How is my debt ratio calculated?
One of the main key calculation French Banks use to determine the eligibility to borrow is the 33% debt to revenue ratio.
Your monthly payment related to the new mortgage, plus the existing loan payments (other mortgages, rent for residence, personal or car loans), should not exceed one third of your net monthly income. If you are married, your spouse’s loan payments and income are taken into account.
In order to determine your stable income, the banks will look at your salary, rental income (70 to 80% of the rental income is used for the calculation), pensions and annuities received. You can include the allowances and social benefits if these are maintained during the loan duration.
If you are self-employed, the banks will calculate the income by taking your percentage ownership of average net profits (annual salary and dividends) over the past 3 years.