Buying a home alone: how to get a mortgage without a guarantor

What changes when you apply for a mortgage alone

When a mortgage application involves two borrowers, the risk for the bank is shared. If one borrower stops being able to pay, the other retains responsibility. When there is only one borrower, the entire risk analysis falls on a single person and a single source of income.

This does not mean the bank will refuse. It means the assessment criteria are applied with greater rigour. The debt-to-income ratio, which is the proportion of the borrower's net monthly income committed to loan repayments, carries more weight when there is only one income in the equation. Banks tend to be more conservative about the percentage of financing they approve and more attentive to employment stability.

For the individual buyer, understanding this logic is the first step. It is not an insurmountable disadvantage, but a reality that requires specific preparation. And that preparation, done in advance with the right support, transforms a profile that appears weak into one that banks approve with confidence.

Debt-to-income ratio: the number that determines everything

The debt-to-income ratio is the most important indicator in a mortgage application assessment. In simple terms, it represents the percentage of net monthly income that will be committed to loan repayments. In Portugal, banks use a general reference limit of 35% to 40%, though this can vary depending on the institution and the client's profile.

For a sole buyer, this calculation is decisive because there is only one income in the equation. If net monthly income is 1,800 euros, the maximum monthly repayment banks typically accept falls between 630 and 720 euros. This figure includes all active loan repayments, not just the mortgage.

The first practical step before proceeding with a home purchase is to calculate your current debt-to-income ratio and the ratio that would result from the new mortgage repayment. If you have an active car loan, personal loan or other credit commitments, these all enter the calculation. In many cases, paying off small outstanding loans before applying for a mortgage significantly improves the ratio and increases the chances of approval.

Professional stability: what banks really value

The employment contract is one of the factors carrying the most weight in the risk assessment of an individual mortgage application. An employee on a permanent contract with a stable company, with regular income and a consistent professional track record, is a profile banks analyse with far greater confidence than a self-employed worker with variable income, even if the income levels are comparable.

For employees on permanent contracts, the situation is the most favourable. Banks typically request the last three payslips and the previous year's tax return. For those on probationary periods or fixed-term contracts, approval is more difficult but not impossible: some banks accept renewable fixed-term contracts with at least two years of active tenure.

For self-employed workers and sole traders, the situation is more complex. Banks generally require tax returns from the last two to three years and evidence of stable or growing income throughout that period. Highly variable or declining income is viewed with caution. The ideal for anyone who is self-employed is to have at least two years of stable registered activity before advancing to a mortgage application.

Credit history: building a strong financial reputation

Credit history is another decisive factor in bank assessment. The Bank of Portugal maintains the Central Credit Register, which records all active loans and the payment history of every individual. Before applying for a mortgage, it is worth checking your record in this database to understand exactly what the bank will see.

A good credit history, with payments always made on time and no incidents, is a valuable asset in the bank's analysis. A history with payment delays, even historical ones, raises questions the bank will want to clarify. More serious incidents, such as loans referred to legal proceedings or listings on debtor registers, can block approval or require considerably more effort to overcome.

For those who have never had credit, the absence of a credit history can be an unexpected obstacle. Paradoxically, having a small active loan managed impeccably is better than having no record at all. Credit cards used in moderation and paid in full every month are a straightforward way to build a positive track record.

The deposit: how much equity you need

In Portugal, banks generally finance up to 90% of the property value for permanent primary residences for buyers under 35, and up to 80% for other profiles. This means that to buy as a sole applicant, you need at least 10% to 20% of the property value in your own funds, plus transaction costs which typically run at between 6% and 8%.

For a sole buyer, the deposit is frequently the biggest practical obstacle. Saving it requires discipline and time, and it is one of the factors that most influences the right moment to buy. Proceeding before having the necessary deposit frequently leads to mortgage applications being refused or approved on unfavourable terms.

A deposit higher than the minimum required is, for a sole buyer, a strategic advantage. It reduces the amount financed, lowers the monthly repayment, improves the debt-to-income ratio and sends the bank a clear signal of savings capacity and responsible financial management. If your situation allows, saving for a little longer to reach a deposit of 25% or 30% can result in significantly better mortgage conditions.

Alternatives to a guarantor worth knowing about

A guarantor is additional security that the bank requests when it considers the borrower's profile has weaknesses that need to be compensated. For those buying alone who want to avoid a guarantor, there are alternatives that can address this need.

Credit insurance as a substitute for a guarantor

Some banks accept specialist credit insurance as an alternative to a guarantor. These policies cover the bank in the event of the borrower defaulting, functioning similarly to a guarantor but without the personal and relational implications that a guarantor involves. The cost of this insurance varies depending on the loan amount and term, but it can be a viable solution for those with a solid financial profile who do not want to involve third parties in the process.

A mortgage on another property as additional security

If the buyer, or a family member, owns another property free of charges, this can be used as additional collateral in the mortgage, replacing the function of a guarantor. This option is particularly interesting when the property being purchased has a value that would require a high loan-to-value ratio, and the additional property used as security reduces the risk perceived by the bank.

Improving the profile before applying

In many cases, the best alternative to a guarantor is simply to improve the financial profile before proceeding. Increasing the deposit, reducing active loans, consolidating professional stability and waiting for income to grow are strategies that, combined, can transform an application that would be refused without a guarantor into one that is approved on favourable terms.

The importance of comparing proposals from multiple banks

A common mistake made by home buyers, particularly those buying alone, is going to their usual bank, receiving a proposal and accepting it without comparing. Mortgage conditions vary significantly between banks, and the difference between the best and the worst proposal can represent tens of thousands of euros over the loan term.

Comparing proposals from at least three to four banks is a practice every buyer should follow. Negotiation is possible: banks have room to adjust the spread, the conditions of associated insurance products and other costs when they realise the client is actively comparing the market.

An effective alternative is to use a mortgage broker, an independent professional with access to proposals from multiple banks who can present the client with the best available conditions without them having to contact each institution individually. For a sole buyer whose profile may require more negotiation, the mortgage broker is frequently a valuable ally.

Choosing the right property also influences mortgage approval

One aspect many buyers do not consider is that the choice of property directly influences the likelihood of mortgage approval. Banks carry out an independent valuation of the property before approving the financing, and if the valuation comes in below the purchase price, the bank finances based on the lower figure, requiring the buyer to cover the difference.

Buying alone with a tighter budget means this gap between valuation and purchase price can have a far more significant impact. For an individual buyer, choosing properties with prices aligned with real market value, supported by a rigorous market analysis, is even more important than for a buyer with two incomes.

This is where the support of an experienced property consultant makes a concrete difference. Someone who knows the local market well can identify properties with a good relationship between sale price and bank valuation, reducing the risk of unpleasant surprises during the mortgage approval process.

The Engel & Völkers team works regularly with individual buyers, understanding the specific challenges this profile faces in the mortgage process. Identifying well-priced properties relative to their market value is an integral part of the service they provide to those buying a home for the first time or proceeding through the process alone.

Planning the purchase in advance: what to do in the months before proceeding

The difference between a mortgage approval with good conditions and one with mediocre conditions or an outright refusal is frequently determined by what the buyer did in the six to twelve months before submitting the application. This preparation period is as important as the application process itself.

During this period, the buyer should: check and address any irregularities in the credit register; pay off small outstanding loans that are compromising the debt-to-income ratio; avoid taking on any new credit; maintain regular documented monthly savings, which demonstrate financial management capacity; and consolidate professional stability, avoiding changes of employer or employment regime close to the application date.

Additionally, it is worth obtaining mortgage pre-approval before beginning to look at properties seriously. Pre-approval is not a definitive bank commitment, but it is a reliable indication of the amount available and the likely conditions, which allows properties to be searched within a real budget and avoids the frustration of finding the right property only to discover that the mortgage is not approved on the expected terms.

Buying alone does not mean proceeding without support

Buying a home as a sole applicant is a demanding project, but one that is entirely achievable with the right preparation and the right partners. Financial independence and the ability to sustain a mortgage without a guarantor are achievements that many individual buyers reach every year in Portugal.

The Engel & Völkers Market Study confirms that the Portuguese property market continues to offer real opportunities for individual buyers, particularly in the areas with greater liquidity and in the property types most sought by this buyer profile. Understanding where those opportunities lie, how to position the mortgage application for the best chances of approval and how to negotiate the right property at the right price are the three variables that determine the success of this process.

Having alongside a team that knows the market, that regularly accompanies individual buyers and that knows how to guide each stage of the process is the difference between proceeding with confidence and proceeding blind. If you are thinking of buying your property and want to understand the concrete options available for your profile, speak to the Engel & Völkers team and start the process with the right information from the very first step.

Frequently asked questions

Is it possible to buy a home alone on a low income, or is a minimum income required?

There is no legally established minimum income for accessing a mortgage, but in practice the income must be sufficient to sustain the repayment without exceeding the debt-to-income limits banks apply. With a lower net monthly income, the approved mortgage amount will be proportionally smaller, meaning the available budget to buy decreases. In these cases, the most effective strategy involves maximising the available deposit to reduce the amount to finance, choosing a property suited to the real budget and, if possible, waiting for income to grow before proceeding. In some situations, housing support programmes for young people or lower incomes can also broaden access to credit on more favourable terms.

What happens if the mortgage application is refused? Can I try again?

Yes, a mortgage refusal is not final. What is important is to understand the reason for the refusal, which the bank is required to communicate, and to work specifically on that factor before trying again. If the refusal was due to a high debt-to-income ratio, paying off other loans or saving towards a larger deposit are the paths forward. If it was due to professional instability, waiting a few months with the same employment arrangement can change the assessment. If it was due to a negative credit history, time and the resolution of any pending situations are the answer. A refusal at one bank also does not prevent applying at others: each bank has its own criteria and what is refused at one institution may be approved at another.

How does the pre-approval process work and how long does it take?

Mortgage pre-approval is a process through which the bank analyses the potential buyer's financial profile and issues an indication of the maximum financing available and the likely conditions, without there yet being a specific property to finance. The process involves submitting financial documentation, such as payslips, the previous year's tax return and bank statements, and typically takes one to two weeks for a response. Pre-approval has a limited validity, generally between 30 and 90 days, and is not a definitive guarantee of final approval, which still depends on the specific valuation of the property. It is, however, a very useful reference for knowing what budget to work with when searching for a property.

What difference does the mortgage term make to the monthly repayment and the total cost?

The mortgage term has a very significant impact on both the monthly repayment and the total cost of the loan. A longer term reduces the monthly repayment but increases the total cost because interest is paid over a longer period. A shorter term increases the monthly repayment but substantially reduces the total cost. For a sole buyer with a tighter debt-to-income ratio, the temptation is to choose the longest possible term to keep the repayment as low as possible. This may be the necessary choice in the moment, but it should be accompanied by a strategy of partial early repayments when income allows, in order to reduce the total cost of the loan over time. In Portugal, the current maximum mortgage term is 40 years, though banks tend to set a limit that ensures the loan is repaid before the borrower reaches 75 or 80 years of age.

Can I use a pension savings plan or other savings as part of the deposit?

Yes. Pension savings plans, known as PPR in Portugal, are one of the most widely used savings products in the country, and their value can be included in the own funds that serve as the deposit for a home purchase. In the case of early redemption before retirement age, there may be tax implications that are important to understand in advance. Other savings products, such as term deposits, investment funds or savings certificates, are equally valid as evidence of own funds. What banks want to see is that the buyer has sufficient liquidity to cover the deposit and transaction costs without having to liquidate all their assets, which would be interpreted as an absence of a financial safety net.

Is there any advantage to having had an active bank account for several years at the bank where you apply for the mortgage?

Having a long-standing banking relationship with the institution where you apply can be an advantage, though it is not decisive. Banks value clients with a history at the institution because they have access to more information about the person's financial behaviour: account movements, regular savings, other products held. This information can compensate, in part, for the absence of certain elements the bank would typically request. However, this advantage rarely justifies accepting less favourable mortgage conditions simply to stay with the usual bank. Comparing proposals from multiple institutions remains the best strategy for securing the best possible conditions.

What tax benefits are available to first-time buyers in Portugal?

The tax benefits associated with buying a primary residence in Portugal have varied over time in line with prevailing policies. Among the most relevant for first-time buyers, exemption from or reduction in the Municipal Property Transfer Tax applies to properties up to a certain value when the purchase is for permanent primary residence, with limits that are periodically updated. Young buyers under 35 benefited, in 2024 and 2025, from exemption from this tax and stamp duty under certain conditions, and it is important to verify whether these measures remain in force at the time of purchase. The deduction of mortgage interest from personal income tax has been progressively reduced over the years and its current framework should be confirmed with an accountant or the Tax Authority, as the conditions may have changed since this article was published.