Is it possible to buy a house in Portugal with no down payment? What the market says

What does “buying a house with no down payment” mean?

Buying a house with no down payment means securing 100% bank financing for the purchase. In other words, instead of having to save 10%–20% of the purchase price as an upfront payment, the bank covers the entire amount.

In practice, this is a rare and exceptional scenario. Portuguese banks generally follow prudential rules set by the Bank of Portugal, which recommend that financing should not exceed 90% of the property's appraisal value. However, there are exceptions and strategies that can help make this possible.

Are there 100% mortgage loans in Portugal?

Generally speaking, Portuguese banks do not offer 100% financing for homes sold on the open market. However, certain situations may allow full financing:

• Properties owned by banks or financial institutions: these are often eligible for 100% financing, particularly if the bank is trying to clear real estate from its portfolio

• Real estate investment funds: sometimes offer favourable financing terms

• Buyers with additional guarantees: such as a co-signer with high income or valuable collateral, may be granted full coverage

While these options exist, they are rare and require a detailed risk assessment. Running simulations and seeking expert advice is essential. If you're unsure, consider checking how much your property is worth—a professional appraisal can improve your chances of negotiating better financing terms.

The importance of the bank appraisal value

The amount a bank is willing to finance depends on the appraisal conducted by a certified professional. For example, if you buy a property for €200,000 but the appraisal value is only €180,000, the bank will base the loan on €180,000—not the purchase price.

This means that even if the seller lowers the price, if the property doesn’t match the bank’s valuation, you will need to cover the difference out of pocket. Appraisal is a key part of the home-buying process.

Strategies to overcome the lack of down payment

Even though 100% financing is uncommon, there are several ways to work around the upfront payment:

1. Save early with a solid plan

It may sound obvious, but saving in advance is still one of the most effective strategies. Setting clear goals and sticking to a savings plan can allow you to accumulate the necessary 10% to 20% in just a few years. Many buyers choose to invest in a retirement savings plan (PPR), which can be used to buy a home with associated tax benefits.

2. Negotiate directly with the seller

In some cases, it is possible to negotiate favourable conditions with the seller—such as a lower deposit, staged payments, or a long-term preliminary sale agreement that gives you more time to gather the down payment.

3. Buy bank-owned properties

As mentioned, these may be eligible for full financing and are often part of recovery portfolios. The downside is that supply is limited and conditions may vary depending on the property’s condition.

4. Explore subsidies or public support programmes

While not directly offering 100% mortgages, some municipalities or regional programmes provide support to young buyers or families—such as reduced property taxes, rental support with purchase options, or municipal housing initiatives. Staying informed about these can make a big difference.

Real estate market trends in Portugal

The Portuguese property market has shown signs of stabilisation after years of rapid growth. Despite rising interest rates, demand from local buyers remains strong, particularly in areas surrounding major cities or in regions with good quality of life and more affordable prices.

According to the Portugal Market Report 2023/2024, there is growing demand from young couples and hybrid workers looking for alternatives outside large urban centres.

This shift is creating new opportunities in cities like Setúbal, Aveiro, Braga, and Viseu—where square metre prices are still attractive and banks are more willing to lend under favourable conditions.

Who qualifies for 100% mortgage loans?

Although rare, 100% financing may be available to buyers with strong profiles:

• Young professionals with stable careers

• Dual-income couples with minimal expenses

• Buyers with high-earning guarantors

• Clients purchasing bank-owned properties or those in incentivised areas

In these cases, it is essential to work with a real estate team with in-depth market experience, who can guide you through every step—from finding the right property to mortgage negotiations and legal formalities.

What documents are needed to apply for a mortgage?

To apply for a mortgage loan in Portugal, you will typically need:

• Income statements

• Tax returns (IRS)

• Credit report from Banco de Portugal

• Proof of employment

• Property documentation

Once submitted, the bank performs a credit risk analysis and, if approved, issues a European Standardised Information Sheet (ESIS) with the loan terms.

What are the risks of 100% financing?

While buying a house with no down payment may sound appealing, there are several risks:

• Higher debt levels: full financing means higher monthly payments

• Higher effort rate: if your income is not significantly above expenses, the loan may be denied

• Property depreciation: if the property value drops, your loan may exceed the house’s market value

• Variable interest rates: with today’s volatility, your monthly instalments could increase significantly

Before committing, run detailed simulations and seek advice from mortgage advisors. You may also consider selling your current apartment to reinvest in a new property with less financial strain.

How to find properties eligible for higher financing?

If you’re specifically looking for homes with favourable financing options or reduced down payment requirements, consider:

• Bank-owned or repossessed properties

• New developments with bank partnerships

• Real estate agencies offering special campaigns

• Areas with local government housing incentives

The Engel & Völkers platform allows you to filter properties by location, price, features, and even financing options. With a national network of consultants, the brand offers exclusive listings and support throughout the process.

Personalised support: a major advantage for buyers

In a competitive market with many variables, working with experienced consultants is essential. A skilled professional helps to:

• Correctly assess market value

• Negotiate favourable mortgage terms

• Prepare the necessary paperwork

• Avoid unexpected delays and costs

Many buyers feel more confident when working with trusted professionals who know the local market. The expertise of real estate consultants ensures that the entire process runs smoothly and securely.

What to expect in the coming years

As younger generations enter the housing market, banks will face pressure to offer more flexible products. Some financial institutions are already exploring low down payment loans for young buyers, especially when combined with life insurance or collateral.

Additionally, rent-to-buy models may become more common. This option allows buyers to live in a property while paying rent, which is later deducted from the purchase price—effectively reducing the need for a large upfront deposit.

Final thoughts

Buying a house in Portugal without a down payment is an ambitious—but not impossible—goal. Although banking regulations are strict, exceptions exist, and opportunities can be found by those who prepare early and rely on the right guidance. Understanding the type of property, local market dynamics, and available financing solutions is key to making a smart and sustainable decision.

With the support of an experienced team like Engel & Völkers, you can discover personalised strategies that align with your profile and goals. Whether through special financing opportunities, public programmes, or strategic selling of your current home, the path to homeownership may be more accessible than you think. The secret lies in preparation, information, and choosing the right partners.

Frequently asked questions (FAQ)

1. Is it really possible to buy a house with no down payment in Portugal in 2026?

Yes, but it’s the exception, not the rule. Most banks require a down payment of 10% to 20%. However, 100% financing may be available for bank-owned properties, strong borrower profiles, or with additional guarantees.

2. Which banks offer 100% mortgage loans?

There’s no public list of banks offering 100% mortgages. Some do offer it for properties in their portfolios, but approval depends on risk evaluation, property type, and borrower profile.

3. What matters more: purchase price or bank appraisal?

Banks base the mortgage amount on the appraised value, not the purchase price. If the bank’s appraisal is lower than what you pay, you’ll need to make up the difference yourself.

4. Can I use a retirement savings plan (PPR) for the down payment?

Yes. Under Portuguese law, PPRs can be withdrawn without penalty for purchasing a primary residence. This is a common and tax-efficient way to fund the down payment.

5. Is it advisable to take a personal loan to cover the down payment?

Technically possible, but not recommended. Banks assess your effort rate (total debt vs. income), and combining a personal loan with a mortgage can lead to rejection or unsustainable payments.

6. Are there government programmes that help first-time buyers?

While there’s no nationwide 100% mortgage programme in 2025, some local authorities offer tax exemptions (like IMT for buyers under 35), rental assistance, or affordable housing schemes. Availability depends on your municipality.

7. Should I start by finding a house or getting mortgage pre-approval?

Start with a mortgage pre-approval. It gives you a clear idea of your budget and strengthens your position when negotiating or making an offer on a property.