For a typical owner-occupied home in Switzerland, plan to provide at least 20% of the purchase price as equity and finance no more than about 80% with a mortgage. A CHF 1 million home therefore implies roughly CHF 200,000 of equity and a mortgage of up to CHF 800,000. That is a planning rule, not an approval guarantee: the lender’s valuation, affordability calculation, amortisation requirements and internal risk policy can require more.
Under the Swiss minimum standard in force from 1 January 2025, at least 10% of the property’s collateral value must come from funds other than second-pillar pension assets. The 10% rule is only one part of the financing test and is not a substitute for the usual 20% total-equity target.
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What “equity” means when buying a Swiss home
Equity is the part of the purchase that is not financed by the mortgage. It can include cash savings, securities and certain pension assets, as well as documented gifts or advances on an inheritance. The bank usually takes a mortgage against the property’s collateral value, which may differ from the agreed purchase price.
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1Scan for outdated or missing drivers - takes under a minute2Clear out junk files and repair common Windows errors3Fix the driver behind crashes, sound loss and screen glitchesThis article concerns owner-occupied residential property, such as a home in which you live. Investment and buy-to-let properties are treated more cautiously because lenders consider them higher risk; they can face lower loan limits and a larger required contribution. FINMA’s 2024 announcement specifically urged banks not to increase loan limits for investment and buy-to-let lending.
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The headline number: 20% of the purchase price
Consumer guidance from Swiss Life uses a mortgage of up to 80% of the price as the general example for an owner-occupied property. The buyer supplies the remaining 20% as equity.
| Purchase price | Illustrative mortgage at 80% | Illustrative total equity at 20% |
|---|---|---|
| CHF 1,000,000 | CHF 800,000 | CHF 200,000 |
| CHF 750,000 | CHF 600,000 | CHF 150,000 |
| CHF 500,000 | CHF 400,000 | CHF 100,000 |
These are proportional planning examples. A bank can lend less than 80% if its valuation or risk assessment is lower, so you should budget a reserve above the calculated 20% rather than treating it as a guaranteed maximum contribution.
How the 10% non-pension rule fits in
FINMA’s current cross-sectoral minimum standard requires at least 10% of collateral value to be funded by assets other than second-pillar pension money. Second-pillar assets include an eligible early withdrawal from an occupational pension fund or a pledge of those assets.
Because the rule is based on collateral value, it is not always exactly 10% of the price written in the purchase contract. It also does not mean that only 10% equity is enough. In the common 80% mortgage example, the buyer still needs 20% total equity; no more than half of that 20% can be represented by second-pillar assets if the 10% non-pension minimum is to be met.
For a CHF 1 million home valued by the lender at CHF 1 million, a CHF 200,000 contribution could theoretically include up to CHF 100,000 of eligible second-pillar assets, with at least CHF 100,000 coming from savings, securities, Pillar 3 assets, gifts or another accepted non-second-pillar source. The lender and pension provider must confirm the exact eligibility and documentation.
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Rules that took effect on 1 January 2025
On 27 March 2024, FINMA announced that adjusted Swiss Bankers Association mortgage self-regulation would take effect on 1 January 2025 and be recognised as a binding minimum standard. FINMA’s May 2025 Guidance 02/2025 describes the relevant borrower-capital and amortisation provisions.
- Borrower capital: at least 10% of collateral value must come from sources other than second-pillar assets.
- Amortisation: mortgage debt must be reduced to two-thirds of collateral value within no more than 15 years.
- Affordability: banks must apply internal directives so that affordability is assessed sustainably and systematically.
FINMA also stresses that self-regulation sets a minimum standard. Banks may impose stricter conditions, and their underwriting methods differ.
Affordability can matter as much as your deposit
Having the required equity does not prove that you can carry the mortgage. A lender tests whether the home remains affordable under an imputed interest rate and maintenance assumptions rather than relying only on today’s mortgage rate.
In Guidance 02/2025, FINMA gives supervisory examples for owner-occupied property. One example uses an affordability limit of 33% of sustainable gross income, an imputed mortgage interest rate of 5% of the loan amount and building-related maintenance costs of 0.8% of collateral value for a new property. Another example uses 38% of sustainable net income with the same imputed interest and maintenance assumptions. These are examples for supervisory purposes, not a single statutory customer formula that every bank must copy.
Illustration using a CHF 1 million property
Assume a CHF 1 million collateral value, an CHF 800,000 mortgage and a new property:
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- Imputed interest at 5% of CHF 800,000: CHF 40,000 per year.
- Imputed maintenance at 0.8% of CHF 1 million: CHF 8,000 per year.
- Combined imputed annual cost before any other lender adjustments: CHF 48,000.
At a 33% gross-income limit, CHF 48,000 would correspond to approximately CHF 145,455 of sustainable annual gross income. At a 38% net-income limit, it would correspond to approximately CHF 126,316 of sustainable annual net income. The calculation is purely illustrative: a bank may define income differently, include amortisation in its test, use another maintenance assumption or value the property differently.
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The mortgage percentage normally applies to the lender’s collateral value. If you agree to pay more than the bank believes the property is worth, you must fund the difference yourself.
For example, suppose the contract price is CHF 1 million but the lender values the home at CHF 950,000 and lends up to 80% of that value. The maximum mortgage would be CHF 760,000, leaving CHF 240,000 of the price to be funded by you, before transaction costs. This is an illustration of the valuation effect, not a prediction of any bank’s valuation.
Ask for the bank’s accepted value and the resulting maximum loan in writing. FINMA reported in 2025 that 21 of 45 surveyed institutions did not regularly validate hedonic valuation models, a finding about valuation governance rather than a rule that changes your required equity. It reinforces why buyers should not rely on the asking price alone.
Where your equity can come from
Cash savings and securities
Bank deposits and eligible securities are the simplest sources to document. The lender will normally require evidence of ownership, liquidity and the transfer path into the transaction. Securities may be valued conservatively or may need to be sold before completion, depending on the bank’s policy.
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Occupational pension (second pillar)
Swiss Life describes two routes for eligible owner-occupied property: an early withdrawal or a pledge.
- Early withdrawal: money leaves the pension account and is used as equity. It reduces retirement capital, and pension funds generally also reduce death and disability benefits after a withdrawal.
- Pledge: the pension assets remain invested and retirement and insurance cover remain unrestricted, but the larger mortgage creates a higher interest burden.
Neither route is universally better. Compare the effect on retirement income, insurance benefits, taxes, mortgage interest and future repayment obligations with your pension fund and lender before signing.
Pillar 3a
Swiss Life’s consumer guidance says Pillar 3a may be withdrawn or pledged for eligible owner-occupied residential property, renovations or mortgage amortisation, and describes a once-every-five-years limit for home-ownership use. Conditions and tax treatment depend on your circumstances and provider rules, so confirm the current requirements with the 3a provider before counting the balance as available equity.
Gifts and advances on inheritance
Gifts and documented advances on inheritance can be accepted sources. The lender may request a written gift declaration, evidence of the donor’s funds and confirmation that the amount does not have to be repaid. Tax and inheritance consequences vary by canton; obtain advice relevant to the property’s canton.
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Other assets
Swiss Life also lists bank savings, securities and advances on inheritance among possible sources. Acceptance is lender-specific, and the bank may apply haircuts, exclude borrowed funds or require proof that the contribution is genuinely available at closing.
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Amortisation after the purchase
The mortgage is not necessarily intended to remain at 80% indefinitely. Under the current minimum standard, debt must be reduced to two-thirds of collateral value within no more than 15 years.
Using a CHF 1 million collateral value, two-thirds is approximately CHF 666,667. An initial CHF 800,000 mortgage would therefore need to fall by about CHF 133,333 over 15 years. A simple straight-line illustration is roughly CHF 8,889 per year, although lenders can structure the schedule differently and may distinguish between first and second mortgage tranches. Obtain the contractual amortisation schedule rather than relying on this simplified arithmetic.
A practical way to calculate your own target
- Set the price range. Multiply each candidate price by 20% to create a first equity estimate.
- Estimate the collateral value. Ask prospective lenders how they would value the property and whether they lend against the lower of price and valuation.
- Separate pension and non-pension funds. Check that at least 10% of collateral value comes from assets other than second-pillar money.
- List acceptable sources. Document savings, securities, Pillar 3a, pension balances, gifts and inheritance advances separately.
- Run the affordability test. Request the lender’s imputed interest rate, maintenance percentage, income definition and treatment of amortisation in writing.
- Budget transaction and liquidity reserves. Keep money available for taxes, notarial and registry charges, moving, repairs and unexpected work; the 20% figure is not a complete cash-cost budget.
- Obtain a written financing decision. Do this before making an offer that depends on a particular mortgage amount.
How to compare mortgage offers
Do not compare only the advertised interest rate. Request the same information from each lender:
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Outbyte Driver Updater FREEScan for outdated or missing drivers - takes under a minuteDriver Scan →Outbyte PC Repair FREEClear out junk files and repair common Windows errorsFree Scan →| Comparison point | Question to ask |
|---|---|
| Accepted property value | What collateral value will you use, and is the loan capped by the lower of value and purchase price? |
| Required equity | What total contribution is required, and how much must be non-pension capital? |
| Affordability assumptions | Which imputed interest rate, maintenance cost and income definition are applied? |
| Amortisation | How much must be repaid, by which dates and through which method? |
| Pension assets | Will you accept a withdrawal, a pledge, or both, and what documents are required? |
| Total financing cost | What interest, fees, account charges and costs arise over the selected mortgage term? |
Common mistakes that leave buyers short
- Assuming 20% guarantees approval: affordability and valuation can require more equity.
- Confusing the 10% rule with the full deposit: the non-second-pillar minimum is only one component of the overall contribution.
- Counting pension assets without checking eligibility: withdrawal and pledge rules depend on the property, use and provider.
- Ignoring reduced pension protection: an early second-pillar withdrawal can affect retirement, death and disability benefits.
- Using the asking price as the bank’s value: a lower valuation increases the cash gap.
- Forgetting the 15-year repayment requirement: future amortisation affects both cash flow and affordability.
- Using a lender’s ratio as a universal law: FINMA’s 33% and 38% examples are supervisory illustrations, while bank criteria vary.
Bottom line for a Swiss owner-occupied home
Start with 20% of the purchase price in total equity. Within that amount, ensure that at least 10% of the lender’s collateral value comes from sources other than second-pillar assets. Then verify the bank’s valuation, affordability model and 15-year amortisation plan. A lender-specific written calculation is the only reliable answer for a particular property; the 20% rule is a planning benchmark, not a promise of financing.
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