Young Portuguese Tax Residents Can Access Financing of Up to 100% for First-Time Home Purchases

Tax residents in Portugal who are 35 years old or younger are eligible for financing of up to 100% for the purchase of their first home. This initiative is aimed at facilitating homeownership for young residents by offering comprehensive financial support for their first house acquisition.

Decree-Law No. 44/2024, enacted on the 11th July, introduces new conditions allowing the Portuguese state to provide personal guarantees to financial institutions, such as banks. This initiative aims to simplify the credit approval process for individuals purchasing their first real estate property intended as their primary and permanent residence.

The implementation of this measure requires regulation by government officials responsible for finance, housing, and youth affairs. Once in place, young taxpayers residing in Portugal who meet the eligibility criteria will be able to access this financing option.

This state-guarantee financing is not the only initiative the Portuguese government has introduced to support young taxpayers and reduce their tax burden. Another significant measure, effective since the 1st August 2024, is the exemption from IMT tax (Municipal Property Transfer Tax) and stamp duty for first-time home buyers, provided the house is their primary residence.

To provide a clearer understanding of this government regulation—who qualifies, which properties are eligible, and whether foreign residents can benefit—detailed answers to these important questions are provided below.

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

• Be 35 years old or under;
• Hold tax residence in Portugal;
• Must not currently own a property;
• Have an annual taxable income not exceeding € 80 000 (which falls within the 8th Personal Income Tax Bracket);
• Have no outstanding debts to the tax authority or social security;
• Ensure that the property being purchased is their first real estate acquisition and intended as their permanent residence.
  

To apply to the state guarantee, young taxpayers will need to submit the following documentation:



• ID card (or equivalent for foreign residents);
• Proof of tax residency;
• Statement of Personal Income Tax (IRS) liquidation;
• Property registry certificate (proving the applicant does not own another real estate);
• Debt clearance certificates from the tax office and social security;
• Document showing the purchase price of the house;
• Property Register;
• Declaration by the young taxpayer confirming that the financed housing is intended as their first permanent residence and that they have never benefited from a state guarantee.

To address this question effectively, two key aspects must be considered: the property’s price and the nature of the acquisition.



The property must be valued at no more than € 450,000. It is important to note that the state guarantee applies exclusively to credit agreements for purchasing a home; and does not cover credit for house construction.

No, participation is optional for banks. Banks have until the end of October 2024 to opt in. If a bank chooses to participate, it will have 60 days to establish the necessary processes. After this period, the bank will be ready to offer housing loans backed by the state guarantee.

After fulfilling all the aforementioned requirements, applications can be made for contracts signed up until the 31st December 2026.

The state guarantee is valid for 10 years, starting from the date the contract is signed.

Yes, homeowners are allowed to sell their property at any time, even if it was purchased with the state guarantee. In such cases, the state guarantee will be terminated upon the issuance of the mortgage discharge.

Regarding the IMT tax exemption, homeowners must keep the property as their permanent residence for six years from the date of purchase.

There are specific exceptions to this rule where the property can cease to be the primary residence without incurring penalties:

• Property Sale: If the house is sold, the exemption will not apply to any future property purchases.
• Household Changes: In cases of household changes, such as marriage, divorce, or the addition of new dependents, the exemption remains valid as long as the property continues to be used as a residence.
• Employment Relocation: If there is a job relocation more than 100 kilometres away from the property, the exemption is maintained if the property continues to be used for residential purposes.

Yes, the guarantee remains valid if the mortgage is transferred to another bank that participates in the state guarantee protocol.

Yes, young taxpayers can purchase real estate without a down payment, provided that the loan is obtained from a bank participating in the state guarantee programme.

Banks participating in the state guarantee programme may offer financing up to 100% of the property's purchase price, provided the young taxpayer demonstrates the financial capacity to support the loan. The mortgage approval process under this initiative follows the same criteria as standard mortgage agreements, meaning the bank will assess the applicant's financial effort ratio.

Yes, foreign residents who meet the eligibility criteria can also take advantage of the state guarantee, regardless of nationality.