The Swiss Mortgage Affordability Stress Test — How Banks Assess Whether You Can Afford a Property

The intuition: "rates are low, our salary is high, of course we can afford it." The bank's answer comes from a different calculation entirely — one that ignores the actual interest rate you'd pay and substitutes a theoretical one. This single convention, not the market, defines your maximum purchase price.

The calculation

Banks assess affordability using imputed running costs, generally:

• ~5% theoretical interest on the full mortgage — regardless of the ~1.5–2% you might actually fix today;
• ~1% of the property value per year for maintenance and running costs;
• amortisation: the mortgage above two-thirds of the property value must be repaid within ~15 years (or by retirement, if earlier).

The sum of these imputed costs must not exceed roughly one third of gross household income.

Worked example

CHF 1.5m property, CHF 300,000 equity, CHF 1.2m mortgage:

• Theoretical interest: 5% × 1,200,000 = CHF 60,000
• Maintenance: 1% × 1,500,000 = CHF 15,000
• Amortisation to 66.7%: (1,200,000 − 1,000,000) ÷ 15 = CHF 13,333
• Imputed total: CHF 88,333/year → required gross household income: ~CHF 265,000

Meanwhile the actual cost at a 1.8% fixed rate would be around CHF 50,000/year — the bank is testing you against a bill nearly double the one you'd pay. That's the point: the test asks whether you'd survive rates returning to historical levels, because a mortgage outlives every rate cycle it's born into.

What counts as income — the professional's catch

The test uses sustainable gross income. Bonus and equity compensation are typically counted only partially, averaged, or not at all — bank practice varies. A CHF 180k base + CHF 120k bonus household can find itself assessed closer to 200k than 300k. If variable compensation is a large share of your income, this single policy difference between lenders can move your maximum price by hundreds of thousands — worth asking before falling in love with a listing.

Second-earner income counts, which is why affordability often changes materially when a partner's hours change — in either direction. Pension-fund withdrawals used for equity also raise the mortgage-to-value line the amortisation is computed from.

The consequence

In expensive regions, the stress test — not the 20% equity — is usually the binding constraint: households holding sufficient equity still "fail" on imputed costs. If that's you, the levers are mechanical: more equity (smaller mortgage), a lower price, higher documented sustainable income, or indirect amortisation structures that improve the after-tax picture without changing the test itself (see the amortisation article).

What are you optimising for?

The test is also a free planning tool: run it on yourself years early. Gross income × ⅓ → maximum imputed costs → maximum mortgage → with your equity, maximum price. Four lines of arithmetic that turn "someday we'll buy" into a number with a savings plan attached — or into a deliberate, contented decision to keep renting, which the test respects just as well.

Control question: what is your household's stress-tested maximum price today — calculated, not assumed? If a purchase is a real goal, that number belongs on your one page.