What income counts for the affordability calculation?

The recognized income

The affordability calculation primarily includes the fixed, contractually guaranteed gross salary from an unterminated employment relationship. Variable salary components such as bonuses, commissions or revenue shares are generally only credited by banks if they have been paid out consistently over the last three years — and even then, often only with a security discount of up to 50%. Expenses, child allowances or irregular additional income are completely removed from the bill by almost all institutions.

The rock in the surf: The fixed gross salary

The undisputed basis of affordability calculation is ordinary basic income. Anyone who works in a permanent position with a fixed workload has the easiest negotiation. As proof, banks require wage statements for the last one to three years and the current three monthly wage sheets.

Gross income is always counted — i.e. salary before deduction of AHV, IV, pension fund and taxes. If the employment contract guarantees a 13-month salary or a fixed Christmas bonus, the bank adds this amount in full to the total annual income. However, the current status of the employment relationship is important: If the applicant is still in the probationary period or if a fixed-term employment contract is about to expire, most banks refuse to grant loans until there is a permanent permanent position or a written extension guarantee from the employer.

The wobbly candidate income: bonus, commissions and overtime

In many sectors — particularly in banking, in the IT industry or in upscale sales — the variable wage share accounts for a significant portion of total income. This is where buyers face banks' strictest hurdles when it comes to the affordability affordability calculation. The credit reviewers' argument: A bonus is a voluntary benefit from the employer and depends heavily on the economic situation of the company — but a mortgage lasts for decades.

In order for a bonus to be included in the affordability at all, the claimant must provide the exact salary statements and bonus letters from the last three consecutive years without gaps. The bank then calculates the mathematical average from these three years. In order to mitigate the risk of sudden burglary, many institutions also apply the so-called precautionary principle: They calculate only a portion of the calculated bonus average (e.g. 50 or 70 percent) or cap the variable portion at a certain percentage of the basic wage. Anyone who has collected a record bonus in one year but came out empty in the previous year must therefore not plan this peak value as a financial basis for their house. By the way, lump sum allowances are generally ignored, as they are legally regarded as a mere substitute for work-related expenses.

The pinnacle of the exam: self-employed and entrepreneurs

Anyone who works as a freelancer, runs their own GmbH or is registered as a partner in a collective company is subject to an in-depth balance sheet analysis by the banks. Since the income of self-employed workers naturally fluctuates, a simple paysheet is by no means sufficient here.

Self-employed persons must submit the revised annual financial statements (balance sheets and income statements) and the final tax assessments for the last three to five years to the bank. The institute not only checks the declared entrepreneurial wage, but also the development of equity, liquidity and profitability of the company. If the company has only been active on the market for one or two years, mortgage financing in Switzerland using the regular procedure is almost impossible, as there is no historical database for a affordability calculation. Eligible income is ultimately the average, tax-reported net profit or verifiable management salary over the past three years.

Additional income, alimony and pensions: What is allowed?

In addition to the main job, there are numerous other sources of money that support the budget in everyday life. The acceptance of these items varies considerably in the Swiss banking market:

• Second income/sideline income: A classic part-time job (e.g. Saturday work or a small workload in a second company) is only credited if the employment relationship has been stable for at least one to two years and can be realistically continued alongside the main job.
• Alimony and maintenance payments: If a divorced parent receives court-approved alimony, they can supplement their income. However, banks are examining the contractual duration: Since child support payments usually end when they reach the age of majority (or completion of initial education), they are only fully included in the affordability if the mortgage period and the age of the children allow this.
• Pensions (IV and AHV): Lifelong state pensions such as disability insurance (IV) or retirement and survivors insurance (AHV) as well as guaranteed pensions from the pension fund are considered extremely secure sources of income and are accepted 100 percent as income by banks.
• Capital income: Regular income from securities (dividends) or from existing, leased properties (rent interest) is credited provided that it flows sustainably and is fully declared in the tax return for recent years.

The sustainability dilemma for couples: Focus on life planning

If a couple wants to buy a property together, the income of both partners can be added together to overcome the 33 percent hurdle. This increases purchasing power on paper enormously. However, credit specialists are looking at this constellation with healthy realism.

If both partners work 100 percent today and earn 180,000 francs together, a mortgage worth millions is no problem mathematically. However, if the couple is between the ages of 25 and 38, the bank inevitably raises the question of family planning. It is checked whether sustainability is still guaranteed even if a partner drastically reduces the workload after the birth of a child (e.g. to 20 or 40 percent) or completely retires from working life for a few years. If the mortgage can no longer be financed alone with the remaining main income, banks often require higher equity in order to minimize credit risk from the outset.

Conclusion: Early income check secures the buying process

Which income counts for affordability is decided according to the criteria of security and continuity. Provisional invoices and income from intent have no place in the Swiss credit check.

In summary, anyone planning to buy a property should calculate their adjusted gross salary conservatively well in advance of the first bank conversation. Don't rely on bonuses or flat expenses to artificially increase your financial leeway. A professional income check in advance — ideally supported by clean wage statements from the last three years — protects you from disappointment in the approval process and ensures that when looking for real estate, you are specifically looking for properties that fit into your financial budget in the long term.

Credit check glossary

• gross income: The contractually agreed salary before the deduction of social security contributions (AHV/IV/ALV/pension fund) and taxes. It provides the mathematical basis for calculating the profitability of Swiss banks.
• Joint ownership/joint liability: When two partners take out a mortgage together, both incomes flow into the affordability. In return, both parties are jointly liable to the bank for the entire debt.
• precautionary principle (haircut): An internal bank risk discount. This involves reducing uncertain or fluctuating income components such as bonuses or dividends in the affordability calculation by a lump sum of a certain percentage in order to reduce the credit default risk.