Equity requirements for real estate financing in Switzerland: the key points
To finance the purchase of your main residence in Switzerland, three things are decisive: your equity, your income and the value the lender assigns to the property. Equity is the share of the price you finance with your own funds. Here are the essential rules, updated in November 2026.
1. The 20% rule and the loan-to-value ratio
The guidelines of the Swiss Bankers Association (SBA), recognised by FINMA, require a minimum down payment of 20% of the lending value of the property, i.e. the lower of the purchase price and the lender’s valuation. The mortgage therefore covers at most 80% of that value.
An often underestimated point: if the bank values the property below the sale price, you must cover the entire difference with your own funds. Financing above 80% remains exceptional and requires additional collateral; don’t count on it.
2. At least 10% “hard” equity
Of that 20%, at least half, i.e. 10% of the lending value, must come from funds that do not originate from the 2nd pillar: savings, pillar 3a assets, gifts, advance on inheritance, securities, etc. The rest may come from your pension fund (2nd pillar).
3. Purchase costs come on top
In addition to the 20%, you need cash for the purchase costs: property transfer tax, land registry fees, notary fees and the cost of creating the mortgage note. In French-speaking cantons they generally amount to 4% to 5% of the purchase price (some cantons offer relief for first-time buyers). These costs are not financed by the bank.
In practice, you should therefore plan for about 25% of the purchase price in equity, costs included.
4. Using your 2nd and 3rd pillar
Pension assets can be used to buy your main residence in two ways:
- Early withdrawal (home ownership promotion): minimum CHF 20,000 from the 2nd pillar; after age 50 the amount is limited; a withdrawal is only possible every 5 years and no later than 3 years before retirement age. The withdrawal is taxed separately at a reduced rate and lowers your pension benefits, which it may be wise to offset with insurance.
- Pledging: the assets stay invested and serve as collateral for the bank. Benefits are not reduced and there is no immediate tax.
Pillar 3a can also be withdrawn or pledged for your main residence. Choosing between withdrawal and pledging depends on your age, your tax situation and your death and disability cover, and deserves a personalised analysis.
5. The source of funds must be documented
Lenders must check where your equity comes from. They ask for supporting documents: bank statements, pension statements, gift or family-loan agreements, the sale deed of another property. The assets usually need to appear in your tax return. A family loan is possible, but it is generally treated as debt and included when assessing your affordability. Our documents checklist for your financing helps you prepare everything.
6. Equity is not enough: affordability
Even with a 20% down payment, the bank checks that your theoretical costs do not exceed about one third of your gross income. They are calculated using a theoretical interest rate of around 5%, amortisation and maintenance costs of about 1% of the property value. We explain this calculation in our practical guide to obtaining a mortgage.
In summary
- At least 20% equity on the lending value, of which at least 10% outside the 2nd pillar.
- Allow an extra 4% to 5% in cash for purchase costs.
- The 2nd and 3rd pillar can be withdrawn or pledged for a main residence.
- The source of funds must be documented.
Want to know what purchase price your equity allows? Calculate your purchasing capacity in a few minutes or contact our advisors.
