Buy-to-let investment
Investing in LMNP: financing a furnished property, and what the bank actually considers
LMNP financing: the same loan as unfurnished letting, but furniture is excluded from the loan, rents must be proven, and the tax return is scrutinised.
LMNP is a tax status, not a banking product: a furnished property is financed through an ordinary mortgage, under the same debt-to-income ratio as an unfurnished rental. The bank considers a rent proven by a lease, a written valuation or dated comparables, often only in part. It rarely finances the furniture, and for a furnished property already let, it sometimes reads the tax result rather than the rents received.
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
- LMNP is a tax status and not a banking product: the bank grants an ordinary mortgage, under the same debt-to-income ratio as an unfurnished rental.
- The furniture is rarely financed by the mortgage, which is secured on the property: it is paid from the down payment or through a separate loan.
- The advertised furnished rent must be proven by a lease, a written valuation or dated comparables, never by a figure from an online simulator.
- For a furnished property already let, a reconciliation statement prepared by the accountant helps the bank to read the rents received, not a result close to zero.
- A serviced residence backed by a commercial lease depends on the financial health of a single operator and often resells less well than a standard property.
There is no such thing as an “LMNP loan”: it is an ordinary property loan, subject to the same debt-to-income ratio as a bare rental. Three points require preparation: the furniture is excluded from the loan, the rents are assessed with caution, and your existing furnished properties are recorded on the tax return. The framework: the investment rental file.
Same loan as bare rental, different assessment
The same loan offer, the same insurance, the same limit. However, the lender finances a property and rents, not a tax regime: short-term tenancy and turnover weigh on the rents assessed, and sometimes on the down payment. Tax savings are not income.
Furnished rents to be proven
Most lenders only take a fraction of the rent into account, then compare all your instalments to all your income.
Le plafond ne distingue pas le meublé du nu. Ce qui varie d'un établissement à l'autre, c'est la fraction du loyer retenue et la méthode de calcul — et certaines grilles sont plus sévères pour un bail meublé que pour un bail nu.
- En vigueur depuis le
- Source
- Décision D-HCSF-2021-7, art. 1er — Légifrance
Prove the rent: an estate agent’s valuation, a current tenancy agreement, dated comparable property listings. An online simulator is worthless. The method: rental income and debt-to-income ratio. Do not expect any derogation: the investor has only the smallest share of the margin.
C'est dans cette seule fraction qu'un investissement locatif, meublé ou non, peut obtenir une dérogation, en concurrence avec les résidences secondaires et tous les autres projets hors résidence principale.
- En vigueur depuis le
- Source
- Légifrance
Furniture is paid for outside the loan
The security covers the property, not a sofa.
- Pay for the furniture from your own funds: a consumer credit would increase your debt-to-income ratio.
- Furnished property sale: the price of the furniture, as distinguished in the deed, is not financed; apportion it with the notary, based on a realistic list.
Renovation works, however, can be financed: see renovation works in the loan.
You are already renting out furnished: make your rents count
Furnished rents are industrial and commercial profits: the declared result may remain close to zero even though the rents are received. An analyst who reads the tax result sees a nil income. Enclose:
- the complete tax return and its schedules;
- a reconciliation of rents, expenses and result, prepared by the chartered accountant;
- twelve months of statements for the rent account;
- your SIRET number.
Serviced residence: read the commercial lease
| What the brochure highlights | What the analyst reads |
|---|---|
| A rent guaranteed by a commercial lease | A rent that depends on the health of a single operator |
| A managed property, without worry | A property that is difficult to sell outside the residence, therefore a weaker security |
| An “all-inclusive” price | A price per square metre to be compared with the local second-hand market |
| A displayed yield | A commercial figure, never included in the debt-to-income ratio calculation |
Request the lease, the operator’s accounts and the rent history.
The short duration, a separate case
Nights are not a rent: the lender rarely takes them into account. See the second home and, in Lyon, the furnished tourist accommodation.
A regime designed for the next loan
Micro or real, personal name or company: fiscal choices, to be made with an accountant before the purchase. The professional status, for its part, depends on revenue thresholds to be read on impots.gouv.fr. Bear in mind the document that this regime will produce for the property company or the fourth property.
Before the purchase offer
I am a mortgage intermediary working under mandate.
- Justify the rent, using a low assumption.
- Separate the property, works, and furniture in the plan.
- Prepare the review of your existing furnished rentals.
- Anticipate the insurance: see the investor's insurance.
Documents to gather and fees online. Have the furnished rental plan reviewed by telephone, with the property listing in hand.
Create your file and submit your latest tax return.
Sources
Read next
- How much can I borrow? Mortgage capacity in Lyon
- 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.
- Buying to house your student child: what structure will the bank finance? A lent property, a tenancy, a shared residence or a purchase in the child’s name: the structure the bank will finance, and the post-studies plan.
- Financing a fourth rental investment: why the bank stops, and how to proceed Refusal at the third or fourth rental investment: what is truly blocking the bank, and the levers that restart the financing, in the right order.
- Mortgage insurance for a rental investment: which coverages to reduce and which to keep For rental properties: the cover the lender really requires, what can be reduced, the cumulative-limit trap, and the case of a property company (SCI).
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