Lately, there have been more and more posts on the forum about house hunting, and my partner and I have started thinking about it too. But the topic of money, especially our payslips, is always a bit overwhelming. It feels like this is the most critical hurdle for getting a mortgage approved by the bank. So, I wanted to start this thread to discuss: when buying a house in Spain, what salary level is actually considered ‘qualified’?
How Do Banks Actually Evaluate Our Payslips?
In reality, when banks approve a mortgage, they don’t just look at the total amount on your payslip; they are more concerned with your repayment capacity. There’s an unwritten golden rule here: the total of all your monthly loan payments should not exceed 30%-35% of your net monthly income. If you exceed this ratio, the bank will consider you a higher default risk and may either reject your application or reduce the loan amount.
Let’s Do the Math: An Example
To make it clearer, let’s create a hypothetical scenario. Suppose you want to buy a €250,000 apartment in a second-tier city in Spain. The bank’s mortgage calculation would typically look something like this:
| Item | Amount (€) | Notes |
|---|
| Property Price | 250,000 | Assuming a second-tier city |
| Down Payment | 50,000 | Banks typically finance up to 80% |
| Taxes & Fees | 25,000 | ITP/IVA, Notaría, Registro, etc. |
| Total Cash Needed | 75,000 | This is the initial barrier |
| Loan Amount | 200,000 | Property Price - Down Payment |
| Monthly Payment | Approx. 898 | This is what you need to pay each month |
| Required Net Monthly Household Income | Approx. 2,565 | Calculated at 35% debt-to-income ratio |
Beyond the Payslip: What Else Do Banks Look For?
Apart from income figures, which are also relevant for processes like getting a Non-Lucrative Residency, banks will also very carefully look at your type of employment contract. A permanent contract, or contrato indefinido, carries far more weight than a temporary one. They will also check your official work history (vida laboral) to assess your job stability and review any other outstanding debts. Existing car loans or significant credit card installments will also impact the bank’s assessment of your repayment capacity.
The calculation above is just a very rough model. In big cities like Madrid and Barcelona, property prices can be double, so the salary requirements naturally rise accordingly. Conversely, in some smaller towns, you might be able to get on the property ladder with a much lower income. So, it really is a matter that varies from place to place and person to person. I’m curious, which cities are you all looking in? What do you think of the local property price-to-income ratio? Feel free to leave a comment below to discuss and share some insights for others!
