Is It Possible To Get A 100% Mortgage In Spain?

Many people dream of Spanish home ownership, but don’t have access to the ready-cash they need to put down a typical 10-20% deposit on their dream Spanish property. In fact, for many young couples and young families, saving the deposit needed to secure a mortgage is the most significant obstacle to home ownership in Spain.

In a bid to overcome this hurdle, the Spanish government have announced a groundbreaking new scheme, referred to as the ICO mortgage guarantee scheme, that will provide a 20% deposit to eligible families and individuals, effectively providing them access to a 100% mortgage without needing to save a deposit.

Here’s everything you need to know about the ICO mortgage guarantee scheme, and 100% mortgages in Spain: 

Can You Get a 100% Mortgage In Spain?

It would be factually inaccurate to say that you can’t find a 100% mortgage in Spain, but these are extremely rare, and the vast majority of lenders simply don’t offer them. Those lenders that do have 100% mortgages available have such stringent requirements attached to them that it is near-impossible to qualify.

Instead, most lenders in Spain ask that their mortgage applicants have at least a 20% deposit in place.

Thanks to the new ICO scheme, however, this established mortgage lending landscape is set to change, and over 16 million eligible applicants in Spain are likely to have access to a 100% mortgage.

What Is The ICO Scheme?

The ICO scheme is a mortgage guarantee scheme that will guarantee 20% of the mortgage for eligible individuals, couples and families. This means that lenders will still get a 20% deposit in guarantee form, whilst applicants will effectively have access to a 100%, deposit-free mortgage.

The scheme was announced by Spanish Prime Minister Pedro Sánchez made a significant announcement on Sunday, May 7th, and is being facilitated by Spain's Official Credit Institute (ICO).

The news has been welcomed in Spain and been greeted with excitement by many young citizens. It is thought that as many as 16.6 million people in Spain will benefit from the scheme.

Who Is Eligible For The ICO Scheme?

The ICO Scheme is not available to everyone: in fact, there are stringent and fairly restrictive requirements in place as to who can be eligible for this form of government assistance. To be eligible for the ICO scheme you must:

  • Either be under the age of 35 years old when you are purchasing your first property OR be purchasing a property to reside in with your dependent minors. If you have dependent minors then there is no age limit on how old applicants should be.
  • The annual income of each applicant cannot exceed 37,800 euros. If you are completing a joint application with a spouse or partner, you joint income cannot exceed 75,600 euros. And if you are a family buying a property to live in with dependent minors then your household income cannot exceed 83,00 euros.
  • You don’t have to be a Spanish citizen to apply for the scheme but you do have to be a Spanish Resident and hold either a valid DNI (Documento Nacional de Identidad) or NIE (Número de Identificación de Extranjero).
  • The property you are purchasing must be your first home. If you have ever purchased a property before, you are not eligible for the scheme.
  • You must have the financial security and income needed to be accepted for a mortgage before you can be eligible for the ICO deposit scheme.

Do I Have To Pay Back The ICO Deposit?

The ICO deposit scheme is not a free cash gift to applicants, but a scheme to make it easier for them to get on the property ladder. Because it is not a loan or a cash injection, the ICO deposit functions as a guarantee. This means that you will have to pay back the 100% of your mortgage that you borrow from your bank or other mortgage lender.

The obligation of applicants would be to pay the full 100% mortgage amount that they borrow, plus interest. interest will be charged on the mortgage loan provided by the bank, which means interest will also be charged on the 20% portion guaranteed by the Government.

The main attraction of the scheme is that the door to this 100% mortgage is opened, because the government is prepared to guarantee 20% of this payment on your behalf.

How Do I Apply For The Scheme?

This is one of the main questions that potential applicants have about the scheme but, unfortunately, we don’t have an answer to this yet. Because the ICO deposit scheme bill was only approved in Spanish Parliament on 9th May, it is very early stages for the scheme and the practical details are yet to be announced.

What we do know is that the scheme will open soon, and that the ICO mortgage aid will be available under the scheme until 31st December 2025. The scheme will be widely available, with over 30 banks in Spain that already offer ICO loans and guarentees taking part in the programme. These include well known institutions such as Sabadell, Santander, BBVA and Caixa.

 Are you thinking of moving to Spain? Whether you want to travel from spot to spot and enjoy everything is culturally diverse location has to offer, or you’re just looking for somewhere quiet and warm to enjoy your retirement, our locally based property experts can help. Why not get in touch today to find out more about how we can help you find the home of your dreams.