Between the two of us, Ralph and I have owned a half-dozen homes. We’ve jumped through some crazy hoops in the past to get a mortgage (paperwork! deployment! marriage!), but we’ve always been successful. However, after lurking in a few “Expats in France” types of Facebook groups, we began to realize that mortgaging a home in France would be nearly impossible. And, it turns out, it is. So, here’s what we’ve learned about paying for this dream of ours, since some of you may be planning to do the same!

In a nutshell:

• Be prepared to pay cash
• Or, use a HELOC from an existing US mortgage to pay cash

Forget everything you know about financing a property in the US – it doesn’t apply in France. Even if you have a near-perfect credit score and passive guaranteed income, it doesn’t matter. French banks care about French income and French credit history, so if you don’t have any of those, you’re a pretty risky candidate for a big loan. And if you’re American, that makes you even less desireable because in 2014, the US enacted the Foreign Account Tax Compliance Act (FATCA). This requires foreign entities to report assets held by Americans to the IRS. It is such a pain that most French banks would prefer not to have American clients. Apparently, because French banks don’t make much money from mortgages, the risks versus the rewards are not enticing. Instead, they build relationships with their clients and play the long game by selling other products like insurance.

Now, I’m not saying getting a mortgage is impossible, but you’ll probably find after looking at the terms that it just doesn’t make sense to get one. Here’s our story:

As we started our home search, Ralph and I met with a highly recommended mortgage broker to see what the possibilities were. Mortgage brokers give you the best chance of finding a mortgage because they can work with multiple banks at once . Plus, they’re used to working with foreigners and banks who lend to them. In our first meeting, he shared the process and the particulars. We could expect to put between 40-50% down, pay around €5k for a broker’s fee, and then around €500-600 per month in mortgage insurance. The mortgage insurance isn’t the same as Private Mortgage Insurance (PMI) – it’s kind of like a life insurance that would pay off the balance of the loan if you die, instead of having a bank foreclose on your property if you can’t make payments. Plus, the amount you pay for this insurance is tied to your health, so the older you are, the more expensive it tends to be. On that note, banks are very reluctant to loan to people in their 60s. If they do, the loans are typically only for 10-15 years. Some of this is common sense if you think about it. Why would a bank make a 30-year loan to someone in their 60s?

About two months later, we met with the broker again to find out our options. Yes, two months. The holidays slowed things down, but I’m not convinced that it would have been much faster. At the time, we had an offer in on the house we didn’t get, and there was no sense of urgency. Meanwhile, if you even fill out an online form inquiring about a mortgage in the US, you’d have dozens of brokers calling you the second you hit “enter.” Very different indeed!

After reviewing the offers, the terms were not good at all. We’d have to put 83% down for a 10-yr loan, and the rate would be around 5%! The only way to get a bigger mortgage would be to pay off our car loan and my student loans, but that would only incrementally change the debt-to-income ratio. Ultimately, we decided that our best option was to pay cash for whatever home we’d buy. That would come with it’s own complications, but fortunately, the exchange rate between the US dollar and the Euro have been quite favorable at around $1.08 to €1, much better than when we first arrived in Germany.

Still, it felt scary to make this choice after decades of doing things the American way with easy debt. We couldn’t have predicted that we’d be on this path. If we had, we would have prepared better by saving cash over the last few years. Or maybe even kept one of our homes back in the US to sell once it had appreciated. That’s just how things go, isn’t it? Sometimes life’s twists and turns catch you by surprise! We told ourselves that it would feel amazing to roll into retirement with a paid-off house – and hopefully, we’d be right.