Buying property in Switzerland: the 20% equity rule and affordability test
Published 2026-10-19 · Updated 2026-10-19 · 3 min read · 2 sources · Verified Swiss federal benchmarks
Direct answer
Banks typically finance up to 80% of the property value, so you need at least 20% equity, with at least 10% from sources other than your pension fund. Affordability is tested with imputed interest near 5%, about 1% maintenance, and amortisation rules on the second mortgage.
Key facts
- Minimum equity is usually 20% of the purchase price or bank valuation.
- At least 10% of that equity must not come from pension assets (BVG withdrawal).
- Affordability uses imputed interest (~5%), ~1% maintenance, and amortisation assumptions.
- Second-mortgage debt is often amortised within 15 years or by retirement.
- Pillar 3a and BVG can be pledged or withdrawn for an owner-occupied home under permitted rules.
Equity and pension rules
For owner-occupied property, Swiss lenders apply a minimum down payment of 20% of the purchase price or the bank’s valuation, whichever drives the stricter number. The remaining 80% is mortgage debt split into a first and often a second tranche.
Up to 10% of the purchase price may come from your occupational pension (BVG) if you meet withdrawal conditions. The remaining 10% must be cash, gifts, or other non-pension assets. Pillar 3a can support the deal through pledge or withdrawal under separate tax and product rules.
This article focuses on the home you will live in.
Worked example: CHF 1,000,000 purchase
Purchase price CHF 1,000,000. Required equity 20% = CHF 200,000. Maximum mortgage CHF 800,000 if the bank values the property at CHF 1,000,000.
Of the CHF 200,000 equity, at least CHF 100,000 must be non-pension money. The other CHF 100,000 could come from BVG withdrawal if legal conditions are met. Pillar 3a might cover part of either slice depending on your plan.
Purchase costs such as notary, land registry, and transfer tax sit on top of equity and vary by canton.
| Item | Amount (CHF) | Note |
|---|---|---|
| Purchase price | 1,000,000 | Bank may use lower valuation |
| Equity 20% | 200,000 | Minimum down payment |
| Non-pension equity min. | 100,000 | Cash, gifts, savings outside BVG |
| Mortgage max. | 800,000 | Often split 1st/2nd tranche |
Second worked example: CHF 650,000 apartment
On CHF 650,000, 20% equity is CHF 130,000 with mortgage CHF 520,000. Non-pension minimum is CHF 65,000. A buyer with CHF 80,000 cash and CHF 50,000 BVG meets the split if BVG use stays within the 10% pension allowance.
Affordability testing uses imputed interest near 5% on the debt plus maintenance near 1% of value and second-tranche amortisation, not necessarily your contract rate.
Gross household income must carry that stressed cost; banks often align it with roughly one-third of gross income for housing.
Affordability calculation in practice
Lenders add imputed interest, maintenance near 1% of value, and second-mortgage amortisation within 15 years or by retirement, even when contract rates are lower.
Run your bank’s calculator early; valuation shifts change how much you can borrow.
Common mistakes first-time buyers make
Counting the entire 20% from pension assets violates the 10% non-pension rule and stops the mortgage at approval stage.
Using headline salary without understanding gross versus net leads to wrong affordability expectations. Use net salary tools for living costs and bank gross figures for the mortgage test.
Forgetting amortisation on the second tranche makes the monthly budget look cheaper than the bank’s test. Plan for paydown even if initial cash flow uses interest-only periods on promotional products.
FAQ
- Can I buy with less than 20% equity?
- Standard owner-occupied financing targets 80% loan-to-value. Exceptions are rare and usually come with higher costs or additional guarantees.
- What is the second mortgage?
- It is the tranche above about two-thirds of value. Banks require it to be paid down within 15 years or by retirement, which raises the affordability test.
- Does imputed 5% mean my real rate is 5%?
- No. It is a conservative test rate. Your contract rate can differ; the test checks whether you could still afford payments if rates rose.
- Are purchase costs included in the 20%?
- Notary, land registry, and transfer tax are extra. Plan cash beyond equity for these cantonal fees.
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