How do Swiss banks calculate my affordability?

Banks use a theoretical interest rate of 5% (not the actual rate) to calculate mortgage interest, add 1% of the property price for maintenance, and the 2nd rank amortisation over 15 years. The total of these charges must not exceed 33% of your gross annual income.

Why a theoretical rate of 5% and not the actual rate?

The 5% theoretical rate is a prudential mechanism. It ensures you could continue to pay your mortgage even if rates rose sharply. Historically, mortgage rates in Switzerland exceeded 7% in the 1990s. This reference rate is a standard set by the SBA (Swiss Bankers Association).

Can I include my spouse's income in the calculation?

Yes, the gross income used in the affordability calculation is the household income. If both partners work, their incomes are combined. Banks generally retain 100% of the primary income and up to 100% of the second income if it is regular and on a permanent contract. For part-time or temporary employment, only a portion may be retained.

What if my affordability is insufficient?

Several solutions exist: increase your equity (to reduce the mortgage), add a co-borrower, look for a less expensive property, negotiate the purchase price, or optimise your file with the help of a broker. Some banks have more flexible criteria for certain profiles.

Do existing debts (leasing, loans) impact the calculation?

Yes, existing fixed charges such as car leasing, consumer loans, alimony or other financial commitments are deducted from your affordability. These charges reduce the amount available to finance the mortgage and can therefore lower the maximum property price you can afford.

Mortgage affordability calculator

Affordability (or Tragbarkeit in German) is the central criterion used by all banks and insurance companies in Switzerland to determine whether you can obtain a mortgage. Understanding this calculation allows you to better prepare your property project and anticipate the maximum budget you can afford.

This detailed guide explains step by step the exact method used by Swiss credit institutions, with concrete numerical examples for different income levels and property prices.

Fundamental principle: the one-third rule

In Switzerland, the golden rule of mortgage financing is simple: the theoretical charges related to your mortgage must not exceed one third (33.33%) of your gross annual income. This standard, established by the Swiss Bankers Association (SBA), is applied by virtually all lenders.

If your theoretical charges represent 28% of your income, your file is comfortable. At 33%, it is at the limit. Above 33%, most banks will refuse your file, except under special conditions (high net worth, additional guarantees).

Example: A household earning CHF 180,000 gross per year can support maximum theoretical mortgage charges of CHF 60,000 per year, or CHF 5,000 per month.

The three components of theoretical charges

The affordability calculation is based on three elements, each calculated theoretically (and not on actual costs):

1. Theoretical mortgage interest (5% rate)

Banks do not use the actual interest rate of your mortgage for this calculation. They apply a theoretical rate of 5%, also called the reference rate or calculated rate. This prudential rate simulates a rate increase scenario and ensures that the borrower could afford their mortgage even during periods of high rates.

Historically, mortgage rates in Switzerland have experienced significant fluctuations:

1990-1995: Rates exceeded 7%, causing significant difficulties for homeowners
2000-2008: Rates ranged between 3% and 5%
2015-2022: Period of historically low rates, sometimes below 1%
2022-2023: Rapid increase following SNB policy rate hikes
2024-2026: Stabilisation at moderately low levels following SNB rate cuts

Calculation: Theoretical interest = Mortgage amount x 5%

For a mortgage of CHF 800,000, theoretical interest amounts to CHF 40,000 per year.

2. Maintenance and ancillary costs (1%)

Banks add 1% of the property value per year for maintenance and ancillary costs. This provision covers:

Routine repairs and building maintenance
Condominium charges (for co-ownership properties)
Building insurance
Property taxes
Provisions for future renovations

Calculation: Maintenance costs = Property price x 1%

For a property at CHF 1,000,000, theoretical maintenance costs are CHF 10,000 per year.

3. 2nd mortgage rank amortisation

In Switzerland, the mortgage is divided into two ranks:

1st rank: Up to 67% of the property value. This rank does not need to be amortised (no mandatory repayment).
2nd rank: From 67% to 80% of the property value. This rank must be amortised within 15 years maximum or before retirement age (whichever comes first).

If you contribute exactly 20% equity for a property at CHF 1,000,000:

Total mortgage: CHF 800,000 (80% of the property)
1st rank: CHF 670,000 (67% of the property) - no mandatory amortisation
2nd rank: CHF 130,000 (800,000 - 670,000) - to be amortised over 15 years
Annual amortisation: CHF 130,000 / 15 = CHF 8,667 per year

Tip: If you contribute more than 33% equity, your mortgage stays within the 1st rank and you have no mandatory amortisation. This significantly reduces theoretical charges and therefore the income required.

Complete affordability calculation formula

Here is the complete formula used by banks:

Annual theoretical charges = (Mortgage x 5%) + (Property value x 1%) + (2nd rank / 15 years)
Affordability OK if: Theoretical charges ≤ 33.33% of gross annual income

You can also invert the formula to find the minimum required income:

Minimum income = Annual theoretical charges / 0.3333

Affordability table by income

The following table shows the maximum purchase price based on gross annual household income, assuming an equity contribution of 20%:

Gross annual income	Max charges/year (33%)	Max property price	Max mortgage	Equity required
CHF 80,000	CHF 26,667	CHF 450,000	CHF 360,000	CHF 90,000
CHF 100,000	CHF 33,333	CHF 565,000	CHF 452,000	CHF 113,000
CHF 120,000	CHF 40,000	CHF 680,000	CHF 544,000	CHF 136,000
CHF 150,000	CHF 50,000	CHF 850,000	CHF 680,000	CHF 170,000
CHF 180,000	CHF 60,000	CHF 1,020,000	CHF 816,000	CHF 204,000
CHF 200,000	CHF 66,667	CHF 1,135,000	CHF 908,000	CHF 227,000
CHF 250,000	CHF 83,333	CHF 1,420,000	CHF 1,136,000	CHF 284,000
CHF 300,000	CHF 100,000	CHF 1,700,000	CHF 1,360,000	CHF 340,000

These values are indicative and based on a 20% equity contribution. The actual maximum price depends on the specific criteria of each bank and your complete profile.

Factors that influence your affordability

Elements that increase your affordability

High and stable income: A permanent job with a high salary is the most favourable factor
Substantial equity: The more equity you bring (beyond 20%), the smaller your mortgage and the lower your theoretical charges
No debts: No leasing, consumer credit or other financial commitments
Dual income: A couple with two stable incomes has significantly higher affordability
Bonuses and gratuities: Some banks take into account a portion of regular bonuses (typically 50-80%)

Elements that reduce your affordability

Existing fixed charges: Car leasing, consumer loans, alimony payments
Self-employed status: Self-employed individuals generally need to demonstrate 3 years of stable income
Temporary contract: A fixed-term contract or recent employment reduces the bank's confidence
Residence permit: Certain permits may limit access to mortgage credit
Age close to retirement: Amortisation must be completed by retirement (64/65), which increases annual charges

Special cases

Buying as an unmarried couple

For cohabiting couples, banks analyse both incomes separately and together. Both partners are generally jointly liable for the debt. It is recommended to draft a co-ownership agreement defining each party's share and the terms in case of separation.

Self-employed individuals

Self-employed individuals face additional requirements. Banks generally require:

Financial statements for the last 3 fiscal years
Tax returns for the last 3 years
Stable or growing average income
Sometimes an equity contribution above 20%

Cross-border workers (frontaliers)

Cross-border workers employed in Switzerland with a CHF income can generally obtain a mortgage, but some banks apply stricter criteria. Currency risk (if the property is in France, for example) and employment stability are additional factors taken into account.

How to optimise your affordability

If your affordability is insufficient for the property you desire, several strategies can be considered:

Increase equity: Every additional franc in equity reduces the mortgage and therefore the theoretical charges. Consider pillar 3a withdrawal, family gifts or pillar 2 pledging.
Add a co-borrower: A parent or relative can act as co-borrower, thereby increasing the income taken into account.
Negotiate the purchase price: A lower price means a smaller mortgage.
Pay off existing debts: Settling a leasing or consumer loan immediately improves your charges ratio.
Choose a more flexible lender: Some banks, insurance companies or pension funds have different criteria. A broker knows these differences.

Test your affordability with our free simulator

Simulate my project

Difference between affordability and borrowing capacity

These two concepts are related but distinct:

Affordability (Tragbarkeit): Determines whether you can support the mortgage charges based on your income. This is the calculation with the theoretical 5% rate.
Borrowing capacity (Belehnung): Determines the maximum amount the bank will lend based on the property value. Generally, maximum 80% of the lending value.

Your mortgage is limited by whichever criterion is more restrictive. It is possible to have sufficient affordability but insufficient equity, or vice versa.

The role of the broker in optimising your file

A mortgage broker like Vision Hypotheques can make the difference, especially when your affordability is borderline. Our experts know the specificities of each lender and can:

Identify the banks whose criteria best match your profile
Optimise the presentation of your file to maximise your chances
Propose alternative financing structures (split, fixed/SARON combination)
Negotiate preferential conditions through our network of 40+ partners

Our service is entirely free for you. We are compensated by the lenders, without affecting the conditions you receive.

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