Borrowing capacity, income and budget
Financing a second home: what the bank counts, and what it does not
The same debt-to-income limit, no rental income offset, no subsidised loan: what the bank counts for a second home, and the documents to prepare first.
A second home is financed through a standard residential mortgage, subject to the same debt-to-income ratio limit. The bank counts the new instalment in addition to that of the primary residence, and expects a tangible down payment and visible savings after the transaction. It almost never counts the rental income from a seasonal let; the zero-interest loan is closed, and the derogation margin is allocated first to primary residences.
By Sandy MASCART, mandataire d'intermédiaire en opérations de banque et en services de paiement ORIAS 26000541 sous le mandat de CDV PATRIMOINE & ASSURANCE (ORIAS 14005573)
Key points
- The loan for a second home follows the rules of a standard residential mortgage, but the bank expects a greater margin than for a primary residence.
- The instalment for the second home is added in full to that of the primary residence in the calculation of the debt-to-income ratio.
- The banks' derogation margin is directed towards primary residences: the second home competes only for the free portion, which is the narrowest.
- The zero-interest loan is closed to second homes, except in the specific case of a future primary residence occupied after a delay set by the legislation.
- The rental income from a seasonal let is almost never taken into account by the bank, due to the lack of a legible lease and a history for the property in question.
A second home is financed: debt remains below the limit with both properties, actual down payment, budget accounting for the costs of the second roof. The basic calculation: the borrowing capacity.
Does a bank lend for a second home?
Yes, like an ordinary mortgage. The bank simply requires more margin: debt well below the limit, down payment beyond the fees, visible savings.
The new instalment is added to the old one
Existing loans plus the new instalment, reported against your income. Are you a tenant? Your rent often counts.
Le plafond est le même pour une résidence secondaire que pour une résidence principale. La différence est en face : aucun loyer ne vient s'ajouter aux revenus, puisque le bien n'est pas destiné à être loué à l'année.
- En vigueur depuis le
- Source
- Décision D-HCSF-2021-7, art. 1er — Légifrance
To free up space: settle a small heavy loan, or extend the term within the limit of the debt-to-income ratio.
A file that passes without derogation
The derogation margin goes first to the main residence:
- En vigueur depuis le
- Source
- Décision D-HCSF-2023-2, art. 1er — Légifrance
C'est dans cette seule fraction qu'une résidence secondaire peut obtenir une dérogation, en concurrence avec les investisseurs locatifs et tous les autres projets hors résidence principale.
- En vigueur depuis le
- Source
- Légifrance
Build your file within the norm, even with high income.
Assisted loans: in practice, none
The zero-interest loan is reserved for the principal residence. The other regulated loans and employer assistance schemes must be verified individually before being included in the calculation.
- En vigueur depuis le
- Source
- Article D. 31-10-6 du code de la construction et de l’habitation — Légifrance
Exception: the house purchased for retirement, with an extended occupancy period.
1 an suivant la déclaration d’achèvement des travaux ou l’acquisition si postérieure ; porté à 6 ans lorsque le logement est destiné à être occupé à compter du départ à la retraite, à condition qu’il soit loué dans l’intervalle sous conditions de ressources, de loyer et de déclaration
Ce n'est pas une porte ouverte à la résidence secondaire : dans l'intervalle, le logement doit être loué sous conditions, et non occupé par vous le week-end. Les autres conditions du prêt à taux zéro s'appliquent en entier.
- En vigueur depuis le
- Source
- Article D. 31-10-6 du code de la construction et de l’habitation — Légifrance
See also borrowing after sixty.
Seasonal rents are almost never counted
The bank considers a lease, not a few weeks of rental. You should also check what the town hall and the co-ownership regulations permit. If rented on an annual basis, it is a different structure: rental investment.
Down payment and guarantee
Plan for a down payment that covers the fees and a portion of the price (see personal down payment). The guarantee body scrutinises this property closely; if it refuses, the mortgage costs more: see compared guarantees. Chalet, house in the Ardèche, seaside: the valuer is less familiar with this market, and the property valuation becomes likely.
The budget for the second home
- Council tax and residence tax on secondary residences: the local authority may increase the latter. Ask the seller for their advice.
- Service charges, which are often high in resort areas or seaside locations.
- Insurance and maintenance of a property that is often empty.
- Energy and subscriptions, throughout the year.
- Travel: the often-forgotten cost, which frequently determines the resale.
Check the increase on impots.gouv.fr.
Before the purchase offer
I am a mortgage intermediary working under mandate; neither the approval nor the interest rate depends on me.
Present the full debt-to-income ratio, the annual budget for the second property and the security, then compile the property file with your documents.
Fees published. Have the project scrutinised by telephone, with the property listing in hand.
Create your file while the price remains negotiable.
Sources
Read next
- How much can I borrow? Mortgage capacity in Lyon
- Debt-to-income ratio: the HCSF rule, its derogation margin and how the bank applies it Calculate your debt-to-income ratio as an analyst would: retained charges, residual income, HCSF derogation, and the levers to get back under the cap.
- Guarantee, mortgage or IPPD: the true cost of securing a mortgage Guarantee, mortgage, lender's privilege: what each form of security costs, what you end up paying, and when the bank requires a mortgage.
- Down payment for a mortgage: how much is actually required, and how to prove it No minimum down payment threshold is imposed: what the down payment actually covers, what counts as a down payment, and how to prove its origin to the bank.
- Borrowing after 60: Removing the real obstacles, from insurance to term There is no legal age limit for borrowing. After 60, three factors decide: the insurer, pension income and the insured amount.
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