Two almost identical applications, two opposite answers. In buy-to-let, your borrowing capacity does not depend on your income alone: above all, it depends on the calculation method the bank chooses to apply.
The debt-to-income ratio, the basic rule
The recommendations of the HCSF (French macro-prudential authority), which became legally binding in 2022, cap the debt-to-income ratio at 35% of income, borrower’s insurance included, over a maximum term of 25 years (27 years for new-build or where substantial works are involved). Banks may deviate from this for a limited share of their lending, but the margin remains narrow.
The key point: how rental income is counted
The rental income expected from a buy-to-let investment is almost never taken into account at 100%. The bank applies a discount — usually in the region of 20 to 30% — to allow for void periods, running costs and unpaid rent. Rental income therefore counts in the calculation only at 70 to 80% of its amount.
Two methods, two results
The conventional calculation (by debt ratio) adds together all your credit commitments, including the new monthly instalment, and divides them by all of your income, weighted rental income included. The ratio must stay below 35%. This method quickly penalises borrowers who are already in debt.
The differential calculation isolates the rental transaction: the bank subtracts the weighted rental income from the property’s monthly instalment, and only any negative balance is added to your commitments. If the property is self-financing, it weighs little — or not at all — on your debt ratio. This approach is markedly more favourable, but not all banks apply it.
The consequence: with identical income and an identical project, one bank may reject an application that another will accept without difficulty. Hence the value of knowing, even before you apply, which lender reasons according to which method.
The other levers
Loan term, deferred repayment during works, the “change in outgoings” (comparing current rent with the future monthly instalment), residual living income, structuring through an SCI: all of these are parameters which, used well, can push a tight application through.
- Debt ratio capped at 35% including insurance, 25 years maximum (HCSF).
- Rental income counted at 70–80%, never at 100%.
- The differential calculation favours investors; not all banks apply it.
- The choice of bank determines acceptance as much as the application itself.