Mortgages for Young People Up to Age 35: How They Work and What You Need to Know
Buying your first home is one of life’s biggest financial undertakings. For many young people, the main obstacle isn’t necessarily being able to afford a monthly payment, but rather coming up with the down payment required to purchase the property.
The government-backed mortgage guarantee for young people up to age 35 was designed precisely to make it easier to buy your first permanent home.
But how does it work? Is it really possible to get 100% financing? Who is eligible? What documents are required? And what are the steps from the loan simulation to the purchase of the home?
In this guide, we explain the key points.
What is the public guarantee for mortgage loans?
The public guarantee is a mechanism through which the government provides a guarantee for a portion of the loan granted by the bank.
The goal is to enable eligible young people to obtain financing ranging from 85% to 100% of the transaction value considered under this program.
The government guarantee can cover up to 15% of that amount and remains in effect for a maximum of the first 10 years of the loan agreement.
It is important to clarify a common misconception: the government does not pay for the home or assume the young person’s loan payments.
The loan is still granted by a financial institution, and the buyer remains responsible for paying off the entire debt.
Who is eligible?
The program is intended for young people who wish to purchase their first permanent home.
Among the main requirements are:
* Be between 18 and 35 years of age, inclusive;
* Have tax residency in Portugal;
* Not owning an urban building or an independent residential unit;
* Not having previously benefited from the public guarantee;
* Complying with the income limits set forth in the legislation;
* Having your tax and social security obligations in good standing;
* Be purchasing a first home for permanent residence;
* The transaction value considered for the program must not exceed €450,000.
When there are multiple buyers, all must be borrowers on the loan and meet the eligibility requirements.
The program currently covers loan agreements entered into through December 31, 2026.
Is it possible to obtain 100% financing?
Yes, that is possible.
The program allows participating institutions to finance between 85% and 100% of the transaction value.
However, there is one very important detail.
For these purposes, the transaction value corresponds to the purchase price or the bank’s appraisal value, whichever is lower.
Imagine you find a house for €250,000, but the appraisal conducted for the bank determines a lower value. This difference can affect the maximum amount that can be financed and require the buyer to use their own funds.
Therefore, referring to “100% financing” does not necessarily mean it is possible to buy any property without having savings.
Does the public guarantee mean automatic loan approval?
No.
This is probably one of the most important points for anyone planning to use this program.
Even if the buyer meets all the requirements to qualify for the public guarantee, the bank is not obligated to approve the loan.
The financial institution will still assess the customer’s ability to repay the loan.
Factors such as the following are typically considered:
* Net income;
* Job stability;
* Type of employment contract;
* Other existing loans;
* Credit cards and financial obligations;
* Regular expenses;
* Age of the buyers;
* Desired loan term;
* Credit history;
* Debt-to-income ratio.
In other words, the government guarantee can help overcome the difficulty of the down payment, but it does not replace a financial situation that is compatible with the desired loan.
What documents should you prepare?
The required documentation may vary from bank to bank and depending on the buyer’s employment status.
However, in an initial review, documents regarding identification, income, and financial situation are often requested.
These may include:
* Identification document;
* Tax Identification Number;
* IRS tax return;
* IRS tax assessment notice;
* Recent pay stubs;
* Bank statements;
* Proof of other income;
* Information regarding credit obligations;
* Proof related to employment status;
* Documents or statements required to demonstrate compliance with public guarantee requirements.
Self-employed individuals, business owners, or people with variable income may need to submit additional documentation.
The more organized your application is, the simpler the initial review tends to be.
And what are the property documents?
After choosing a home, you’ll also need to verify the property’s documentation.
Depending on the specific situation, documents such as the following may be required:
* Permanent land registry certificate;
* Property register;
* Occupancy permit, when applicable;
* Energy performance certificate;
* Floor plan and other property details, when necessary;
* Preliminary Purchase and Sale Agreement, if any;
* Other documents requested by the bank or required to finalize the purchase.
This review is essential.
Before making any major financial commitments, it is advisable to confirm that the property’s documentation and legal status are in order for the transaction.
What should be the first step?
A common mistake is to start with the house.
The most prudent approach begins with your budget.
Before visiting properties that are beyond your financial means, try to determine approximately how much you can finance and what a comfortable monthly payment would be for your household.
A possible sequence is:
1. Organize your financial documentation;
2. Request loan simulations;
3. Determine your financing capacity;
4. Confirm your eligibility for a public guarantee, if applicable;
5. Set a realistic budget;
6. Only then should you look for properties within that budget.
This significantly reduces the risk of falling in love with a home that you later cannot afford.
Found the home? Be Aware of the CPCV
After finding the property and negotiating the price, a Preliminary Purchase and Sale Agreement, known as a CPCV, may be signed.
It is common to make a down payment at this stage.
When the purchase depends on bank financing, this stage requires special attention.
If the buyer pays a deposit and later fails to obtain loan approval, the consequences will depend on the terms set forth in the contract.
For this reason, it is advisable to seek appropriate professional guidance and consider including a clause related to securing financing.
A CPCV must be fully understood before it is signed.
The Bank Appraisal
The bank will typically request a professional appraisal of the property that will be used as collateral for the loan.
This appraisal helps the bank determine the property’s value for loan purposes.
And it can make all the difference.
If the negotiated price is significantly higher than the value assigned in the appraisal, you may need to have your own funds available to cover the difference.
This is yet another reason to keep some savings available, even when high financing is possible.
How do you compare loan offers?
Don’t just look at the spread.
An offer with a seemingly lower spread isn’t necessarily the most economical option overall.
Review the European Standardized Information Sheet (FINE) and compare elements such as:
* Nominal Annual Interest Rate (TAN);
* Annual Percentage Rate (APR);
* Average Monthly Installment (MTIC);
* Monthly payment;
* Loan term;
* Fixed, variable, or mixed rate;
* Associated insurance;
* Fees;
* Banking products required under certain conditions;
* Terms after the initial fixed-rate period, if applicable.
The comparison should be based on the overall cost and not just a single variable.
What about the IMT Jovem?
In addition to the public guarantee, there are tax benefits intended for the purchase of a first, permanent home by eligible young people, often known as IMT Jovem.
These benefits may cover the IMT and the stamp tax associated with the purchase, within the conditions and limits defined by law.
It is important not to confuse the two mechanisms.
The public guarantee relates to bank financing.
IMT Jovem pertains to tax benefits for the purchase of the property.
A buyer may qualify for different forms of assistance, but the requirements for each program must be analyzed separately.
How much money should I have available even with 100% financing?
This is a crucial question.
Even with high financing and tax benefits, buying a home can involve other expenses.
Depending on the transaction, there may be costs related to:
* Bank appraisal;
* Applicable bank fees;
* Legal formalities and registrations;
* Insurance;
* Moving expenses;
* Condominium fees;
* Minor repairs;
* Furniture and appliances;
* The difference between the purchase price and the appraisal value, if any;
* Other expenses associated with the purchase.
Therefore, using all your savings solely to purchase a home can leave the new homeowner financially vulnerable.
It is advisable to maintain a fund for unexpected expenses.
The path to your first home
In simple terms, the process can follow this order:
1. Assess your financial situation
Understand your income, expenses, existing loans, and monthly budget.
2. Gather your documents
Prepare the necessary documentation in advance.
3. Run simulations
Compare different financing scenarios.
4. Confirm eligibility
Determine whether you meet the requirements for a public guarantee and any potential tax benefits.
5. Set the maximum budget
Choose a purchase price that aligns with your financial reality.
6. Search for a property
Select homes within your defined budget.
7. Verify the documentation
Confirm the property’s legal and documentary status.
8. Negotiate and review the CPCV
Pay special attention to the down payment and the financing contingency.
9. Submit the loan application
Provide the bank with the necessary documents.
10. Complete the bank appraisal
The property is appraised for financing purposes.
11. Compare the offers
Carefully analyze the terms presented.
12. Obtain final approval
Confirm the financing definitively.
13. Handle applicable tax obligations and benefits
Check the Property Transfer Tax (IMT), Stamp Tax, and any exemptions.
14. Finalize the purchase
Complete the purchase and the corresponding financing.
The biggest mistake? Buying at the limit of your financial capacity
Just because a bank is willing to finance a certain amount doesn’t mean that’s necessarily the ideal budget for your life.
Your mortgage payment will be just one of your monthly expenses.
You’ll still need to pay for food, transportation, utilities, telecommunications, insurance, condo fees, home maintenance, and all other personal and family expenses.
And there should still be room to save.
A home should provide stability, not turn every month into a race to pay the bills.
Buying your first home may be closer than you think
The government-backed loan program represents a significant opportunity for young people who can afford the monthly mortgage payments but haven’t yet accumulated enough savings for a traditional down payment.
Even so, each situation must be analyzed on a case-by-case basis.
The right property isn’t simply the one the bank agrees to finance. It’s the one that meets your needs, fits your life plan, and, above all, aligns with your financial capacity in the medium and long term.
Information, preparation, and planning remain three of your best allies for making the purchase of your first home a sound decision.