How much can I afford?
Calculate the required annual income and equity with our affordability calculator.
Affordability calculator
Calculate the required annual income and equity to acquire this property.
Acquisition costs
CHF 2'000
Equity required
CHF 200'000
Equity: 20%
Mortgage
CHF 800'000
Required annual income
CHF 175'758
Total monthly cost
CHF 2'833
Non-binding forecast
Maintenance per year
CHF 10'000
Calculation uses an imputed interest rate of 5% p.a., 1% amortisation and 1% maintenance costs. Affordability threshold: 33% of gross income.
What is affordability and why does it matter?
The affordability threshold is the percentage of monthly gross income that can be used for mortgage payments. Affordability is usually considered by lenders when deciding on loan approval.
How is affordability calculated?
Affordability is calculated by determining a buyer's available income after deducting monthly expenses. Generally the monthly mortgage payment should not exceed 33% of gross monthly income.
How can you increase affordability?
There are three main levers:
- Find a favourable interest rate
- Increase income
- Bring more equity
What do banks look at?
Banks consider not only financial factors but also individual life situations. Families with children have higher monthly expenses than childless couples. Make sure you can afford a home that meets your needs without endangering your financial stability.
— R. Schüpfer, MSc Banking and Finance
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