Being an employee makes the bank's job easier; it does not make the mortgage cheaper. The regulatory terms are the same for both, LTV 80 % or 90 % under 36, and the rate depends mainly on LTV, the fixed period and insurance, not on the type of income.
The difference lies in when and from what the bank calculates your income: for an employee from recent payslips, for a self-employed person (OSVČ) only from a filed tax return, and only from the tax base.
That gives a practical rule for anyone planning to go self-employed: sort out the mortgage first. A programmer with a net salary of CZK 70,000 can borrow up to CZK 5.87 million as an employee. Self-employed with a turnover of CZK 1,800,000, he would wait more than a year for his first assessment, and the bank would then allow him a ceiling of only CZK 4.49 million.
Does an employee have an advantage over the self-employed?
Not on price: the rate and LTV rules are the same. The advantage lies in timing and paperwork, because the bank reads a salary straight away and self-employed income only from a filed tax return.
| Employee | Self-employed | |
|---|---|---|
| Proof of income | income confirmation from the employer, 3–6 payslips | 1–2 tax returns, bank statements |
| What the bank calculates from | average net salary | tax base minus tax, divided by twelve |
| When income starts to count | after probation, at some banks earlier with the employer's confirmation | from the first return covering a full calendar year |
| What reduces income in the bank's eyes | a fixed-term contract, a notice period, bonuses counted only in part | high expenses, a fall between years, arrears on tax and insurance |
| LTV and rate | LTV 80 % (90 % under 36), rate by LTV and fixation | the same |
A salary is easier for the bank to read. It sees it on the confirmation and in your account, and knows it will arrive again next month. Self-employed income it knows only in hindsight, for a closed year, and it interprets swings cautiously. That is why the self-employed get more questions and approval takes longer, even though the same parameters decide the rate.
Should you get the mortgage before going freelance?
Tomáš, a programmer about to go freelance (a 30-year mortgage at 5.00 %, i.e. a repayment of CZK 5,368 per million; the bank allows at most 45 % of recognised income for repayments; no other loans):
- Now, as an employee: net salary CZK 70,000, CZK 31,500 available for the repayment, a loan of at most ≈ CZK 5.87 million. The bank assesses him on his payslips and his employer's confirmation.
- Self-employed from 1 January 2027 with a turnover of CZK 1,800,000 and 60 % flat-rate expenses: he files his first return, for 2027, in the spring of 2028. Tax base CZK 720,000, tax at today's basic taxpayer credit CZK 77,160, recognised income CZK 53,570, CZK 24,107 for the repayment, a loan of at most ≈ CZK 4.49 million.
He will earn more as a freelancer, but in the bank's eyes his ceiling will be CZK 1.38 million lower, and for over a year he will have none at all.
Arranging the mortgage and changing jobs only after drawdown is a legitimate approach. The bank assesses your situation at the time of the application, on the basis of truthful information. If you have already handed in your notice or are working it out, you must say so in the application. False information can lead to the loan being called in and, in the worst case, amounts to credit fraud under § 211 of the Criminal Code.
After drawdown, keep an eye on two things. A rate discount is often tied to your income arriving in an account with the bank, and when client payments start landing elsewhere instead of a salary, you may lose it. Many contracts also oblige you to tell the bank about a material change in your finances, so read what yours actually says.
Salary and a business side by side, DPP and DPČ
Banks know the combination of employment and a business and add the two incomes together: salary from payslips and the tax base from the return. The business counts only once you have filed a return for a full year, though; until then the bank sees just the salary. A loss-making business adds no income, and some banks treat it as a warning sign.
Agreements to perform work and to perform an activity (dohoda o provedení práce, DPP, and dohoda o pracovní činnosti, DPČ) are accepted if they have run long enough and the income is regular. How many months a bank wants to see and what share it counts differs from bank to bank. A short-term side job usually doesn't count.
Self-employed people with a single client, typically IT contractors, are treated like any other business owner. A higher hourly rate does nothing for the bank until it shows up in a tax return. How a bank turns a tax return into monthly income is shown in Mortgages for the self-employed.
A couple where one partner runs a business
This is the most common combination in practice: one partner employed, the other self-employed. The incomes are added together and the steady salary carries a good part of the loan, so swings in the business matter less. If at least one of you is under 36, the bank may go up to LTV 90 % on a joint application.
Plan for the worse scenario too. A self-employed person who falls ill gets no sickness benefit unless they pay voluntary sickness insurance. Payment protection insurance or risk life insurance therefore makes more sense for a business owner than for an employee who is entitled to benefits.
Unmarried partners should put in writing who repays how much and who owns what share. What not to forget is covered in Joint mortgage for an unmarried couple.
From self-employment back to a job
A new job after years in business makes proving income easier, but first comes a probation period. It can last up to 4 months, 8 for managers, and most banks will not count income during it. Some accept it after 3 months with the employer's confirmation.
If you are buying soon, consider postponing the job change until after drawdown, or adding a co-applicant with an established income. How banks view probation, fixed-term contracts and a change of employer is discussed in Mortgage during probation.
Sources
- Act No. 257/2016 Coll., on consumer credit, § 86 (assessment of the consumer's creditworthiness)
- Act No. 586/1992 Coll., on income taxes, § 6 (employment income), § 7 (income from self-employment)
- Act No. 262/2006 Coll., the Labour Code, § 35 (probation period) and Act No. 40/2009 Coll., the Criminal Code, § 211 (credit fraud)
- ČNB – LTV upper limit, deactivation of DSTI and DTI