100% financing on home loans for young people: How does it work?
Young people can apply for 100% financing when buying a house with a mortgage credit, through a public guarantee measure.
What are the conditions for public guarantee when buying a house for young people, for 100% financing?
Young people can resort to 100% financing in home loans, through public guarantee to buy a house since the beginning of 2025.
Regarding the requirements, the regulations establish: It is intended for young people between 18 and 35 years old, with fiscal address in Portugal, income up to the 8th bracket of the IRS, not being able to be owners of another residential property, and for properties up to 450 thousand euros.
It should be noted that the state's public guarantee applies to 15% of the transaction value, allowing banks to finance the full value of the property. The guarantee 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 were fulfilled before that deadline. Note that if the credit is partially or fully paid off, the guarantee is also reduced in the same proportion.
In other words, if default occurs, 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 circumventing the macroprudential measure of the Banco de Portugal regarding the maximum financing limit of 90% for the acquisition of own and permanent housing (the lowest between the acquisition value or appraisal), the 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, unless an exception is made.
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