French property: How to get a mortgage in France

The rules

Borrowing limits are the first criteria. Repayments – including insurance charges – cannot exceed 35 percent of the borrower's pre-tax income, a rule that was put into effect in January 2022. 

While salaried employees can present payslips as proof of income, self-employed people need to provide three years of audited accounts.

The second condition concerns the length of the mortgage – borrowers are only allowed to access loans with a maximum of 25 years, or 27 years in certain cases, such as when buying a new-build before completion, allowing you to defer the start of payments for two years.

There are some exceptions to the rules, but banks are only permitted to offer exemptions to 20 percent of borrowers. Within that margin, at least 80 percent of exemptions must be for primary residences, while 30 percent will concern first-time buyers.

Age is also a factor - while there is no age limit for borrowing, banks tend to be reticent to offer mortgages to those nearing retirement age.

Accessing a mortgage 

In France, the vast majority of loans are guaranteed by banks, and one bank's offer to you may not be the same as another's. You are free to contact several banks to find the best offer for your situation.

While there are alternative options besides banks, such as a 'vendor loan' (prêt vendeur) - where one sets up a credit contract directly with the seller of the property via a notary - this is much less common.

Foreigners living in France can also consider independent, specialised mortgage brokers, like those geared toward expats. Keep in mind that some have minimum income levels and minimum property purchase prices, however.

Typically, people begin by doing some of their own research to figure out what they can expect banks to offer them. Your 'debt capacity' is defined as the total of the maximum amount plus interest that you can repay on your loan per month. While the official rule is 35 percent of your monthly income, property websites advise people to plan for 33 percent.

Several property websites offer simulations to help you figure out this total for yourself - you can test out the French government's one HERE. 

France also offers 'regulated' mortgages, which offer certain benefits. For example, these might be a zero-interest loan available to low-earners or more competitive interest rates available to those who opened a first-time homebuyer savings plan (PEL).

READ MORE: French property: What is a PEL and can it help offer a lower mortgage rate?

As you may have guessed, these 'regulated' mortgages are only available under specific circumstances. If you suspect you may be eligible for any of these offers, you can contact the organisation 'Action Logement' or 'ADIL' (Action Départementale d'Information sur le Logement) for free professional advice.

When it comes to interest rates, France's national bank, the Banque de France, calculates the usury rate, or the maximum rate a bank can lend at. Previously, this was done each trimester, but since February 2023, it has been revised each month. As of June 2023, it was set to 4.68 percent for a fixed-rate 20-year or more mortgage.

You can also choose between a fixed rate and a variable rate, though the former is more common. For the latter, the rate would change corresponding to a reference, such as the Euribor index, with the interval for rate reviews decided with your bank.

Taking out a loan as a foreigner 

Non-French nationals can become homeowners in France, but not having French nationality (or an EU national) can make it more difficult to access a loan. 

Many banks will require that foreigners prove that they will be able to legally remain in France for the entirety of the repayment period.

Another thing to keep in mind is the fact that French banks also look favourably on 'stable' employment statuses, such as CDI (indefinite) work contracts, which, by their calculation, reduce risk of unemployment.

This does not mean that those in other types of employment situations will not be able to take out a mortgage, but banks may ask for more information or evidence of consistent income.

Additionally, age can be a factor - lenders tend to be less likely to award mortgages to  those nearing or above retirement age.

Preparing your dossier

First, figure out your debt ratio and how much you will be able to offer in a down payment. Property experts advise between 10 to 20 percent of the price of the property you are buying.

Once you have done this, you are prepared to start your dossier. You will need several different forms demonstrating your employment and financial situation. 

Keep in mind that you can only request a mortgage once you and the seller have signed a preliminary sales agreement.

These include the bank's application form itself, as well as:

• Identification (passport, titre de séjour)
• Proof of your family status (marriage certificate, PACs certificate, Livret de familly, if this applies)
• Copies of your last three bank statements
• Copies of your last two tax returns (avis d’imposition)
• Your bank account information and proof of current address (ex. electricity bill)
• Proof showing your capacity to pay the downpayment (apport), like a statement of assets
• If you are buying an existing property, you will need the compromise de vente or a promesse de vente 
• If you are building a new property, you will need to include reservation contract (le contrat de réservation signé) or the construction contract (le contrat de construction) 
• If you need to also have a prêt relais, then you must include the title deeds and valuation of the property (A prêt relais is a bridging loan, also known as a buy-to-let loan, often used to finance the purchase of a new property before the sale of the previous one. Typically, this is done when changing primary residence).
• Any estimated costs of renovations that will be necessary, if your purchase requires them.

How the process works

In France you make an offer on a property first, then begin the mortgage process (although obviously you can do your research in advance).

You cannot apply for a mortgage until you have signed a compromis de vente - the first stage of the property-buying process. According to Bouygues-Immobilier, the process from applying for a mortgage, to being accepted and signing your acte de vente (the final stage of the sale process) usually takes at least two months.

READ MORE: Everything you need to know about having a second home in France

Once you have this (legally binding) document, you can apply for a mortgage. As mentioned above, you can apply with more than one bank or broker to see which offers you the best deal.

At this point, you might need to consider taking out a loan insurance plan - many banks require those that cover events like death, disability or loss of employment to include in your dossier, with the documents listed above.

It may take several weeks for the bank or broker to get back to you with an offer, but once you get it, you will have a 10-day cool off period before you are allowed to sign.

When accepting the offer, be sure to send a copy to the notaire involved in the real estate transaction. The bank and notary will then communicate, and funds are paid directly to the notaire. 

Possible changes this summer

The strict lending conditions are one factor - along with high interest rates and a lack of new-build properties - in a stagnating property market in France.

For this reason, some of the mortgage conditions could be relaxed, the finance ministry told AFP in April.

France's financial watchdog, the High Council for Financial Stability (HCSF) will consider loosening borrowing limits during its meeting in June. 

Finance minister Bruno Le Maire told AFP that the goal is to ensure that the standards aimed at protecting against over-indebtedness "do not become an obstacle in accessing credit".

The minister requested that Banque de France and HCSF work together to evaluate what steps could be taken to ease access to credit, with a decision to be reached during the June meeting.