2. Your debt ratio

The highest commonly accepted monthly payment is 33% of annual net income (as shown on your most recent tax return under "net taxable income"), divided by twelve.In other words, your monthly income must be at least three times your monthly payment.

This debt ratio takes into account all monthly loan repayments. It is the sum of monthly payments due on real estate loans and reimbursement of other existing loans (e.g. consumer credit, personal loans, car loans, etc.).

The total is then divided by the sum total of your stable income.

Example, if your net monthly income amounts to €3,500:

  • A debt ratio of 30% (a monthly payment of €1,050, corresponding to a loan of approximately €142,000 over 15 years at a rate of 4.00% excluding insurance) will be considered quite acceptable.
  • However, a debt ratio of 40% (a monthly payment of €1,400, corresponding to a loan of approximately €189,000 over 15 years at a rate of 4.00% excluding insurance) is over the accepted threshold for most banks.

Exceptions may be made if your expenses before your real estate transaction already exceed the 33% threshold without causing cash flow issues (e.g. rent of €900 added to monthly savings of €600). However, you should not rely on the flexibility of banks on this matter, as the rules are generally strict.

The higher your income, the more likely banks will be to accept a debt rate of over 33%.

For low-income households, banks use an additional measure called the "family quotient" or "left to live" criterion. These aim to determine if the household will be able to meet its everyday needs once loan repayments are made.

The family quotient is calculated based on the residual income per person after payment of expenses related to the loan. A certain amount of debt is acceptable to the extent that the available sum per person that remains is enough to cover day-to-day expenses.

You are committed to reimburse your mortgage Loan. Verify your ability to reimburse before committing.