Nowadays, it is necessary to have some savings to buy a home in Spain. In this way, most banks offer mortgages only for 80% of the property value. Therefore, if we add the inflation and interest rates rise, purchasing a home, especially for the young, gets complicated.
The ICO guarantee for home purchase aims to solve this situation, at least partially. The goal is to obtain financing for 100% of the property price they wish to buy. For that, it'll be necessary to meet some specific requirements.
What are the ICO guarantees to buy a home?
It is essential to note that these guarantees are not a non-refundable grant. The ICO will only cosign up to 20% of the property value the banks will not grant. It means that whoever obtains the guarantee will be able to get a mortgage loan from the financial institution for 100% of the price of the home. But they will have to repay the total credit, interest included.
The ICO would return the guaranteed amount to the bank in the event of non-payment, provided that this occurs when that 20% is still pending. However, they may claim the guaranteed amount plus interest.
Another important aspect is that, in a discrepancy between the appraisal value and the sale one, the maximum amount the ICO will guarantee will be 20% of the lowest amount.
Requirements to request an ICO guarantee to buy a home
Applicants must meet a series of requirements. When it is a couple that requests it, both must comply with the conditions:
• The applicant must be under 35 years when purchasing the home or, failing that, have dependent minors.
• Applicants may not exceed a maximum income of €37,800 gross per year per person. This amount doubles if two people purchase the home, and increase by 2,520 euros gross per year for each dependent minor, 70% more in the case of single-parent families.
• Reside in Spain and have a DNI or NIE.
• An income and financial profile that allows the petitioner to apply for a mortgage.
• The price of the home must not exceed the maximum specified for the aid. Each region will determine the quantity.
• An ICO guarantee is only for the purchase of the first home and provided that its destination is the habitual residence.
When and where can we request an ICO guarantee to buy a home?
At the moment, there is no start date to be able to request them. The agreement with the ICO remains to be signed. We know that applications may get submitted until December 31, 2025. Nevertheless, the government will likely extend them for two more years.
On the other hand, we could request them at any bank that collaborates with the ICO, which can be the same one we have the mortgage with. In fact, in Spain, there are around 30 entities that regularly collaborate with the Official Credit Institute.
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