The Portuguese government has announced that young people up to the age of 35 will have the opportunity to access a general state guarantee, allowing them to obtain financing of up to 100% of housing credit to purchase their first home. This measure comes as part of a range of initiatives aimed at facilitating young people's access to housing, including exemption from the burdensome municipal property transfer tax and stamp duty.
The decree regulating this new guarantee was published on September 27 and stipulates that banks have until the end of October to decide whether they want to join the program. After joining, they will have an additional period of 60 days to implement the process that will allow the granting of a state-guaranteed housing loan.
Access conditions
To benefit from this guarantee, young people must meet a set of requirements:
- age: You must be at least 35 years old (inclusive);
- residence: Have a tax domicile in Portugal;
- ownership: Not owning other homes;
- income: Your annual taxable income is less than 80 thousand euros, which corresponds to the eighth step of the IRS;
- Tax status: You have no debts to tax or social security authorities;
- Destination: Buying your first permanent home.
The state guarantee applies exclusively to property purchases up to a maximum of €450,000, and is limited to credit contracts for housing purchases, with the exception of construction financing.
Financing and documentation
Banks are not obligated to finance 100%, but they are able to do so, as long as young people prove that they have the financial capacity to support the loan. Approval for a home loan follows the same rules as any other contract, including an analysis of the applicant's effort rate, which increases the larger the amount the young person requests.
To apply for state guarantee, young people must submit several documents, such as:
- Citizen card (or equivalent document for foreign citizens);
- Tax domicile certificate, which can be obtained from the Finance Portal;
- An IRS assessment note or IRS payment exemption certificate, accompanied by a Social Security declaration proving income or social benefits for the past three months;
- A negative ownership certificate proving that they do not own another home;
- Non-debt certificates issued by the Tax and Social Security Administration;
- A document indicating the purchase price of the home;
- Ownership register.
Warranty term and duration
The state guarantee will only be available for housing credit contracts concluded until December 31, 2026. State coverage is valid for 10 years, starting from the date of conclusion of the contract.
Furthermore, the state guarantee can be maintained in the event of a transfer of credit to another bank, as long as the new institution also adheres to the general guarantee protocol. Homes purchased with this guarantee can be sold, but the guarantee expires when the mortgage cancellation is issued.
Non-compliance and accumulation of benefits
In cases of non-compliance with the payment of housing loan installments, the state bears responsibility for non-payment of installments up to the limit of the guarantee granted. After this point, it is up to the bank to activate credit recovery mechanisms.
Finally, IMT and stamp duty tax relief can be combined with a state guarantee, allowing young people who meet the requirements to obtain multiple benefits when purchasing their first home.
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