Mortgage Loans in France

How French Mortgages Work

The French mortgage system isn't like what you might be used to back home. For a start, over 95% of mortgages here are fixed-rate loans. That means your monthly payment stays exactly the same for the entire term, regardless of what happens in financial markets. French borrowers tend to prefer this stability, and banks are happy to accommodate.

The market is regulated by the Banque de France through the HCSF (High Council for Financial Stability), which sets lending rules that protect both borrowers and the broader economy. Since 2022, the 35% debt-to-income cap has made mortgages harder to get but also reduced the risk of people taking on more debt than they can handle.

What strikes many buyers is how conservative French banks can be. They want to see stable employment (a CDI is gold), solid income history, and meaningful down payments. But this caution works in your favor: when you do get approved, you have a system that won't surprise you with payment spikes down the line.

What Lenders Actually Want to See

The 35% Debt-to-Income Cap

This is the big one. All your monthly debt payments combined cannot exceed 35% of your net income. That includes your new mortgage, any car loans, student debt, and credit card minimums. On a 4,000€ monthly net salary, your total debt payments cannot exceed 1,400€. This isn't a suggestion—it's enforced by the regulator.

Here's what this means in practice. If you're buying a 300,000€ property with a 15% down payment (45,000€), you'd finance 255,000€. At 4% over 20 years, that's roughly 1,550€ per month. If your salary is 4,500€ net, that's already 34% of your income just for the mortgage, and banks also calculate in insurance and property charges. You might need a bigger down payment or a longer term to fit within the 35% ceiling.

Down Payment: More Than the Percentage

French banks typically want 10-20% of the purchase price as a down payment. But here's the detail that catches first-time buyers: you also need cash for notary fees and registration taxes, which add another 7-8% for existing properties. New construction is cheaper at 2-3%.

So on a 300,000€ existing property with a 15% down payment, you're looking at 45,000€ for the down payment plus roughly 22,500€ in fees. That's 67,500€ total cash needed, not the 45,000€ that seems obvious at first. Most banks require you to fund these additional costs from your own savings—they won't finance them as part of the mortgage.

For non-residents, the situation is stricter. You'll typically need 30-40% down payment, and not all banks will lend to you at all. EU citizens have an advantage here due to regulatory alignment, but non-EU nationals face more paperwork and limited options. Brokers who specialize in expat mortgages can be worth their weight in gold.

Employment Status Matters

A CDI (permanent employment contract) is the gold standard. Banks love it because it signals stability. If you're on a CDD (fixed-term contract), self-employed, or freelance, you can still get approved, but expect to jump through more hoops. Self-employed borrowers typically need three years of profitable tax returns, and banks will often average your income over that period rather than using your most recent figure.

Age also plays a role. Many banks cap loan terms so that full repayment happens by age 75-80. If you're buying in your 50s, this might mean a shorter loan term or larger monthly payments to finish before the cutoff.

Retired individuals can absolutely get mortgages, but the calculation changes. Banks look at pension income, and there are specific products designed for retirees that work around the age limitations.

Interest Rates and Loan Types

Fixed Rate: The French Standard

As I mentioned, over 95% of French mortgages use fixed rates. Your interest rate stays locked in for the entire loan duration, so your monthly payment never changes. This predictability is deeply embedded in French financial culture—people here value knowing exactly where they stand years into the future.

Current fixed rates range from about 3.5% to 4.5%, depending on your profile, loan amount, down payment percentage, and which bank you approach. Running a mortgage simulation across several lenders before committing helps you understand where you stand. Your rate is genuinely negotiable. I can't stress this enough. What one bank offers can differ substantially from another, and using a mortgage broker (courtier) who can shop your application around often results in better terms than going direct.

The exact rate you'll get depends on several factors: your employment stability, down payment size, loan term, the property type, and your relationship with the bank. Clients with 20%+ down payments, CDI status, and clean credit histories consistently get the best rates.

Variable Rates: Rare but Available

Variable rate mortgages exist in France, but they're uncommon. If you're considering one, expect caps on annual rate increases (usually 1%) and lifetime caps (typically 3% above your starting rate). There's also a minimum rate guarantee. These safeguards exist because French consumer protection law requires them.

Variable rates might make sense if you plan to repay quickly or if you believe rates will stay low. For most buyers seeking stability, fixed rates are the safer choice in the French context.

PTZ: Free Government Money for First Buyers

Eligibility depends on your household income and the property's location. The scheme has been expanded in recent years, and income ceilings have been raised, meaning more buyers qualify than before. If you're a first-time buyer and your project fits the criteria, PTZ should be central to your financing strategy.

Combining PTZ with a traditional mortgage and your own savings is often the optimal approach for making the numbers work on an ambitious property purchase.

Bridging Loans (Prêt Relais)

If you need to buy a new property before selling your current one, a bridging loan covers the gap. These short-term loans (typically 12-24 months) let you move forward with your purchase using your existing property's equity as security. Interest rates run higher than standard mortgages, so this is a temporary solution rather than a long-term strategy. Use it carefully—there's real risk if your original property takes longer to sell than expected.

Understanding TAEG and Usury Rates

TAEG stands for Taux Annuel Effectif Global—essentially the true annual cost of your loan expressed as a percentage. It includes your interest rate plus all fees, insurance premiums, and charges. French law requires banks to quote this figure, and it's the real number you should compare when shopping around.

The usury rate (taux d'usure) is the legal maximum TAEG that banks can charge. The Banque de France calculates and publishes these thresholds quarterly. If your TAEG would exceed the usury rate, your application must be rejected—even if you're fully solvent otherwise.

This mechanism protects borrowers from predatory lending, but it can also create unexpected roadblocks. Older applicants or those with health conditions sometimes find themselves blocked because their insurance costs push the TAEG above the ceiling. One solution is to shop strategically for lower-cost insurance, which brings down the overall TAEG.

Borrower Insurance: Your Biggest Optimization Opportunity

Mandatory borrower insurance (assurance emprunteur) covers death, disability, and inability to work. Without it, your bank won't finalize the loan. The cost typically runs between 0.2% and 0.5% of your total loan amount per year. On a 250,000€ mortgage, that's 500€ to 1,250€ annually.

Here's what many buyers don't realize: you don't have to take your bank's group insurance policy. Since 2010, you've had the legal right to choose an independent insurer, provided the coverage meets minimum standards (this is called "délégation d'assurance"). The savings can be substantial—30% to 50% compared to bank rates is common, especially for younger, healthier borrowers.

The Lemoine Law of 2022 made this even better. You can now switch insurers at any time, not just at annual renewal, and without paying any penalties. If you signed your mortgage before 2022 and are still paying high bank insurance rates, you could be leaving thousands of euros on the table. This is something I'd personally look into right after signing. The same legal protections apply to other insurance products under the Lemoine Law changes for insurance.

Additional Costs Nobody Talks About

Notary Fees (Frais de Notaire)

Despite the name, most notary fees go to taxes and government charges, not the notary's salary. For existing properties, expect 7-8% of the purchase price. For new construction, it's much lower at 2-3%. On a 300,000€ existing property, that's 21,000€ to 24,000€ in fees. New construction on the same price would be 6,000€ to 9,000€ in fees.

These fees must be paid from your own funds at signing. Most banks won't finance them, so budget accordingly. First-time buyers often underestimate this cost—make sure you have the full amount ready.

Bank and Guarantee Fees

Banks charge various upfront fees: application fees (frais de dossier) of 500€ to 1,500€ (sometimes negotiable or waivable), property valuation fees of 200€ to 400€, and guarantee fees that I'll explain next.

French mortgages require the lender to have security on the property. This comes in two forms. A mortgage (hypothèque) is a legal charge against the property, costing about 2% of the loan amount in fees. Alternatively, a surety guarantee (caution) from a guarantee organization costs around 1% to 1.5% but gets partially refunded when you finish repaying. Most buyers find the surety option simpler and cheaper.

Home insurance (assurance habitation) is also mandatory for mortgaged properties. Budget 200€ to 600€ per year depending on your property value and location. Your lender will want proof of this before releasing mortgage funds.

The Application Process Step by Step

Step 1: Financial Assessment and Pre-Approval

Before you start property hunting, figure out what you can afford. Calculate your maximum monthly payment using the 35% debt rule, determine how much cash you have for down payment and fees, check your credit history, and get pre-approved in writing from a bank or broker.

Pre-approval isn't binding, but it tells sellers you have real financing behind you. In competitive markets, having this letter can make the difference between getting the property and losing it to another buyer.

Step 2: Make an Offer and Sign the Preliminary Contract

When you find a property you like, you sign a preliminary purchase agreement (compromis de vente or promesse de vente). This commits both parties to the sale, subject to conditions—most importantly, that you obtain mortgage approval within a specified period (usually 45 days).

The buyer gets a 10-day cooling-off period after signing. You'll also pay a deposit of 5-10% of the purchase price, held by the notary. If you can't get mortgage approval and invoke the condition suspensive, you get your deposit back in full.

Step 3: Formal Mortgage Application

With the preliminary contract signed, you submit your formal mortgage application with identity documents, proof of address, last three months' pay slips, employment contract, last three years' tax returns, bank statements (typically three months), the preliminary contract, property details and valuation report, and documentation of any existing debts.

The bank then values the property, checks your credit, verifies your income, and analyzes your debt ratio. This usually takes two to four weeks.

Step 4: Receive and Accept the Mortgage Offer

If approved, the bank sends you a formal mortgage offer (offre de prêt) that must remain valid for at least 30 days. This document includes all loan terms, interest rate, complete repayment schedule, insurance requirements, every fee and cost, and all conditions precedent.

French law requires a mandatory 10-day reflection period after receiving the offer. You cannot sign earlier, even if you want to. This protects you from rushed decisions. After the 10 days, you have until the offer expiration date to accept.

Step 5: Final Signing at the Notary

Once you accept the offer and all conditions are satisfied, you sign the final deed (acte de vente) at the notary's office. The bank transfers the mortgage funds, you pay the remaining down payment and all fees, and you receive the keys. The whole process from offer to final signature typically takes two to three months, though it can be faster or slower depending on complexity.

Should You Use a Mortgage Broker?

Brokers (courtiers en crédit immobilier) are common in France and can be genuinely useful. They work with multiple lenders, have access to wholesale rates unavailable to individuals, handle all the paperwork and back-and-forth with banks, and know exactly which lenders fit which profiles.

Broker fees vary. Some work completely free (they earn commission from the lender when the deal closes), while others charge around 1% of the loan amount. Even with a fee, the better rate they secure often makes them cost-effective. For complicated situations—non-residents, self-employed applicants, multiple property purchases—a broker's expertise is usually worth the expense.

The key is finding a mortgage broker (courtier prêt immobilier) who fits your profile. Here's what I'd look at when comparing brokers: first, their lender network—some work with 10 banks, others with 50 or more, and a wider network means better chances of finding the right fit. Second, their specialization—some focus on first-time buyers, others on non-residents or complex income situations, and matching their expertise to your situation matters. Third, their fee structure—commission-based brokers are free to you but may push certain lenders, while fee-based brokers might give you more objective comparisons across the full market.

Mortgages for Non-Residents and Expats

Getting a French mortgage as a non-resident is possible but comes with extra friction. You'll typically need 30-40% down payment, have fewer bank options (some don't lend to non-residents at all), possibly face slightly higher interest rates, and complete more extensive documentation of foreign income.

EU citizens have a significant regulatory advantage over non-EU nationals. Freedom of movement provisions create a more straightforward path. Some French banks have dedicated international divisions that understand the specific requirements for different nationalities and can guide you through the process.

If you have foreign income, banks assess your borrowing capacity in euros. They may apply conservative currency conversion rates or require income verification across multiple currencies. Having some French income or assets strengthens your application considerably.

For non-residents, I'd strongly recommend working with a broker who specializes in international mortgages. They know which banks are most accommodating and how to structure your application for the best chance of approval.

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