Mortgages in Portugal: how to get a home loan

A mortgage is the most popular and affordable way to buy a home, as well as a common tool for investing in real estate.

However, in order to make the most of the opportunity to purchase real estate on credit, you need to understand in more detail how mortgage lending works in Portugal.

 

What do banks usually consider when making a lending decision?

• The object of the loan. Most likely, you will not receive credit funds in Portugal if you plan to use them for purchases or investments abroad, and you will not be able to buy a car on credit if you are not a resident of Portugal.
• The borrower's confirmed income and stability of income are important. In most cases, the monthly loan payment should not exceed 35-40% of the borrower's monthly income.
• The borrower's credit history — if the client already has a history of successful credit servicing in Portugal — will help them when considering a mortgage application.
• Proof of residence in Portugal;
• Tax residence – if the client is a tax resident of Portugal, receives income here, files a tax return (IRS), and pays taxes, this increases their chances of obtaining a loan on more favorable terms.
• Ownership of other real estate in Portugal;
• Availability of a guarantor (surety).

 

Credit and mortgage broker in Portugal: who helps with the paperwork

In Portugal, there are specialised professionals whose job is to help clients obtain loans, including mortgages. These professionals are credit or mortgage brokers.

A credit broker is an intermediary between the bank and the client who helps in obtaining a loan for any purpose (for personal, business, or car loans), while a mortgage broker in Portugal specializes specifically in arranging loans for the purchase of real estate (for residential, commercial, or investment purposes).

Contacting a credit (mortgage) broker is the best way to obtain a loan:

• A credit broker conducts a preliminary analysis of the borrower's financial situation and documents.
• The specialist can immediately explain to the client how much credit they can count on and under what conditions.
• With experience working with various banks, they will advise which one offers the highest chance of approval and which one offers the most favorable terms.
• In addition, a qualified specialist will help you choose the right loan (mortgage) product, prepare a package of documents, assist with property appraisal (if necessary), and take on the process of negotiating with the bank regarding the terms of the loan (term, interest rate, down payment, and fees). The credit broker coordinates the process of obtaining preliminary approval and signing the loan agreement.

 

How to get a mortgage in Portugal: a step-by-step description of the process

• Preparatory stage: discussion of available options with a credit broker, collection of documents: passport, NIF, documents confirming income – contracts, invoices, bank statements, IRS tax returns for the previous 3 years (if available);
• Submitting an application: applying to one or more banks with a basic set of documents and information about the property being financed;
• Preliminary approval of the application: the bank assesses your income and credit history. The result of this stage is usually a letter of preliminary approval of the application and an offer of loan terms. If the property has not been selected at the time of application, it is recommended to select it after receiving approval from the bank, already knowing the loan amount;
• Legal review and appraisal of the property: the bank orders an appraisal of the property and a review of the title, and a lawyer or notary reviews the documents for the property;
• Final decision (final approval): after a positive conclusion, the bank gives final approval, after which the terms of the loan agreement are formed;
• Signing of the loan agreement and mortgage registration: the agreement is signed in the presence of a notary, the mortgage is registered with the registration authority, and the funds are transferred to the seller;
• Loan servicing: monthly mortgage payments are made, and life and/or property insurance is provided as stipulated in the mortgage agreement.

 

Loans in Portugal: terms and interest rates

In addition to the main question of whether or not to grant a loan, the bank also considers the terms on which the loan can be granted.

The parameters (terms) of a mortgage loan are influenced by:

• The cost of the property being financed;
• The borrower's financial situation;
• The borrower's age;
• The degree of rootedness in Portugal;
• The intended use of the property being purchased.

The cost of the object of the loan determines, to a certain extent, the term of the loan and the size of the down payment.

The borrower's financial situation determines the amount of the loan that the bank is willing to provide and the size of the monthly payment (as already mentioned, it should not exceed 35-40% of monthly income). You should be prepared for the bank to take an interest in the sources of the borrower's funds.

The borrower's age also affects the loan term—in general, for mortgages, the loan term ranges from 5 to 40 years, while the maximum age of the borrower on the date of expiration of the loan agreement may be limited by the bank's requirements.

If a foreigner applies for a mortgage, especially without a financial history in Portugal, such borrowers usually have a higher down payment and interest rate. This is how the bank compensates for the potential risks of loan default. For citizens and permanent residents, a minimum down payment of 10% may apply, while for temporary residents or non-residents, the down payment may be 20-40%. For foreigners with a temporary residence permit, the loan term may be limited to the validity period of the permit.

The purpose of the mortgage also affects the size of the down payment. If this is the borrower's first home, the down payment is lower. If a foreigner wants to buy a home, or if the property is being purchased for investment or commercial use, the down payment averages 20-30%.

The interest rate on the loan depends not so much on the borrower's origin as on whether you are a customer of the bank. For example, if you do not have a salary account with the bank, the interest rate may be increased by 0.25% or even 0.5%.

When concluding a loan agreement, it may provide for a fixed or variable interest rate.

If a variable interest rate is applied, this means that its size depends on the 6-month average Euribor rate, which is increased by several points (usually an additional 1-2%). For example, if as of September 2025, the 6-month average Euribor rate was 2.084%, then the most commonly applied interest rates were 3.0-3.5%.

If a fixed interest rate is applied, it is usually higher than a variable rate and averages 3.5-4.0%. If, during the term of a fixed-rate loan agreement, the Euribor rate increases unexpectedly, the bank's likely losses will be offset by the greater difference.

 

Real estate loan: what properties do banks finance

How much do you need to limit yourself in your choice of real estate if you plan to purchase it with loan funds?

Portuguese banks have a fairly wide range of mortgage products, so you can choose real estate according to your preferences and financial capabilities.

A mortgage loan can be provided both for the purchase of a new building and for the purchase of housing on the secondary market. If you plan to purchase housing on the primary market, the bank will pay more attention to the developer. Therefore, it is better to make sure that the developer has obtained all the necessary permits and licenses and has a positive reputation.

If you plan to purchase commercial or investment property, be prepared for the fact that not only your financial capacity, the seller, and the subject of the mortgage will be checked, but also the profitability of the property itself. Loans for non-residential real estate also usually come with less favorable terms — a larger down payment, shorter loan terms, and higher interest rates.

 

Why you should contact First Legal Portugal to work with a credit broker

If you are a foreigner in Portugal and are planning to purchase real estate, it is critically important for you to start the process with a credit broker. An experienced credit broker will help you assess your options, choose the right credit product and the most loyal bank, provide advice on documents, and help you avoid mistakes when working with the bank. Our lawyers in Portugal will help you collect and prepare the necessary documents for the bank, as well as assist with the translation and notarization of documents in Portugal.

First Legal Portugal has partnerships with experienced, reliable, and time-tested credit brokers, and our real estate lawyers in Portugal can provide additional legal assistance, including legal support for the purchase of real estate, verification of contract terms, real estate properties, sellers, etc.

So, by contacting First Legal Portugal, you will receive a combination of highly qualified legal support and access to the best mortgage brokers. You can count on comprehensive support, from choosing a bank to signing a loan agreement. This will give you confidence that your deal with the bank will be completely transparent and secure.