Do you need help to buy your first home? If you are young or have minors in your care, you have another ally: ICO guarantees. The new ICO guarantees for home purchases provide support for those who want to be homeowners but do not have savings for a down payment on the home .
What are ICO guarantees?
ICO guarantees are a line of financing of 2.5 billion euros approved by the Government through the Official Credit Institute (ICO), hence its name. Its objective is to facilitate the purchase of housing for people under 35 years of age and families with dependent minors.
To buy a house, most banks require a down payment equivalent to 20% of the total value. If we add to this the tax and bureaucratic costs, the initial outlay rises to 30% of the final value. That is to say, if you want to buy a house valued at 150,000 euros, you must have saved a minimum of 45,000 euros.
This level of savings makes it difficult for many young people to access housing . Therefore, these ICO guarantees aim to finance that first disbursement, known as the mortgage down payment.
How do ICO guarantees for housing work?
ICO guarantees for home purchases seek to finance a range of 20% to 25% of the total value of the transaction, coinciding with the percentage typically required by banks. - If the home has an energy rating of D or higher, the maximum amount may be 25%.
With this support, the Government seeks to facilitate that financial institutions cover 100% of the cost, allowing buyers to have only the 10% necessary to cover additional expenses, such as taxes, notary and registration.
To continue with the example given above, if you want that 150,000 euro home and you request one of these ICO guarantees, the Government could grant us between 30,000 euros – 20% – and 37,500 euros – 25% – while you would have to have 15,000 euros saved for additional expenses.
However, this is neither a grant nor a subsidy, it is a loan. In this way, you will have to pay back the 20% or 25% that the Government has lent you, plus the indicated interest.
How much is the aid?
The aid approved by the Executive amounts to 2.5 billion euros in total. An amount with which they hope to facilitate access to housing for 50,000 people.
The credit line per person is not specified, as it will depend on each case and the homes requested for purchase. However, if the Government's calculations are followed, to finance 20% of 50,000 homes, the average amount for each one should be 250,000 euros.
For you, the aid will be between 20% and 25% of the principal of each mortgage under the same conditions as the loan to buy the house you have obtained.
Who can request an ICO guarantee for a mortgage?
Those interested in ICO guarantees for home purchases must meet certain requirements.
- Be under 35 years old or have minors in your care.
- Have an individual income of no more than 37,800 gross euros per year.
- If the property is to be purchased by two people, the joint gross income must not exceed 75,600 euros.
- This limit will be increased by 0.3 times the IPREM (2,520 gross euros per year) for each dependent minor and, in addition, in the case of a single-parent family, the limit may be increased by an additional 70%.
- The buyer's net worth cannot exceed 100,000 euros.
- Not own another property (with some exceptions).
As for the solvency of those who will request these lines of credit, no details have been given. That is, it is not known whether a minimum annual income is required.
Other requirements and conditions of the guarantees
In addition to the requirements we have already mentioned, these ICO guarantees for the purchase of housing also have more fine print, which should be known if you are interested in applying for them:
- The term of the guarantee managed by the ICO will be a maximum of 10 years from the date the transaction is formalised, regardless of amortisation. This means that the 20% will have to be repaid in a maximum of 10 years.
- During that same period, 10 years, the home must also be the habitual residence and cannot be rented, except in certain circumstances.
- Applications can be submitted until December 31, 2025. The agreement can be extended for two more years.
When can guarantees be requested?
At this time, banks are negotiating with the Executive the remaining conditions for offering this type of mortgage.
Only the final deadline is known, which in principle is until December 31, 2025. However, depending on when these mortgages guaranteed by the ICO become available, the deadline may be extended.
How to apply for an ICO guarantee for housing?
At the moment, it is not known how these guarantees will have to be requested. It is likely that it will be directly through the associated entities that offer this type of mortgage. However, it is also likely that some additional procedures will have to be carried out with the administration itself.
