Fact Sheet & FAQ: French Mortgages for Non-Residents

• Fact Sheet Overview
• Key Facts (Eligibility, Types, Process, Features)
• Key Numbers (LTV, Rates, Deposit, DTI, etc.)
• Key Costs & Taxes (Purchase & Annual)
• Equity Release in France
• Key Considerations (Docs, Insurance, Risks, Structures)
• Example Scenario
• FAQ Overview

FAQs: Eligibility, Maximum LTV, Typical interest rates, Interest-only, Documentation, Timescales, Life insurance, Company / trust, Taxes, Currency, Renting out, Tax benefits, Capital gains tax, Reselling, Moving to France, Law changes, Home-country financing, Revaluation

Fact Sheet: French Mortgages for Non-Residents

Key Facts:

French lender criteria for non-residents – deeper detail on eligibility, affordability rules, deposits and documentation.

Eligibility:

• Non-residents can obtain mortgages; no citizenship requirement.
• French banks lend to non-EU nationals, though with stricter conditions.
• Typical down payment: 20–30% minimum (see deposit and LTV expectations in France).

Mortgage Types:

• Repayment mortgages in France: Monthly payments include interest and principal.
• Interest-Only (Prêt in Fine): Available through private banks; principal repaid at term-end.
• French private bank mortgages: Flexible, asset-backed, tailored for large loans (typically over €2 million).

Mortgage Process Timeline:

• Initial consultation & pre-approval (1–2 weeks).
• Property search & offer (variable duration).
• Signing Compromis de Vente (usually within 2 weeks after offer).
• Mortgage application & approval (4–8 weeks).
• Mandatory 10-day reflection period on the formal mortgage offer.
• Completion & funds release (~8–10 weeks total) – see the French mortgage process step-by-step.

Mortgage Features:

• French mortgage interest rates and terms often favour fixed rates for long-term stability.
• Variable-rate options are available, typically linked to Euribor (see rate structures).
• Loan terms typically range from 5–25 years; average duration 15–20 years (see typical terms and durations).

Key Numbers:

LTVs for mortgages in France – plus latest market commentary for current lender appetite and indicative pricing.

Key Costs & Taxes (Beyond Mortgage):

French property costs, taxes and legal considerations – a full breakdown of upfront costs, annual taxes and key legal points.

Notary Fees:

• Existing Properties: Approximately 7–8% of the purchase price, covering transfer duties and notary fees.
• New-Build or Off-Plan Properties: Around 2–3% acquisition costs, plus VAT (20%) on the purchase price.

Annual Taxes:

• Taxe Foncière: Annual property tax; new constructions may be exempt for two years if declared within 90 days of completion.
• Taxe d'Habitation: Reduced or phased out for main residences; applicable for second homes.

French Wealth Tax (IFI):

• Applies to net property value exceeding €1.3 million.
• Mortgage debt reduces taxable property value (see IFI mechanics and deductions).

Rental Income Tax:

• Non-residents taxed on rental income; mortgage interest deductible (see ongoing taxes and rental treatment).

Capital Gains Tax (CGT):

• 19% plus social charges (17.2%).
• Full exemption after 22 years (CGT) and 30 years (social charges) – see CGT and taper relief.

Equity Release in France

French private bank mortgage structures are typically the most realistic route for high-value equity release in France.

General Overview:

• Equity release is less common in France compared to other countries.
• Traditional equity release products (like lifetime mortgages in the UK) are rare.

Private Banking Options:

• For properties valued over €2 million, private banks may offer tailored equity release solutions.
• Typically, up to 50% of the property's current value can be released.
• Minimum loan amount: typically €300,000.

Costs and Considerations:

• Mortgage Registration Tax (Hypothèque): Higher costs apply as the new mortgage must be registered.
• Notary & Legal Fees: Approximately 1.5% of the new loan amount.
• Bank and Broker Fees: Around 1.5% of the new loan amount.
• Eligibility: Requires proof of income, net assets, and justification of fund use.

Limitations:

• Equity release options limited; complex arrangements are common.
• Traditional equity release schemes (lifetime mortgages) are rare.

Key Considerations:

French mortgage documentation requirements – what lenders typically ask for, plus insurance and practical considerations for non-residents.

Documentation Required:

• Identification (passport), proof of address.
• Income verification (3 months’ payslips or 2–3 years’ financial statements).
• Bank statements.
• Existing debt details.
• Translations required for non-French documents (see documentation and process requirements).

Life Insurance:

• Typically required by lenders to cover the mortgage amount (see French mortgage life insurance requirements).
• Costs vary by age and health; bank-offered policies are common but you may be able to use an equivalent external insurer.

Foreign Currency Risks:

• Loans are typically denominated in EUR; income in other currencies may affect affordability due to exchange rate fluctuations (see currency considerations for buying in France).

Ownership Structures (SCI, Trusts, Companies):

• SCI and SARL de Famille (French property-holding company): Commonly accepted (see French ownership structures and lending).
• Foreign entities (trusts, companies): Less favoured, potentially impacting taxes, complexity, and loan terms.

Resale Considerations:

• No resale restrictions; capital gains tax applicable, particularly within first 5 years (see CGT overview).
• Early mortgage payoff penalties possible (~3% of outstanding balance or 6 months’ interest).

Example Scenario (Illustrative):

French mortgage scenarios for HNW buyers – a fuller set of real-world-style case studies.

• Property Purchase: Paris apartment, €2 million
• Mortgage: 70% loan-to-value (€1.4 million), 20-year fixed-rate at 4% interest
• Monthly Payment: Approximately €8,500 (Capital + Interest)
• Deposit & Fees: Approximately €600,000 deposit plus around €160,000 notary fees
• IFI Wealth Tax: Only €600,000 taxable initially due to outstanding loan balance

FAQ

Eligibility for a Mortgage

Who can get a French mortgage? Both residents and non-residents can apply for mortgages in France. Banks will assess your income, debts, and credit history (even if abroad) to determine eligibility. Generally, non-EU foreigners can obtain a French home loan but may face stricter requirements (such as higher down payments). Lenders also impose age limits—the loan must usually end by retirement age or around 70–75. Important: Most lenders require you to open a French bank account and obtain a fiscal number if you don’t already have one.

Foreign buyer conditions: French banks often ask that your total debt payments (including the new mortgage) do not exceed about 33–35% of income. Some banks request additional collateral or savings for non-resident borrowers. Occasionally, banks require foreign borrowers to deposit 12–24 months of mortgage payments into a French account as a guarantee. Having French residency is not required, but being an EU/EEA citizen or having stable foreign income makes the process smoother. Property ownership in France does not grant residency rights—you must follow visa procedures separately.

Maximum Loan-to-Value (LTV)

How much can you borrow? The maximum loan-to-value ratio in France depends on residency and financial profile. Non-resident foreign buyers typically receive around 50–75% LTV, meaning a 25–50% down payment is required. Practically, many non-EU buyers find LTVs around 60–70% common. French residents (or EU citizens with local income) can often borrow up to 85% and sometimes even 100% of the property price (though 100% loans usually require excellent credentials or additional guarantees).

Interest-only loans and LTV: Interest-only ("in fine") mortgages generally offer lower LTVs, often around 50–60%, as the principal isn’t reduced during the term. Overall, plan for a substantial deposit—typically 20–40% for foreign buyers. Higher LTVs may be possible with strong income, low debts, or additional collateral.

Typical Interest Rates

Current rates: French mortgage rates move frequently and depend on profile, loan size and structure. For the latest indicative market view, see our News & Commentary.

Fixed vs. variable: Most French mortgages are fixed-rate, locking your rate for the full term (often 15–20 years). Variable-rate loans exist (mostly private banks, indexed to Euribor). For how pricing and rate structures work in practice, see French mortgage interest rates and terms.

Interest-Only Mortgages

Are interest-only loans available? Yes. France offers “in fine” (interest-only) mortgages—interest-only loans with principal repaid in a lump sum at maturity. These loans have strict conditions and typically suit high-net-worth buyers.

Typical terms: Interest-only periods typically run up to 10–15 years. Where it helps, private banks can consider bespoke structures (see private bank mortgages).

French nuances: Lenders commonly require borrower insurance linked to the loan (see French mortgage life insurance requirements), and you should have a clear principal repayment plan.

Required Documentation

What paperwork do you need? French mortgages require extensive documentation. For the full lender checklist, see documentation and process requirements:

• Identification: Passport.
• Proof of address: Utility bill.
• Income proof:
  • Employed: Last 3 payslips, employment contract, last 2 years of tax returns.
  • Self-employed: Several years of accounts/tax returns.
• Bank statements: Last 3–6 months, showing income/savings.
• Proof of funds: Bank statements for deposit amount.
• Specific French requirements:
  • Obtain a French bank account (for mortgage payments).
  • French fiscal identification number (if not already obtained).
  • Life insurance documentation (mandatory, with medical questionnaire).
  • Property details: Signed sale agreement (Compromis de Vente or Promesse), later property title and valuation.

Non-residents may need credit reports or bank reference letters. Documents must be translated into French by an accredited translator.

Tip: French banks can request detailed explanations (large transactions, rental income). Include a cover letter summarising your financial profile. Well-organised documents speed up approval.

Time to Get a Mortgage

How long does it take? Obtaining a mortgage in France typically takes 2–3 months from application to funds availability. See the French mortgage process step-by-step for what happens at each stage.

Once you receive the official mortgage offer, French law requires a 10-day cooling-off period before acceptance. After this period, funds are released upon coordination with your notary, who manages payment at the property’s final sale completion.

How to avoid delays: Submit a complete file promptly, quickly address additional bank requests, and ensure your preliminary purchase agreement (Compromis de Vente) includes a financing contingency clause (usually 45–60 days).

Life Insurance

Is life insurance required? In most cases, yes—French lenders typically require borrower insurance linked to the loan. For fuller detail, see French mortgage life insurance requirements.

Buying Through a Company or Trust

Can I use a Limited company, SCI, or trust to buy? Yes, particularly via a French SCI or SARL de Famille, but lender appetite varies by structure. See ownership structures in France.

Taxes

What are the most common taxes when buying property in France? For a full overview, see French property costs, taxes and legal considerations.

Currency Fluctuations

What are the main currency and FX considerations when buying property in France? Mortgage payments are in euros, creating currency risk if your income or savings are in another currency. For more detail, see currency considerations for French mortgages.

Renting Out the Property

Can you rent out a home with a French mortgage? Yes, but you should understand the tax and regulatory position (see ongoing costs and taxes).

Tax Benefits of a Mortgage

Does having a mortgage help with taxes? The most common benefit is that mortgage debt can reduce IFI exposure (see IFI treatment).

Capital Gains Tax

When you sell, will you owe tax on the profit? Potentially, yes. See capital gains tax in France and taper relief.

Restrictions on Reselling

France imposes no resale timing or ownership restrictions. However, practical financial considerations (e.g., early repayment penalties and CGT) may discourage rapid resale.

Moving to the Country

Owning French property does not grant automatic residency rights or visas. Residency permits must be obtained separately.

Changes to Laws

French real estate and mortgage laws evolve periodically. Where “current rules” matter, refer to our News & Commentary and confirm your position before you commit.

Using Financing from a Home Country Bank

Foreign lenders generally cannot directly secure loans against French real estate. Common alternatives: equity release or personal loans from your home country, converting you effectively into a cash buyer in France.

Revaluation of the Property

French banks generally do not periodically revalue mortgaged properties after initial appraisal. Your loan terms remain fixed unless refinancing occurs.