Mortgages for Foreign Citizens Buying Property in Spain: Process and Conditions

Mortgages for Foreign Citizens Buying Property in Spain: Process and Conditions

Spain has long been a popular destination for foreigners seeking to purchase a property, whether for vacations, permanent relocation, or investment. With a booming property market and competitive mortgage options, it is relatively straightforward to secure funding as a foreign buyer.

Foreign citizens can apply for mortgages in Spain, and Spanish banks are generally open to lending to non-residents and expats. In 2025, mortgage rates varied between 2.5% and 3%.

Types of Mortgages in Spain:

1. Non-Resident Mortgages:
   Non-residents (those who do not live in Spain permanently) can apply for mortgages, but typically at lower loan-to-value (LTV) ratios. Maximum LTV: Around 60–70% of the property's purchase price or valuation, whichever is lower.

2. Resident Mortgages:
   For foreign citizens legally residing in Spain, banks may offer better terms. Maximum LTV: Up to 80% of the property value.

Conditions for Obtaining a Mortgage in Spain:
To qualify for a mortgage in Spain, foreign buyers must meet several conditions and provide documentation to prove their financial stability. The basic criteria and terms include:

1. Stable Financial Situation:
   Lenders require applicants to demonstrate the ability to repay the loan. In general:
   
   • Monthly mortgage payments should not exceed 30-35% of your net monthly income.
   • Proof of income, such as payslips, tax returns, or bank statements, must be provided.
2. Loan Repayment Term:
   
   • Typically, repayment terms range between 10 and 30 years.
   • The maximum age limit is usually 70 years at the end of the loan term.
3. Down Payment:
   
   • Non-residents must provide a down payment of at least 30–40% of the property value (for an LTV ratio of 50–70%).
   • Residents typically need a down payment of about 20%
4. Interest Rates:
   
   • You can choose between fixed rates (stable payments throughout the term) or variable rates (rates fluctuate based on EURIBOR).
   • Hybrid options with a fixed rate during the first years and variable rates afterward are also available.
5. Additional Costs:
   Mortgage applicants must budget for additional costs typically associated with buying a property in Spain:
   
   • Total Property taxes and fees (around 9–14,2% of the purchase price).
   • Legal fees, notary fees, and property registration fees.
   • Bank fees for the mortgage application (normally 1% of the loan amount).
6. Currency in which the revenue is gained: Some banks don’t give loans or limit the amount for eastern european currencies like BGN, RON or HUF.

Required Documents for a Mortgage Application

To apply for a mortgage in Spain as a foreign citizen, you typically need to provide the following documents:

1. Identification:
   
   • Valid passport.
   • NIE (Número de Identificación de Extranjero): A tax identification number required for all property transactions in Spain.
2. Proof of Income:
   
   • Payslips (if employed) from the last 6-12 months or tax returns (if self-employed).
   • Bank account statements for the past 6-12 months.
   • Employment contract or proof of business ownership.
3. Proof of Financial Situation:
   
   • Existing assets or liabilities (proof of other properties or debts).
   • Credit history (evidence of no defaults in the country of origin).
4. Property Information:
   
   • Purchase agreement or property valuation.

5. Additional Documents for Non-Residents:

   • Proof of residence in your home country.

     The Mortgage Application Process

6. Get a Financial Pre-Approval:
   It’s a good idea to approach banks or mortgage brokers to get pre-approval based on your financial profile. This helps set a clear budget for your property search.
7. Find a Property:
   Once pre-approved, you can begin searching for a property that fits your budget and preferences.
8. Property Valuation:
   The bank will conduct a valuation of the property to confirm its market value.
9. Sign the Mortgage Agreement:
   After the valuation and approval, the mortgage terms will be presented. If you're satisfied, you'll sign the mortgage deed in the presence of a notary.
10. Complete the Purchase:
    The mortgage funds will be issued, allowing you to finalize the property purchase. The deed will also be registered with the Land Registry.

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UPDATE: Bank of Spain Considers Limits on High-Risk Mortgages

The Bank of Spain (BdE) is actively studying the implementation of new restrictions on high-risk mortgages to safeguard the financial system and prevent a potential new housing bubble.

The primary concern is the growing number of mortgages granted with a high loan-to-value (LTV) ratio. These are loans where the amount borrowed exceeds the recommended 80% of the property's valuation. These high-LTV mortgages now account for nearly 12% of all new loans, a figure that has almost doubled since the end of 2023 and marks the highest percentage in six years.

While the Bank of Spain currently assesses the overall risks as "moderate" due to relatively stable lending criteria, the pressure to act is mounting.

The financial sector is watching these developments closely. Some institutions have warned that overly strict regulations could create significant barriers to financing, particularly for younger buyers who already face immense difficulty entering the housing market. Despite this, some banks continue to offer mortgages exceeding 80% LTV, often supported by public guarantees from bodies like the ICO (Instituto de Crédito Oficial).

Implications for foreign-buyer strategies

If limits come into effect, more conservative underwriting will become the norm.

If the regulator signals activation of limits, there may be a surge in origination before the change, creating both opportunities and risks for buyers.

For cash-rich buyers, financing headwinds may shift the competitive dynamic towards those less reliant on high-leverage.

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Sources

• Galiciae.com (2025, November 8). El Banco de España se prepara para poner coto a las hipotecas de alto riesgo

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