finanças

Simplifying the mortgage for first home buyers

02 abr 2025 | 5 min of reading

Are you ready to buy your first home in Portugal? The State Guarantee for first home buyers under 35 makes this exciting step more accessible by offering 100% financing.

Buying your first home is one of the most thrilling milestones for young adults, but it can also feel overwhelming with the financial challenges, paperwork, and countless decisions to make.

 

Fortunately, the Portuguese government has introduced a program designed to make this dream more attainable. The State Guarantee supports first home buyers, helping you secure a mortgage with fewer obstacles. Here’s everything you need to know about how this program can make homeownership easier.

 

 

A quick overview of mortgage loans for first home buyers in Portugal

In Portugal, mortgage loans are generally similar to those in other European countries. Banks typically lend you a percentage of the property’s value with the understanding that you’ll repay the loan over time. However, the Portuguese government has created a specific program for first home buyers to make homeownership more accessible.

 

The State Guarantee acts as a co-signer on your loan, covering part of the risk for the bank. This guarantee allows you to finance 100% of your home’s purchase price - no down payment required. If something goes wrong and you can't repay the loan, the state steps in and covers up to 15% of the loan amount. This is valid for up to 10 years after the mortgage is signed.

 

 

Exclusive mortgage conditions for first home buyers

If you’re between 18 and 35 years old, you could be eligible for this benefit, provided you meet a few criteria:

 

  • You must be buying your first permanent residence
  • Your annual taxable income must not exceed €80,000
  • The purchase price of the property must not exceed €450,000
  • You should not have any outstanding debts to the Tax Authority or Social Security.

 

Are foreigners included?

Yes, you don’t need Portuguese citizenship to qualify. The State Guarantee applies to non-Portuguese nationals as long as they meet the same eligibility criteria. This includes having a tax residency in Portugal, which means you live and work here.

 

 

Fees and other costs to consider

While this program removes the need for a down payment and helps with loan approval, there are still some fees to be aware of. These may include:

 

  • Notary fees: required for registering your property
  • Bank fees: needed to process the loan.

 

However, there are great benefits here, too. Effective August 1, 2024, the IMT (Municipal Property Transfer Tax) and Stamp Duty are exempt for first-time buyers under 35 for properties purchased as primary residences.

 

 

Tips for first home buyers in Portugal

1. Ensure your finances are in order: banks will evaluate your debt-to-income ratio (the effort rate) before approving the loan. They want to see that your monthly mortgage payment won’t exceed 40% of your monthly income

 

2. Choose the right mortgage type: you can opt for a fixed rate, variable rate, or mixed rate mortgage, depending on your financial stability and how much risk you’re willing to take. Each has its advantages, so it’s worth discussing with your bank

 

3. Gather the right documents: you’ll need to provide a variety of documents including proof of income, tax residency, and a Certificate of No Debt from the tax authorities and Social Security.

 

Curious about how much you could borrow? Use this mortgage simulator to explore your financing options and see how the State Guarantee can help.

 

 

Additional benefits for under 35s in Portugal

Besides the State Guarantee and tax exemptions, young buyers also have access to other advantages, like:

 

  • Lower interest rates on loans for first-time home buyers
  • Increased chances of loan approval through the State Guarantee support
  • Exemption from notary fees (under certain conditions).

 

These benefits make Portugal attractive for young people looking to own their first home.

 

Ready to take the next step towards owning your first home in Portugal? Using a mortgage simulator can help you explore your financing options and understand how the State Guarantee can make homeownership more accessible. Start today to find out how much you could be eligible to borrow!

 

 

Frequently asked questions on mortgage loans for first home buyers

What is the validity period of the State Guarantee?

The State Guarantee lasts for 10 years from the date you sign the loan contract. It may end earlier if the loan is paid off or refinanced before the 10-year mark.

 

 

Which mortgage loans for permanent homes are not eligible for this support?

This guarantee does not apply to loans for construction, renovations, or financial leasing. It is only available for the purchase of a first permanent residence.

 

 

Does the State Guarantee only cover loans that finance the full transaction value, and what does that mean?

No, the State Guarantee also applies to partially financed loans (i.e., those that cover at least 85% of the transaction value). However, the guarantee will be proportionally adjusted depending on the loan amount.

 

 

Can I switch my loan to another bank while keeping the State Guarantee?

Yes, you can transfer your mortgage to another bank, but the guarantee will remain valid, provided the new institution subscribes to the State Guarantee measure and meets the requirements. This means you have the flexibility to change banks without losing the benefits of the State Guarantee.

 

 

What commitments must I meet to qualify for the State Guarantee?

You must declare that the financing will be used to purchase your first permanent residence, and you must have never benefited from the State Guarantee before.

 

 

Does meeting the eligibility criteria guarantee bank approval, and does the State Guarantee offer extra protection?

No, meeting the eligibility criteria doesn’t guarantee loan approval. The bank will still perform a credit risk assessment. Additionally, while the State Guarantee helps secure the loan, it doesn’t provide extra protection against default. You are still responsible for repaying the full amount.

 

 

Can banks ask for additional documents or extra guarantees beyond the State Guarantee?

Yes, banks may request additional documents, including a mortgage or personal guarantor, to ensure the loan is repaid.

 

 

What are the rules for renegotiating, early repayment, or selling a property under this scheme, and how do the IMT and Stamp Duty exemptions for young buyers apply?

You can renegotiate the loan or make early repayments, but any partial repayments will reduce the State Guarantee proportionally. If you sell the property, the guarantee ends, and you must settle any outstanding debt with the bank.

 

 

The information provided isn’t a substitute for consulting public or private experts in each area.

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O Banco pode ser contactado na Rua da Mesquita, 6, Centro Totta, 1070-238 Lisboa.

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