What are the requirements for a mortgage in Spain?

What requirements do the Spanish banks For a mortgage in Spain? We tell you what the criteria of the banks are and what you need to consider.

Mortgage process Spain
Mortgage spain process

The eligibility requirements for a Spanish mortgage differ considerably between banks in Spain or your own country. There are lots of requirements, but we try to bring you up to speed on the main rules of thumb regarding underwriting criteria:

Acceptance criteria for a mortgage in Spain

Foreign buyers often assume that the mortgage process in Spain is the same as in their own country. They are often confronted with the fact that Spanish banks are quite strict. There are many criteria you have to meet. Some of these criteria are definitive (you have to meet them) and some are in a grey area. This means that while something is possible, the Spanish bank will give your case a lower priority. We walk through the main underwriting criteria, starting with your income:

Income requirements for a Spanish mortgage

First and also the most important criteria is that in Spain, a fixed monthly income (preferably from employment) must always be demonstrable. The bank must be able to see that you receive a fixed salary on a structural (monthly) basis for an extended period of time. Why? This gives security for the Spanish bank. They look at the current situation (your last pay slips) and the average of last two years (via your income tax). Income from benefits is practically never accepted by banks in Spain.

For entrepreneurs, of course, this is more difficult. Here, banks look more at your past 3 years. You need to be able to submit at least 2 complete tax returns + annual accounts. In the case of an LLC, Corporation or similar structure, your management fee is taken. Do you also have dividend income or rental income? Then you'll really need to talk to a specialist advisor (Tip: Pedro is happy to help).

Questions on income requirements:

  • Can I apply for a mortgage with a temporary contract?
    You certainly can. You will need a declaration of intent from your employer. In addition, the banks also look at your past 2 years through your tax returns. So your history also matters.
  • What if I start earning more in the future?
    Banks in Spain are very conservative. They never calculate future income in their requirement checks. Not from a higher salary, nor from income from a B&B or business plan. Only your history and now matters.
  • Can I apply with bonuses or rental income?
    Yes, you can. Bonuses may be added to your income, provided they can be shown on your tax return. Income from rentals are assessed as secondary income. This is where rental income is considered minus the mortgage charges on the rental properties, but a correction is applied.

Lastly, banks also have requirements for a minimum income. Do you earn less than €2500 a month? Then few banks will be interested in providing a mortgage and we do not recommend taking out a mortgage in Spain. But income itself is not the most important thing, as you also have expenses. That is why we make calculations on your DTI (dept-to-income ratio). More on that below!

Realise that Spanish banks get a lot of applications. The better your purchase profile and potential for the Spanish bank, the higher you will be on the list. So a bad application will take longer for the bank to consider it and the process will be more laborious.

Income threshold and DTI

In Spain, it is common that you spend a maximum of 35% of joint net income on your gross housing costs. So take into account: This means gross housing costs in your own country and the housing costs of any financing abroad together. This also includes other credits, such as lease contract, credit card debt or alimony obligations.

This is really a hard requirement in Spain and if this percentage is exceeded, a mortgage application in Spain is almost always rejected. We have prepared a sample calculation for you below. However, you can also calculate this yourself via our mortgage indication.

Sample calculation DTI

Type Amount
Income p/month €4.500
Fixed charges p/month €750
Other expenses (e.g. lease contract) €400
Your DTI 25,6%

So you can see in this example that you are under 35%. That's great! But keep in mind that this leaves you with only 9.4% of your income for a mortgage in Spain. And that, in turn, is not that much in this case.

Equity deposit requirement

You may have read somewhere that you cannot finance 100% in Spain. Well, that's right. This is only max 70%. The Spanish bank requires you to put in 30% of the purchase yourself as a non-resident of Spain. In addition, you can't co-finance the buyer's costs with your purchase. These can amount to 10-14% of the purchase price. That means the bank demands to put in a significant amount out of your own pockets.

Spanish banks mortgage business

Age & term requirements

A mortgage in Spain has a maximum term of 25 years for non-residents. Unlike in your own country, the mortgage must be fully repaid before the age of 75. Banks in Spain like to take a big risk aversion when it comes to life expectancy. This means that an applicant aged 55 can only get a mortgage with a maximum term of 20 years as a result. The Spanish bank almost always bases the duration on the oldest person in case you purchase together.

Besides, banks in Spain will not be so quick to issue a mortgage in Spain if you are over 65, as the minimum term is 10 years, in order to spread the repayment. Intermediate repayment is also not very common in Spain, so there are sometimes penalties for this too. Something you definitely need to discuss with Pedro!

At Spanish banks, repayment is standard. Spain therefore only has an annuity mortgage form.

Testing whether you meet the requirements of the banks in Spain?

Then holapedro's mortgage indication is the solution. With this, you will be tested against the requirements and receive a comprehensive financial report detailing your mortgage options in Spain. Vamos!

Start your mortgage calculation

Or rather first ?

Pedro Do I meet the requirements of Spanish banks?

Pedro is at your service

Chat directly with Pedro and ask your questions about your purchase plans in Spain or Portugal. He will gladly show you the way to a successful purchase.