With the real estate market becoming increasingly difficult to access, especially for young people and families, the Spanish government has introduced a new measure to facilitate home purchases: guarantees provided by the Instituto de Crédito Oficial (ICO). This initiative aims to help those with greater financial difficulties in acquiring their first home, covering up to 20% of the property’s price, and up to 25% if the home has an energy certification of D or higher. Below, we explain in detail how these guarantees work, the eligibility requirements, the necessary documentation, and the banks participating in the program.
Eligibility Requirements for ICO Guarantees
The ICO guarantee program is designed to assist young people and families with dependents who meet certain economic and residency criteria. The main requirements are:
Age and Family Situation:
- Young people up to 35 years old.
- Families with dependents, with no age limit for the parents.
Residency:
- Legal residence in Spain for at least two continuous years before applying for the loan.
Income:
- Individual annual gross income not exceeding €37,800 (4.5 times the IPREM).
- For two purchasers, their combined income must not exceed double the individual limit.
- An increase of €2,520 in the income limit for each dependent.
- For single-parent families, the income limit is increased by 70%.
Assets:
- Maximum assets of €100,000 before the purchase.
Property Ownership:
- Not owning another home, with specific exceptions such as inheritance or divorce.
Use of the Property:
- The acquired home must be the primary residence and not used for economic activities.
Banks Participating in the ICO Guarantee Program
Starting April 2024, several banks have signed agreements with the ICO to offer these guarantees. Currently, the following entities are participating in the program:
- Banco Santander
- Ibercaja
- Evo Banco
- Caja de Ahorros de Ontinyent
- Arquia Bank S.A.
- UCI (Unión de Créditos Inmobiliarios)
- Abanca
- Caja Rural de Almendralejo
These institutions facilitate the guarantee application process, allowing beneficiaries to access mortgages covering up to 100% of the property’s value.
Required Documentation and Procedures
To apply for ICO guarantees and the corresponding mortgage, it is essential to meet all requirements and provide the appropriate documentation. Here is a detailed list of what you will need:
Identification and Residency:
- DNI, NIE, or passport for all buyers.
- Municipal certificate of residence.
Family Status:
- DNI, NIE, or passport of dependents.
- Family book or document certifying registration as a domestic partnership.
Declarations and Certificates:
- Statement confirming the property will be the primary residence and not used for economic activities.
- Negative cadastral certificate to verify that buyers do not own another home.
- Purchase contract for the home.
- Energy certificate of the property.
- Property appraisal report.
- Authorization for the ICO to consult data from the Central Credit Register (CIRBE) during the entire loan period.
- Latest income tax return or a negative certificate from the Tax Agency.
- Declaration of compliance with the requirements of Article 13 of the General Subsidies Law.
These documents must be submitted along with the usual ones required for a mortgage application. The guarantee application process starts at a bank participating in the program.
Steps to Buy a Home with ICO Guarantees
- Verify Eligibility: Ensure you meet the age, income, and residency requirements.
- Calculate Your Budget: Use tools like Fotocasa’s mortgage calculator to determine your buying capacity based on your savings and salary.
- Find the Ideal Home: Look for a property that fits your budget and needs, making sure it meets the price limits set for the guarantee.
- Select a Participating Bank: Once you’ve chosen the home, go to one of the participating banks to start the guarantee and mortgage application process.
- Gather the Necessary Documentation: Collect all required documents and submit them to the bank to complete the application.
- Finalize the Purchase: With the guarantee approved, proceed to finalize the home purchase and sign the mortgage.
While ICO guarantees may increase the final cost of the mortgage by up to 25%, they remain a viable option for many who otherwise could not afford homeownership. This program is available until December 31, 2025, with the possibility of a two-year extension.
If you’re considering buying your first home and meet the requirements, ICO guarantees can be an excellent opportunity to facilitate homeownership. At Living Sitges, we are here to help you navigate this process and find the perfect home for you. Don’t hesitate to contact us for more information and personalized assistance!
For more details on buying homes in Sitges and using ICO guarantees, visit our website or drop by our offices.
Article by Living Sitges Real Estate
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