30:18
    Mary Burnett
    We are a couple in their 70s - I'm 70 and my husband is 71. In April this year we started our 9-yr mortgage ( to max. age 80) with a French bank. We have been French residents for over 8 years.

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    2021-07-06 05:12:30
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