Portuguese Youth Can Access Up to 100% Financing for First Home Purchase

With rising housing prices and the cost of living, buying a first home in Portugal has become a challenging goal for many young people. However, a new government initiative is making homeownership more accessible by offering up to 100% financing for young tax residents. Under Decree-Law No. 44/2024, Portuguese tax residents aged 35 or younger may now be eligible for a state-backed guarantee, enabling them to finance their first primary residence without requiring an initial down payment.

Here is a detailed explanation of this exciting opportunity, eligibility requirements, and everything young residents in Portugal need to know about benefiting from this initiative.

A New State-Guaranteed Initiative for Young Homebuyers

The recently enacted Decree-Law No. 44/2024 allows the Portuguese government to provide personal guarantees to financial institutions, facilitating access to financing for first-time homebuyers. This guarantee is exclusively available for the purchase of a primary residence and aims to simplify the credit approval process.

Key aspects of this program include:

• Financing of up to 100% of the property’s value for eligible buyers.
• Exemption from the Municipal Property Transfer Tax (IMT) and stamp duty for first-time homebuyers, making the process even more affordable.
• Flexibility to sell the property without penalties and the possibility of transferring mortgages to other participating banks.

Eligibility Criteria for the State Guarantee

To qualify for the state guarantee, applicants must meet the following criteria:

• Age: Be 35 years old or younger.
• Tax Residency: Be a tax resident in Portugal.
• First Property: Currently not own any other property.
• Income Limit: Annual taxable income must not exceed €80,000.
• Tax and Social Security Compliance: Have no outstanding debts to tax or social security authorities.
• Permanent Residence: The house must be used as the applicant’s primary residence.

Required Documentation for Application

Young taxpayers applying for the state guarantee must gather the following documents:

1. Identification: Citizen card or equivalent document for foreign residents.
2. Proof of Tax Residency.
3. Personal Income Tax (IRS) Statement.
4. Property Registration Certificate: Confirming the applicant does not own other properties.
5. Debt Clearance Certificate: From the tax office and social security.
6. Proof of Purchase Price: Document stating the property’s value.
7. Property Registration Document.
8. Primary Residence Declaration: Confirming the property will be the applicant’s main residence.

Eligible Property Types

To be eligible for the state guarantee, the property must meet the following requirements:

• Price Limit: Valued at €450,000 or less.
• Type of Purchase: The guarantee applies exclusively to the purchase of a home and does not cover loans for construction.

Bank Participation and Process

It is important to note that bank participation is optional. Banks choosing to offer this guarantee had until the end of October 2024 to join, and they will have 60 days to establish the necessary procedures for these loans. Applications can be submitted for contracts signed until December 31, 2026, with the state guarantee valid for 10 years from the contract date.

Additional FAQs

Can I Sell the Property?
Yes, the property can be sold at any time. Upon mortgage cancellation, the state guarantee ends.

Is the Guarantee Transferable Between Banks?
Yes, the mortgage can be transferred to other participating banks without losing the state guarantee.

Can Foreign Residents Access the State Guarantee?

Yes, foreign residents in Portugal who meet the eligibility criteria can benefit from the state guarantee.

Is an Initial Down Payment Required?

No, the program allows eligible buyers to purchase a home without an initial down payment, provided they demonstrate financial capability for the credit.

Combining the State Guarantee with IMT and Stamp Duty Exemptions

For eligible first-time homebuyers, the state guarantee can be combined with exemptions from the Municipal Property Transfer Tax (IMT) and stamp duty. This further reduces the cost of homeownership. This combination of benefits represents a significant step in empowering young people to own their own homes and promoting long-term stability in Portugal’s housing market.

Final Considerations

This new state guarantee initiative is a major step forward for young people looking to buy a home in Portugal. By making financing more accessible and reducing the initial tax burden, the government aims to help young taxpayers overcome housing challenges and promote stability in homeownership.

If you are interested in seizing this opportunity or need additional information about the application process, our team is available to assist you every step of the way. Contact us via email at info@sansarealestate.pt or by phone at +351 960 205 436.