Mortgage basics
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.
The debt-to-income ratio, which the rule calls the effort rate, relates borrowing charges to income. The decision of the High Council of Financial Stability caps it, as well as the loan term, and this cap is binding on banks. They may derogate from it within a collective quarterly margin, which confers no individual right to the borrower.
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 debt-to-income ratio, called the effort rate, is a lending criterion binding on banks since the decision of the High Council of Financial Stability.
- The cap governs both the effort rate and the loan maturity, the latter adding the deferral period and the amortisation period.
- All current borrowing charges are included in the calculation, including a lease with a purchase option or an outstanding revolving credit.
- No official scale for residual income exists: each bank applies its internal, undisclosed grid, hence different responses for identical files.
- The flexibility margin allowing derogation from the cap is a collective quarterly lending budget, never an individual right acquired by the borrower.
The debt-to-income ratio, your borrowing costs relative to your income, is capped by the HCSF rule. Recalculate it as the analyst will before submission: it is the first of the basic rules of mortgage lending. How much to borrow with your salary: the borrowing capacity file.
Debt-to-income ratio: the HCSF cap
The text refers to it as the effort rate: your borrowing costs divided by your income. Its cap is a lending criterion binding on banks, not a recommendation.
Critère d'octroi imposé aux établissements de crédit par le Haut Conseil de stabilité financière.
- En vigueur depuis le
- Source
- Décision D-HCSF-2021-7, art. 1er — Légifrance
A binding standard since 2022, monitored by the ACPR: no discretionary 'gesture' is possible, only the exceptional lending budget described below.
Insurance matters. The text targets the total amount due, including mandatory premiums: a cheaper delegation lowers your effort rate.
What weighs on each side
| File item | Side of the calculation | Usual treatment |
|---|---|---|
| Monthly instalment of the new loan, insurance included | Expense | In full |
| Consumer credit, car loan, revolving credit | Expense | In full, until its maturity |
| Lease with purchase option, long-term lease | Expense | In full, including when the contract is not a credit |
| Child maintenance paid | Expense | In full, if it is set by court order |
| Rent retained after the purchase | Expense | In full, if you remain a tenant of another property |
| Net salary before tax | Income | In full for a stable contract |
| Bonuses, variable pay, overtime hours | Income | Partially, and according to rules specific to each bank |
| Rental income | Income | Weighted, or treated by differential method |
| Family benefits | Income | Depending on the age of the children and the bank |
The cap is the same everywhere; the base varies. See the income retained by the bank.
The term is also capped
The decision also regulates the term of the loan, which is often the real obstacle.
La maturité est la durée initiale du crédit : période de différé plus période d'amortissement.
- En vigueur depuis le
- Source
- Décision D-HCSF-2021-7, art. 1er — Légifrance
An extension is permitted when the move-in date is delayed: off-plan property, construction of a detached house, real estate development contract, or a property requiring renovation. The deferral period corresponds to the actual duration of the delay, subject to a limit of 24 mois (), for a total maturity of no more than 324 mois (). A deferral does not purchase additional years of amortisation.
For existing properties, the minimum share of renovation costs was reduced in 2024: 10,00 % (). Some simulation tools still apply the previous threshold. Furthermore, the purpose of the works is taken into account:
- création de surfaces habitables nouvelles ou de surfaces annexes
- modernisation
- assainissement
- aménagement des surfaces habitables ou des surfaces annexes
- réalisation de travaux de rénovation énergétique
Liste limitative. Un rafraîchissement décoratif, un changement de cuisine ou de salle de bains n'y figurent pas : le montant des devis ne suffit jamais à lui seul.
- En vigueur depuis le
- Source
- Légifrance
The costs the lender takes into account
All current borrowing costs, and only those. Your everyday expenses fall under the residual income, not the debt-to-income ratio.
- Hire purchase agreements and revolving credit are included, even if unused: it is the existence of the line item that causes concern.
- A loan to be settled is excluded from the calculation only upon receipt of the final statement and proof of transfer: see the file.
- A bridge loan is excluded below a threshold of outstanding balance:
Rapport entre le montant du crédit relais et la valeur du bien mis en vente, nette du capital restant dû sur le prêt en cours.
- En vigueur depuis le
- Source
- Décision D-HCSF-2023-6, art. 1er, 2. — Légifrance
- A zero-interest loan is included, but it reduces the amount borrowed at the market rate.
The residual income: no public benchmark
What remains to the household after all borrowing costs. No legislation sets it: each bank has its own internal grid, which is not published. The amounts shown by comparison tools do not come from any verifiable source.
The grids vary according to the composition of the household, the place of residence, the status after the purchase and the level of income. Some banks apply it before the debt-to-income ratio, others after. Refused for residual income? Change institution rather than extending the term.
Can you borrow beyond the limit?
Yes, but not as a right: banks have a quarterly derogation margin, collective, measured on their production.
Assiette : la production de nouveaux crédits immobiliers de chaque trimestre civil, en montant.
- En vigueur depuis le
- Source
- Décision D-HCSF-2021-7, art. 2 — Légifrance
Measured in amount, it is consumed quickly: a borderline file will not find it the same at the beginning and at the end of the quarter.
The allocation, and the trap of the two percentages
Part de la flexibilité maximale, révisée en 2023.
- En vigueur depuis le
- Source
- Décision D-HCSF-2023-2, art. 1er — Légifrance
Part de la flexibilité maximale, exprimée sur la même base que la part réservée à la résidence principale.
- En vigueur depuis le
- Source
- Décision D-HCSF-2023-2, art. 1er — Légifrance
Both apply to the entire lending budget: the first-time buyer reserve is taken from the main residence reserve, they do not add up. The remainder is free: 30,00 % (), the only pocket for rental property and the secondary residence.
emprunteur (ou co-emprunteurs) en accession à la première propriété au sens de l’article L. 31-10-3 du code de la construction et de l’habitation
- En vigueur depuis le
- Source
- Légifrance
A derogation file
Non-compliant on one point, impeccable on all others:
- a clear reason: a high remaining balance, unsold assets, a future instalment lower than the current rent;
- a short duration, not two exceptions at once;
- perfect accounts over the last few months;
- savings retained after the transaction;
- a written note explaining the excess.
Does buying through a limited company circumvent the rule?
Not in practice: the lender requires a guarantee from the partners and recalculates their personal debt-to-income ratio.
What changes: the method for calculating rents. See rental income, the limited company and what the lender looks at, in order.
Reducing a debt-to-income ratio that is too high
Four levers: settle a short-term loan, review the insurance, increase the down payment, extend the term. The last is the most expensive.
- Settle a short-term loan: it frees up its entire instalment for a low cost.
- Put the insurance in competition with equal guarantees. Do not reduce a share to gain capacity: see the Lemoine law and the share.
- Increase the down payment, without emptying the savings.
- Smooth out several loans: see loan smoothing.
- Extend the term last.
Already refused? See the refused loan. To calculate: the purchase costs, the instalment formula and the borrowing capacity.
Just above the limit? A call to review the calculation line by line shows which lever to pull.
Create your file: the calculation is redone as the analyst would do it.
Sources
Read next
- Mortgage in Lyon: frequently asked questions
- Mortgage refused: the 12 real reasons and the 15-day action plan Mortgage refused: identify the true reason among the 12 most common, correct it with evidence and resubmit in the right order within fifteen days.
- How much can I borrow with €2,000 per month? With €2,000 in monthly income: a step-by-step calculation of your borrowing capacity, the bank’s three constraints and five levers to increase it.
- Net take-home, net payable, gross: which income does the bank actually use? Net payable, gross, taxable, bonuses, dividends, rents: what the bank actually uses to calculate your borrowing capacity, before you start house-hunting.
- Rental income: how the bank calculates your debt-to-income ratio as an investor Weighting of rents, classical or differential method, disposable income: why two banks calculate an investor's capacity differently.
All articles on this topic: Mortgage basics
Passer au calcul : Borrowing capacity