100% financing for young people in mortgage credit: How does it work?
Young people can apply to access 100% financing when buying a house with a mortgage through the public guarantee measure.
What are the conditions of the public guarantee when buying a house for young people, for 100% financing?
Young people can resort to 100% financing in home credit, through public guaranteeto buy a house from the beginning of 2025.
About the requirement conditions, the regulation establishes: It is intended for young people between 18 and 35 years old, with their tax residence in Portugal, incomes up to the 8th level of the IRS, not being able to own another residential property, and for properties up to 450 thousand euros.
It is worth remembering that the public guarantee of the State in question covers 15% of the transaction value, allowing banks to finance the full value of the property. The guarantee in question is provided by the Directorate-General of the Treasury and Finance (DGTF) to the banks.
Young people who join the guarantee can benefit from it for 10 years, starting from the signing of the credit contract, extinguishing the borrower's obligations that are fulfilled before that period. Note that if the credit is partially or fully paid off, the guarantee is also reduced in the same proportion.
In other words, if in default, the State can also be called upon to pay up to 15% of the outstanding capital, which will then be subrogated in the bank's rights to recover the amount from the borrower.
Despite this measure bypassing the macroprudential measure of the Bank of Portugal regarding the maximum financing limit of 90% for the acquisition of own and permanent housing (the lowest between the acquisition value or appraisal), banks still have to follow the other rules.
For example, they must continue to respect the limit of the debt service-to-income ratio, which determines that the set of credit installments must not exceed 50% of the borrower's net income, except in exceptional cases.
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