If you’re looking to buy a property for primary residence purposes, banks, in compliance with recommendations from the Bank of Portugal, will only lend up to 90% of the property’s value. However, if you’re under 35, you might not need to have the money for the down payment. In other words, your mortgage could cover 100% of the property’s value.
To make it easier for young people to purchase their first home, the Government, through the program “You Have a Future in Portugal” has approved a set of measures, including exemption from IMT (Property Transfer Tax) and Stamp Duty, as well as a public guarantee covering up to 15% of the mortgage amount. This effectively allows banks to lend you the amount needed for the down payment as well.
If you’re under 35, you can, under certain conditions, secure financing for 100% of the property’s value.
To Benefit from This Guarantee, You Must Meet Certain Conditions:
Specifically:
- Be between 18 and 35 years old and have your tax residence in Portugal
- Have an income that does not exceed the 8th IRS bracket
- The property must be intended for primary residence
- The lower of the property’s appraised value or transaction value must not exceed €450,000
- You must not own any other residential property (this must be your first home)
- You must not have previously benefited from the State guarantee
- You must have your tax and Social Security obligations in good standing
The State guarantees up to 15% of the property’s transaction value.
This means that, from the total mortgage amount, the State guarantees the financial institution granting the credit the payment of up to 15% of that amount in case of default. In practice, the State acts as your guarantor for the guaranteed portion.
With the public guarantee, the mortgage can cover 100% of the property’s value, bypassing the Bank of Portugal’s recommendation on the maximum amount to be financed. However, note that once the amount corresponding to the guarantee is repaid, the State is no longer involved in the mortgage.
But Only If Your Effort Rate is Below 50%
To secure financing for 100% of the property’s value, your effort rate must be below 50%. This means that the total of your financial commitments (including the new loan) cannot exceed 50% of your net income, in compliance with the Bank of Portugal’s recommendation.
The Public Guarantee is Not Available at All Financial Institutions
Indeed, participation by financial institutions in this measure is voluntary. Therefore, when applying for the loan, check whether the institution has signed the protocol with the State.
And It’s Only Available Until December 31
Although the public guarantee was approved in 2024, it only began to be offered by participating banks at the start of this year. It is only available for mortgage agreements signed by December 31, 2026.
Get in touch with Lead Kash
If you’re under 35, don’t have the money for your house’s down payment but meet the requirements to access the public guarantee and secure 100% financing, talk to us. In the end, we’ll present you with the ideal solution to achieve your goal. Lead Kash handles the entire process for you, including comparing proposals from different institutions. And the best part: this service is completely free for you. Run a simulation, contact us, and let us simplify your life.
