Getting a Mortgage in Portugal: A Complete Guide for Foreign Buyers

Dreaming of owning a little slice of Portugal — maybe a sunny apartment overlooking the Algarve coast, a stone cottage in the Alentejo, or a city apartment in Lisbon? The good news is that getting a mortgage in Portugal is absolutely possible for foreigners. The process is more straightforward than you might think — as long as you understand how Portuguese banks work, what paperwork you’ll need, and what kind of deposit to expect.

Since 2016, Portugalist has helped countless expats and future residents turn their Portuguese property dreams into reality. Whether you’re a retiree, a digital nomad, or simply someone ready for a lifestyle change, this guide will walk you through every step of the mortgage process in plain English — no banker-speak required.

Can Foreigners Get a Mortgage in Portugal?

Yes! Foreigners can buy property and apply for mortgages in Portugal. You don’t need to be a Portuguese citizen or even a resident, though residents (people living in Portugal) will typically get better terms.

Here’s how it breaks down:

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• Residents (people legally living in Portugal) can usually borrow up to 80–90% of a property’s value.
• Non-residents (those living abroad) can borrow around 65–75%.
  This means you’ll need a 20–35% down payment, depending on your residency status and the bank.

It’s important to note that foreign banks almost never lend on Portuguese properties. Even if your main bank is in the UK, US, or Canada, they’ll likely decline to finance an overseas property. You’ll need to go through a Portuguese bank — and the good news is that most major ones have English-speaking mortgage teams used to working with expats.

Popular banks for foreigners include Millennium BCP, BPI, Novobanco, Santander Portugal, CGD, and UCI (a lender specialising in expat mortgages).

If you’re new to the country or prefer extra guidance, a mortgage broker can be a huge help. They can compare offers across banks, explain the fine print, and make sure your documents meet each lender’s requirements.

Understanding Loan-to-Value (LTV) and Deposits

Portuguese banks determine how much you can borrow using something called the Loan-to-Value ratio (LTV).

Here’s what it means: If a property is worth €300,000 and the bank offers a 70% LTV, they’ll lend you €210,000, and you’ll need to provide a €90,000 deposit.

In Portugal:

• Residents can often borrow up to 80–90% of the property’s value (so a 10–20% deposit).
• Non-residents are usually limited to 65–75%, meaning a 25–35% deposit.

Example:
If you have a €50,000 deposit:

• As a resident, you could buy a property worth up to roughly €250,000.
• As a non-resident, your budget would be closer to €166,000.

If you’re a young Portuguese resident (aged 18–35), some government-supported programs even allow 100% financing, but these are designed for locals, not foreign buyers.

How Much Can You Borrow? (Debt-to-Income Ratios)

Portuguese banks assess not just your savings but also your income and existing financial commitments.

They use something called a debt-to-income ratio (DTI) — a fancy way of saying that your fixed expenses, including the new mortgage, can’t exceed roughly 35% of your net income.

Here’s what that looks like in practice: If you earn €3,000 per month after taxes, your total monthly financial obligations (mortgages, loans, credit cards, etc.) can’t exceed about €1,050.

This rule keeps borrowers from overextending, and it applies whether your income is from employment, self-employment, pensions, or other verified sources.

Foreign income is accepted, but you’ll need to provide solid proof — such as payslips, pension statements, or tax returns. Rental income from Airbnb or investment properties generally isn’t counted toward affordability (Portugal doesn’t have a “buy-to-let mortgage” category).

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💡 Tip: If your income is in another currency like dollars or pounds, remember that exchange rates can fluctuate. It’s smart to leave a 10% buffer or so when budgeting your monthly payments.

Fixed or Variable Rates — Which Should You Choose?

Portuguese mortgages come in two main flavours: fixed and variable.

• Fixed-rate mortgages lock in your interest rate for a set period — typically 2, 5, or 10 years — meaning your monthly payment won’t change during that time. Some banks even offer fixed rates for the entire term. These are great if you value predictability and don’t want surprises from rising interest rates.
• Variable-rate mortgages are linked to the Euribor, the European benchmark rate, plus a small “spread” (margin) charged by the bank — often between 0.65% and 1.3%. Your payments can go up or down depending on the Euribor. These can be cheaper initially but come with more uncertainty.

For many buyers, the best option is a hybrid: fix your rate for the first few years to keep costs predictable, then switch to variable later if rates drop.

Typical mortgage terms run up to 30 years for non-residents and up to 40 years for residents. However, most banks want the mortgage paid off by age 65–75, so the older you are, the shorter your maximum term will be.

How Long Does It Take?

From start to finish, getting a mortgage in Portugal usually takes six to ten weeks. The timeline depends on how quickly you can gather documents and how busy the bank’s underwriting team is.

Here’s a rough breakdown:

1. Pre-approval: 1–2 weeks — the bank checks your documents and confirms a borrowing limit.
2. Valuation: 2–4 weeks — the bank arranges an inspection to confirm the property’s market value.
3. Final approval and signing: 1–2 weeks — the mortgage offer is issued, and you sign the deeds.

It’s a good idea to apply for pre-approval early — even before you’ve found a property — so you know your price range and can make offers confidently.

What Documents Will You Need?

Paperwork is part of life in Portugal, and getting a mortgage is no exception. Here’s what banks typically ask for:

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• Passport or European ID
• NIF (Número de Identificação Fiscal): your Portuguese tax number — essential for any financial transaction.
• Proof of address: utility bill or recent bank statement.
• Bank statements: usually the last 3–6 months, showing income and spending habits.
• Income proof:
  • Employees: payslips, employment contract, possibly tax returns.
  • Self-employed: business accounts, tax filings, and an accountant’s statement.
  • Retirees: pension statements, investment income, or savings certificates.
• Credit report: non-residents may need to provide one from their home country.
• Portuguese bank account: most lenders require you to open one with them.

Fees and Extra Costs

Buying property in Portugal always involves a few extras beyond the purchase price. Here’s what to expect specifically for mortgages:

You’ll also need to budget for IMT (property transfer tax) and stamp duty on the purchase (0.8% of the property price), as well as optional home or contents insurance.

Step-by-Step Mortgage Process

1. Get Pre-Approved
   Contact a Portuguese bank or broker to find out how much you can borrow. Pre-approval gives you a clear budget before house hunting.
2. Find Your Property
   Optional: Work with a trusted agent or buyer’s agent who knows the local market and can help you avoid overpaying.
3. Make an Offer and Sign the Promissory Contract (CPCV)
   This contract secures the deal before final completion. You’ll usually pay a 10–20% deposit at this stage.
   Ask your lawyer to include a clause stating the sale depends on mortgage approval — it protects your deposit if the bank says no.
4. Submit Your Full Mortgage Application
   The bank reviews your documents and arranges a valuation of the property.
5. Final Approval and Signing
   Once approved, you’ll sign the Escritura (deeds) at a notary. The bank releases the funds, and the property officially becomes yours.

Legal & Practical Tips

• Always hire a Portuguese lawyer (advogado) independent from the seller or estate agent. They’ll check the property’s legal status, debts, and permits.
• Survey the property. Building surveys aren’t mandatory in Portugal, but older homes often hide surprises — from faulty wiring to moisture issues.
• Understand local rules. In some municipalities, the local government has a “right of first refusal” on certain properties. Your lawyer will check this.
• If renting out: short-term rentals require an Alojamento Local (AL) licence — stricter in Lisbon and Porto than in rural areas.

Final Thoughts

Getting a mortgage in Portugal can feel intimidating at first, but once you understand the system, it’s surprisingly accessible — even for foreigners. The key differences from your home country are higher down payments, more paperwork, and slightly longer processing times. But the reward is the chance to own property in one of Europe’s most beautiful and welcoming countries.

Whether you’re looking for a peaceful retirement base, a remote-work haven, or a family home, the Portuguese dream is achievable. Take your time, gather your documents, and work with trusted professionals — and soon, you could be holding the keys to your new life under the Portuguese sun.