Can you buy the property of your dreams with your current level of income?

What levers can increase your borrowing capacity and help you succeed in your real estate project?

Borrowing capacity determines property purchasing power because it sets the amount a bank can lend.

Purchasing capacity corresponds to the total amount available, meaning the approved loan plus the personal contribution.

We explain the calculation, propose a borrowing capacity simulation method, detail the levers to increase it, examine specific situations and analyze the 2026 trends with numerical examples.

Contact your local Capifrance real estate advisor for personalized support and to be connected with a broker in order to successfully carry out your property purchase project.

Understanding borrowing capacity: definition and differences with property purchasing capacity

Borrowing capacity is the maximum amount the bank can lend you. The bank evaluates it according to your income, expenses and the overall quality of your application.

Purchasing capacity is the total budget you have available to buy a property. It combines the approved loan and your personal contribution.

These notions are essential whether you are buying a primary residence, a secondary residence or making a rental investment.

The main reference rule is the debt-to-income ratio. The High Council for Financial Stability generally sets a threshold of 35% debt ratio. This threshold includes the insurance premium.

Banks also examine the remaining disposable income and the household composition. They take into account the local cost of living, for example Paris versus other regions.

For first-time buyers, preparing the application is crucial. A couple can combine their incomes and benefit from a higher borrowing capacity. Solvency depends on professional stability, the absence of banking incidents and available savings.

A prior borrowing capacity simulation allows you to anticipate limits and adjust your project.

Running a simulation and preparing your application increases your chances of obtaining a better interest rate.

Your Capifrance advisor can guide you and connect you with a broker. The broker will refine the calculation and negotiate the loan conditions.

What is the calculation of borrowing capacity?

Banks first estimate a maximum monthly payment that you can afford. A simplified formula often used is:

(revenues − monthly expenses) × 35%

This monthly payment excluding insurance is then converted into a loan amount depending on the interest rate and the loan duration.

Borrower insurance increases the monthly payment and is included in the APR.

Mini example: net income €3,500 per month and expenses €800 per month.

(3,500 − 800) = 2,700
35% of 2,700 = €945 maximum monthly payment excluding insurance.

The conversion into capital is done using an amortization table or an annuity formula.

The role of the debt ratio and remaining disposable income

The 35% rule is indicative.

Banks also assess a minimum remaining disposable income. They adapt their decision according to location and household composition.

A single person in Paris will often need a higher remaining income than in other regions.

Typical benchmarks: minimum remaining income may be around €800 to €1,000 per month for a single person.

For a couple, it is often between €1,500 and €2,000 per month depending on the location.

The presence of children naturally increases the required threshold.

The bank may accept a debt ratio above 35% if the remaining income is considered comfortable.

Income and expenses considered by the bank for a mortgage simulation

Income considered includes salaries under permanent contracts.

Fixed-term contracts and variable income may be accepted if the situation is stable.

Regular bonuses, pensions and rental income are also included.

For self-employed workers, banks examine the financial statements of the last two to three years.

Expenses considered include ongoing loans, alimony payments and rent.

They also include condominium charges and estimated taxes.

Rental income is often considered at 70 to 80% of net income.

This percentage accounts for risks related to vacancy and expenses.

Documents required to estimate your borrowing capacity

Prepare the following documents before the simulation: the last three payslips, the last two to three tax assessments and bank statements from the last three months.

Also include amortization schedules for ongoing loans and proof of rent payments.

For self-employed workers, attach financial statements and an accountant certificate.

Checklist prepare your appointment

Payslips
Tax assessments
Bank statements
Loan amortization schedules
Proof of contribution or savings accounts such as PEL or Livret A

Clean up your accounts by avoiding overdrafts and banking incidents before the application.

A strong loan application makes borrowing capacity simulation easier and improves negotiation conditions.

Your local real estate advisor and a mortgage broker can help you structure this application.

Calculating your borrowing capacity: simple method and mortgage examples

Step by step method: calculate the maximum monthly payment using the 35% rule.

Then convert this monthly payment into capital depending on the interest rate and the loan duration.

Add the insurance premium to obtain the total monthly payment including insurance.

Compare the result with the APR to estimate the real cost.

Borrower insurance reduces the monthly payment available for the capital.

The APR includes insurance and fees.

A simulation remains indicative. A broker will refine the calculation and compare bank offers.

Below, a box called numerical examples presents three scenarios.

It includes a mini amortization table and a comparison between 20 years and 25 years.

Practical calculation formula and loan monthly payment simulation

Practical formula: monthly payment = capital × annuity.

The annuity depends on the interest rate and the duration.

As an approximation, at 3% over 20 years, the monthly annuity equals about 0.0055 of the capital.

Complete example scenario B couple:

Net income €4,500 per month
Monthly expenses €800
Contribution €30,000
Interest rate 3.2%
Loan duration 20 years

(4,500 − 800) = 3,700
35% of 3,700 ≈ €1,295 per month excluding insurance.

Estimated insurance at 0.30% → premium ≈ €90 per month.
Total monthly payment ≈ €1,385 per month.

At 3.2% over 20 years, €1,295 per month excluding insurance allows borrowing around €235,000.

These figures are indicative and based on market observatories.

The amortization table details the share of interest and capital each year.

It helps you understand how installments evolve and how the outstanding capital decreases.

Including borrower insurance, mortgage rates and APR in the calculation

The nominal interest rate corresponds to the loan interest.

The APR includes insurance and fees. It is the relevant rate to compare offers.

Mortgage insurance covers death and disability risk.

It often includes the PTIA guarantee.

Its cost depends on age, health and profession.

Example impact: on €200,000, adding 0.20% insurance may reduce the borrowing capacity by several thousand euros.

Insurance delegation allows you to choose an external insurance policy that is often cheaper.

The law now facilitates insurance substitution and cancellation.

Reading an amortization table and understanding the impact of duration

An amortization table lists for each installment the interest portion, the capital portion and the remaining capital due.

It shows that interest dominates at the beginning of the loan.

Comparison of two mortgage loans over 20 years vs 25 years for €200,000 at 3.2% indicative figures:

Duration 20 years
Monthly payment €1,133
Total interest cost about €72,000

Duration 25 years
Monthly payment €966
Total interest cost about €89,800

Extending the duration reduces the monthly payment by about 15%.

However, the total cost of the loan increases significantly.

Practical limits: age and insurance costs may restrict the duration.

Always consider the impact on the overall cost.

How to increase your borrowing capacity: effective levers

Several levers can increase borrowing capacity.

They differ in effectiveness and implementation.

The most common include increasing the personal contribution, reducing expenses, restructuring loans and optimizing insurance.

Recommended order of action: build a contribution, repay consumer loans, improve the application and then optimize insurance and duration.

Keep precautionary savings to reassure the bank.

Some solutions such as a family donation to create a contribution require tax verification.

Your Capifrance advisor can help evaluate options and connect you with a broker.

Author :

Frédéric Rémy – Director of Commercial Performance

A real estate professional for several years within the Capifrance network, I would like to share with you some essential advice to help you succeed in your real estate project with the support of our advisors.