Annual Income as the Basis for Your Mortgage

The most important things at a glance

You can calculate your mortgage based on your annual income or salary. This is often asked when filling in online calculators. Using your annual income, you can use handy tools to calculate your maximum mortgage online. But what exactly counts as annual income or annual salary? What is the right figure to use? On this page you can read what falls under annual income.

1. How loans affect your mortgage

Always use your gross annual salary. This is your annual income before deducting taxes and pension premiums, but including holiday pay and fixed allowances. By using the gross annual salary, providers can prevent any tax advantages or disadvantages from affecting the calculation of your maximum mortgage.

So use the amount you receive gross per year. You can work this out by multiplying your monthly gross salary by 12 or 13 months, depending on the agreements in your collective labour agreement (CAO). If you only know your net salary, you can work backwards by looking at how much tax you pay and adding that to your net income. In general, the higher your income, the more you can borrow. The government sets each year how much of your gross salary you may spend on your mortgage; this is called the woonquote (housing cost ratio).

2. Calculating your annual income

There are several ways to calculate your annual income. Here is one example: multiply your gross monthly salary by 12, then add your thirteenth month. That gives you a quick and accurate annual income figure.

Example

If you earn €3,000 per month and your thirteenth month is also €3,000, your annual income is €39,000. You can then use this figure in the mortgage calculation.

3. Non-structural bonuses or overtime

When calculating your gross salary to determine your mortgage, you cannot simply add one-off bonuses or allowances to your salary. For example, if you received a bonus last year for landing a great deal, you cannot include it in the gross annual income calculation. What matters to the mortgage provider is the structural salary you receive, since that is what you will have available in the future to pay your monthly costs (interest and repayment). Non-structural allowances may not simply be included in the calculation either. We can of course advise you on which bonuses and allowances you can and cannot include.

4. Income as a self-employed person

Are you self-employed? Then you can calculate your gross annual income based on the annual figures for the last 3 years. As a freelancer (ZZP'er), you can use the taxable profit per year. Calculate this by subtracting your business costs from your revenue (excluding VAT). Do this for the past 3 years, add the amounts together, then divide by 3. This gives you an average that you can use as your gross annual income to calculate the maximum mortgage.

Bear in mind that providers often use the taxable profit in the most recent year as a maximum. The bank also looks at the trend in your income over time. Calculate your mortgage as an entrepreneur here.