Rental-income weighting
Rental-income weighting is the practice by which lenders include only a fraction — typically 70% — of rent collected when computing the income figure used to assess an investor-borrower's repayment capacity. The haircut covers the risk of rental vacancy, irrecoverable co-ownership charges, and unanticipated maintenance costs, building a safety margin into the debt-to-income analysis.
Key points
- The most common weighting rate is 70%, though some lenders apply 80% or even 100% on strong files.
- Weighting typically applies to net-of-charges rent; some lenders start from gross rent then apply their haircut.
- Weighted rental income is added to professional income to form the total income figure used in the DTI calculation.
- A vacant property at the time of application is generally excluded from income unless a signed lease is attached.
- Under the LMNP furnished-rental regime, accounting depreciation does not reduce the income figure lenders use.
Frequently asked questions
Why doesn't the bank count 100% of rents when the lease is active and payments are consistently received?
Even with a reliable tenant, lenders recognize that any rental investment structurally incurs costs not covered by rent: agency fees on re-letting, vacancy between leases, renovation work between tenancies, and irrecoverable co-ownership charges. The 70% haircut is a prudential convention, not a challenge to the current lease.
How is the rental income weighting applied in practice within the debt-to-income calculation?
For example: a borrower collects €900 in gross monthly rent. The lender counts €630 (70%) as income. With net professional income of €4,000, total counted income is €4,630. Total debt service (existing loans plus the new loan including insurance) must not exceed 35% of this amount, i.e. a maximum of €1,620 per month. The rental property's own loan payment is also counted among the borrower's liabilities.
What is the difference between the lender's income weighting and the tax treatment of rental income?
These are two entirely separate mechanisms. The bank's weighting is an internal prudential analysis tool unique to each lender. The tax regime (micro-foncier with a 30% flat allowance, or the actual-expense regime) applies in the borrower's tax return and determines tax owed. Rent that is taxed at 100% under the actual-expense regime can still be weighted at 70% by the lender.
In practice
An investor wants to acquire a third rental property. His broker calculates that his two existing properties generate €1,400 in gross monthly rent, which becomes €980 after the 70% weighting. Added to his €3,500 net salary, total counted income reaches €4,480, opening a maximum monthly payment capacity of €1,568 (35% of €4,480), with existing debt service already factored in.
Official sources
- Obtaining a mortgage loan · Service-Public.gouv.fr
- Mortgage credit (official guide) · Service-Public.gouv.fr