The ministerial council has reactivated a mortgage guarantee program, first announced last May and paused during July’s elections. It is designed to help 50,000 young adults aged 18 to 35 and families with dependent children who want to buy a home, with no upper age limit. The state will back a portion of the loan to encourage homeownership. The program offers a guarantee of 20% of the transaction value, calculated as the lower of the appraised value or purchase price. Banks will finance up to 100% of the loan, while buyers are expected to cover only 10% from their own savings to cover taxes, notary, and registration fees. If the home is rated energy class D or higher, the guarantee can rise to 25%.
New ICO guarantees for mortgages: how to apply and requirements
The program’s beneficiaries must have an individual gross annual income not exceeding 37,800 euros (4.5 times the IPREM). When two people are purchasing together, the income cap doubles to 75,600 euros. Additional adjustments apply based on the number of children and whether the household is single-parent. Increases can reach about 0.3 times the IPREM per child, slightly raising the gross annual income by 2,520 euros for each dependent. For single-parent families, the limit may increase by up to 70%. The total property wealth of beneficiaries cannot exceed 100,000 euros.
Applicants must also prove ownership and legal residence in Spain for at least two consecutive years. The guarantee applies to first homes only, not second homes or investment properties. The warranty lasts for 10 years, regardless of the loan’s term. During these years, buyers must maintain permanent residence in the property, unless life circumstances require relocation, such as marriage, separation, or a job change.
Maximum house price
The guarantee line remains in effect until December 31, 2025, with a possibility of extension by two more years. After the Council of Ministers approves the terms, the Ministry of Housing and the Official Credit Institute (ICO) will sign an agreement to implement and manage the guarantees. The agreement will set the maximum price or rating for eligible homes, the regional scope, and the location. The monitoring commission will have the authority to adjust the maximum value as needed.
Financial institutions may join the agreement and begin offering guaranteed loans. Housing Minister Isabel Rodríguez expressed confidence in bank participation, noting that both the Ministry of Housing and the Ministry of Economy have engaged in discussions with the industry. Over time, the cost of the warranty, initially borne by the institutions, will become free for both lenders and buyers as the program stabilizes.
Rodríguez clarified that buyers must have some cash reserves. Banks will decide loan amounts based on income, effectively setting a ceiling on real estate prices. The aim is for no citizen to spend more than 30% of their income on rent or mortgage payments.
Login difficulty
Since the last financial crisis, banks typically finance up to 80% of a home’s value or appraisal. This prudent measure, driven by supervisory authorities, was meant to prevent a recurrence of large losses that followed the housing bubble’s collapse. The government now seeks to ensure that young people and families can obtain a loan covering 100% of the property’s value with a 20% guarantee. Of course, buyers must provide about 10% of the transaction value as a cash reserve to cover additional costs like taxes, notary, and registration.
The measure had already been announced in May 2023 during the regional and municipal campaign season. The government asked the Ministry of Transport and the ICO to outline the guarantee framework, but the July general election temporarily paused the project.