How much do you need to earn to become a homeowner in 2024?

Are you looking to invest in your primary residence, second home or rental property? Rising interest rates starting in 2022 complicate things for households. Still, the recent drop in mortgage rates offers a glimmer of hope, and many experts agree that investing in real estate is a good idea. But how much do you currently need to earn to make this project a reality?

To prevent future owners from putting themselves in a position of excessive debt, the Higher Financial Stability Board (HCSF) has defined debt norms that are binding on banks, and from which they can deviate only in exceptional circumstances. Monthly home loan payments including insurance should not exceed 35% of his income. For example, a single person earning a salary of €2,000 does not need to pay a mortgage of more than €700 per month.

How much to borrow with an income of €2,000, €4,500 or €7,000 per month?

With a rate of 4.20% over 25 years and borrower insurance at 0.10%, such borrowers can hope to get a maximum loan of €127,907, according to data from financial information site Moneyvox. Compared to June 2023, when the interest rate could be 3.6%, this represents about €8,000 less debt capacity. A reduction that affects not only the most common households, but all borrower profiles.

Thus, with an income of €4,500 per month, a couple in their thirties loses about €20,000 of borrowing capacity between June 2023 and February 2024 and today can expect to borrow €284,000 over 25 years at a rate of 3.95%. On €7,000 a month, a couple in their fifties who earned an interest rate of 3.80% over 20 years also lost €13,000 in borrowing capacity in just nine months.

Should you postpone your purchase?

In a fragile context, where borrowing has become more difficult and more expensive, some households may be tempted to postpone or abandon their real estate projects. However, for Maël Bernier: “All the banks are back on the market, so it’s a good time to position yourself, especially as some sellers are in a rush, so there are inevitably foreclosure opportunities.”