Buying · Mortgages

New mortgage rules: what changed and how to prepare

27 August 2026 · Rafaella Galardo

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On 1 August 2026 the new Banco de Portugal rules for home loans came into force. The main banks have already said they expect to lend less money than they did before. If you are thinking of buying a home, this affects you. Let us explain it without complicated terms.

First, three words you need to know

Before we talk about what changed, let us translate the vocabulary. There are only three concepts, and after that everything becomes easier.

• Debt-to-income ratio (taxa de esforço): the slice of your income that goes to paying instalments. If you earn €2,000 a month and pay €900 in instalments (on the home loan, the car, everything), your debt-to-income ratio is 45%. The reference limit is precisely 45%.
• Down payment: the money you have to put in from your own pocket. The bank does not lend 100% of the value of the home — it normally lends 80% or 90%. The remaining 10% or 20% is the down payment. And note: the taxes and the deed come on top of that.
• Public guarantee for young buyers: this is the State acting as guarantor. It allows people up to the age of 35 to finance up to 100% of the property, under certain conditions — in other words, without needing a down payment.

What the people on the ground are saying

Tiago Vilaça, president of ANICA (the association of credit intermediaries — the companies that help families arrange their loans with the banks), sums up the effect of the new rules like this: the market has become more selective.

In practice, that means two things. More applications refused. And more applications approved, yes, but for lower amounts than requested. Anyone in that position has two ways out: look for cheaper homes, or increase the down payment with more of their own money.

Vilaça does not expect a sudden brake. He does not talk about an "abrupt and immediate" fall, but rather about a gradual reduction over time.

The contradiction worth understanding

There is one point that the president of ANICA himself highlights and that confuses a lot of people. In his words: "Financing of up to 100% of the property is made easier, but at the same time the amount a family can afford is reduced."

Translated: on the one hand, the public guarantee has opened the door for people up to 35 to buy without a down payment. On the other hand, the tightening of the debt-to-income limit reduces the amount those same young buyers can borrow.

Terms of up to 40 years: relief today, cost tomorrow

One of the new features: people aged between 31 and 35 can take out a loan of up to 40 years.

The immediate effect is good — the term is longer, the monthly instalment falls and the loan now fits within the debt-to-income limit. It is real help for people who were close to not qualifying.

But there is the other side: the more years you pay, the more interest you pay in total. The loan becomes lighter every month and more expensive over its lifetime. It is not a trap — it is a trade-off. You just have to make it with your eyes open.

What about insurance?

A detail that is rarely discussed, but important. Some banks are reducing the cover on the insurance policies linked to the loan (life insurance and multi-risk cover) so that families fit within the 45% debt-to-income limit.

It makes sense arithmetically: the insurance premium counts towards the monthly outgoings, so cheaper insurance creates more room. But less cover means less protection. It is worth looking carefully at what is — and what is no longer — covered.

Will this make prices fall?

That is the question everyone asks. The honest answer: probably not.

The rise in Euribor (the benchmark interest rate used in variable-rate loans, which pushes your instalment up or down) combined with stricter rules should reduce the number of transactions. Fewer people with approved credit means fewer deals done.

But a widespread fall in prices is unlikely — because supply remains limited. There are few homes for a lot of demand. Fewer buyers with credit is not enough to reverse that.

How to prepare before making an offer

This is the practical checklist. Follow it in this order.

• 1. Pre-approval first, home second. Never the other way round. Go to the bank before you fall in love with a property and find out exactly how much they will lend you. It saves disappointment and gives you strength in negotiation.
• 2. Gather your documents in advance. Payslips for recent months, IRS (income tax) return and assessment notice, bank statements, employment contract, and the Banco de Portugal credit liability report. Having everything ready saves weeks.
• 3. Clear the small loans. Credit cards, car finance, instalments on appliances — all of that counts towards your debt-to-income ratio. Paying off what you can before applying may be exactly what makes the difference between approved and refused.
• 4. Compare at least three banks. Offers vary widely, and not only on the spread: fees, required insurance and cover create differences of thousands of euros over the life of the loan.
• 5. Budget for the costs beyond the price. IMT (property transfer tax), Stamp Duty, the deed, registrations, valuation. They can reach 7% or 8% of the value of the home. We did all the sums, with examples, in the article what it really costs to buy a home in Portugal.
• 6. Protect yourself in the promissory contract. Include a clause that lets you withdraw without losing your deposit if the bank does not approve the financing you need. With tighter rules, this clause is worth its weight in gold.

For simulations and comparison of offers, see our Financing page.

What we do for you

We support buyers from the first calculation to the deed. That includes working out, before any viewing, how much the bank will lend you today, under today's rules — and not last year's. Then we help you compare loan offers, prepare the paperwork and draft the promissory contract with the right protections.

There were 15 years of legal practice before real estate. That is the eye I bring to contracts and to the small print of insurance policies. If you are buying on the Cascais coastline, start by looking at the properties available or the support we give to buyers.

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Source: idealista/news (5 and 6 August 2026), with statements from ANICA. Note on insurance: idealista/news, 10 August 2026.