State-Backed Youth Housing Guarantee Accounts for €3 Billion in Mortgages Through August
The public guarantee program aimed at facilitating homeownership for young adults has supported 15,300 mortgage contracts in the first eight months of 2025, totaling €3.0 billion in loans, the Bank of Portugal (BdP) reported today. This government initiative has become a significant driver in the nation's housing market, representing 39.6% of all new mortgages for individuals up to 35 years of age.
According to the central bank's statement, these state-guaranteed loans constituted 41.9% of the total mortgage amount contracted by the under-35 demographic during the same period. When measured against the entire market for primary residences, the program was responsible for 21.7% of all contracts and 24.8% of the total credit granted by the financial system through August.
The program, which allows the state to act as a guarantor for up to 15% of a property's transaction value, effectively enables young buyers to secure 100% financing. This circumvents the standard lending rules that typically require a minimum 10% down payment. The policy is targeted at first-time buyers between 18 and 35 years old, for properties valued up to €450,000, and with income limitations corresponding to the eighth IRS bracket.
Demand for the guarantee has been robust. By the end of August, €407 million, or 37.5% of the state's total allocated guarantee fund, had been utilized. In August alone, 2,100 contracts were signed under the scheme, amounting to €416 million. This represented 45.5% of contracts and 47.0% of the mortgage volume for the under-35 age group that month, though it marked a slight decrease of 14.7% in contract numbers compared to July.
The program's adoption shows regional variations. In the Alentejo and Lezíria do Tejo regions, more than half of all mortgages taken by young buyers between January and August included the state guarantee. In the Greater Lisbon area and the Autonomous Region of Madeira, the uptake was lower, accounting for approximately one-third of transactions in this demographic.
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In response to the high demand, the Government recently approved a €350 million increase to the public guarantee fund, raising the total attributable value to €1.55 billion. The decision, formalized in a dispatch on September 18, followed requests from banks that were approaching their initial quotas. The dispatch authorized a €100 million increase for BPI and a €1.8 million addition for Caixa de Crédito Agrícola Mútuo de Mafra, confirming that financial institutions are actively utilizing the program.
The policy objective is to improve access to homeownership for a generation facing affordability challenges. By mitigating the need for a substantial initial deposit, the government aims to stimulate activity in the entry-level housing market and provide a pathway for young professionals and families to acquire property.
The public guarantee scheme is applicable to mortgage contracts signed through the end of 2026, providing a medium-term support structure for first-time buyers. The continued government funding and high uptake from both consumers and banks underscore the program's central role in the current dynamics of Portugal's residential real estate sector.
The initial maximum for the guarantee was set at €1.2 billion, distributed among participating banks. The recent reinforcement confirms the government's provision to increase the total amount if the initial quotas were exhausted, a scenario that has now come to pass.
This measure continues to be a key piece of the government's broader housing strategy, directly addressing the financial barriers faced by young prospective homeowners in a competitive market. Understand policy impacts on your Portugal property plans at realestate-lisbon.com.