Family loan
A family loan is a private loan extended between family members (parents, grandparents, siblings) or close friends, without any credit institution involved. It may be interest-free or bear interest, and must be reported to the tax authority when it exceeds €1,500. A broker incorporates it into a home-financing plan as a supplementary contribution or second-ranking loan, which can improve the terms of the primary bank loan.
Key points
- Any family loan above €1,500 must be reported to the tax authority (Cerfa form 2062) to prevent reclassification as a gift.
- A written loan agreement (private deed or notarized) is strongly recommended to protect both parties.
- Interest received by the lender is taxable income; zero-rate loans may trigger a gift presumption.
- The primary bank may request the agreement to verify the family loan does not worsen the debt-to-income ratio.
- If the lender dies, the receivable enters the estate and may affect the inheritance distribution.
Frequently asked questions
How does a broker incorporate a family loan into a home-financing plan?
The broker presents the family loan to the bank as a component of the overall financing plan. If it requires monthly repayments, those payments are included in the debt-to-income calculation. If it is a bullet or deferred-repayment loan, the bank may sometimes exclude it from immediate monthly obligations. Ideally, the broker structures the family loan to look like equity in the bank's eyes — for example, by clearly subordinating it to the primary mortgage.
Why is it essential to put a family loan in writing?
Without a written agreement, the tax authority may reclassify the loan as a concealed gift, triggering gift taxes. In the event of death or inheritance dispute, the absence of documentation makes it very hard for the lender or their heirs to recover the funds. A written agreement, even informal, protects both parties and lends credibility to the file in the eyes of the bank.
What is the difference between a family loan and a family gift in a real-estate context?
A gift is an outright, no-strings transfer of ownership: the donated funds are not repayable. Subject to gift tax, it benefits from tax allowances renewable every 15 years. A family loan is repayable and does not permanently enrich the borrower. In home-purchase files, the two can coexist: parents make a partial gift and top it up with a loan.
In practice
A first-time buyer is purchasing an apartment for €280,000. Their parents lend them €30,000 interest-free to top up their down payment. The broker writes an explanatory note for the bank, attaches the signed loan agreement, and structures the plan so that the bullet family loan — repayable in a single payment in five years — does not affect the monthly debt-to-income ratio. The family is reminded to file the Cerfa 2062 tax declaration.
Official sources
- Declaring a loan between individuals · Service-Public.gouv.fr
- Obtaining a mortgage loan · Service-Public.gouv.fr
- Mortgage credit (official guide) · Service-Public.gouv.fr