Public Guarantee for Youth Home Purchases Reinforced by €350 Million
The Portuguese Government has authorized a second increase in the public guarantee fund designed to facilitate 100% financing for young homebuyers, with the official decree published in the Diário da República this Wednesday. The total allocation for the program, which supports individuals up to 35 years of age in purchasing a primary residence, has been bolstered by an additional €350 million. This follows a report from Jornal de Negócios earlier in the week that anticipated the reinforcement.
This policy initiative was originally established last year with an initial budget of one billion euros and had previously received a €200 million top-up. With this latest injection of funds, the total amount made available to participating banks for the guarantee now stands at €1.55 billion. The government's objective with this measure is to lower the financial barrier for young people entering the property market by covering the portion of the loan typically required as a down payment.
The decree, signed by Minister of Finance Joaquim Miranda Sarmento, grants specific allocations to participating financial institutions. It gives a 'green light' for a €100 million reinforcement of the guarantee amount for the bank BPI, and an additional €1.8 million for the Caixa de Crédito Agrícola Mútuo de Mafra. The substantial remainder of the new funds is intended to “ensure future reinforcement requests that may be submitted by the institutions adhering to the protocol.” This is to ensure the program's continuity and maintain equal access for all participating lenders.
The policy aims to “make viable the concession of credit for own and permanent housing to young people, without prejudice to equal conditions among the participating institutions.” The decision to expand the program is supported by strong uptake data from the Bank of Portugal. According to the central bank, by the end of July, 32.1% of the total state-allocated guarantee had been utilized, corresponding to €348 million in financing.
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This utilization rate, achieved in just seven months, indicates robust demand for the program across the banking system. The report from the Bank of Portugal also suggests that some financial institutions that initially received smaller portions of the guarantee fund may have already exhausted or were close to exhausting their allocations. The new funding is therefore critical to meeting ongoing demand from young buyers across Portugal.
The government's continued financial commitment to this housing policy highlights its importance as a tool to address affordability challenges. By providing a public guarantee, the state effectively reduces the risk for banks, enabling them to offer more favorable lending terms, including the elimination of a down payment requirement, to a demographic that often struggles with the initial capital outlay for a home purchase. This policy is a key component of the government's broader strategy for the housing sector.
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