How much savings you need to apply for a mortgage and what the bank finances

To secure a mortgage in Spain, it's not enough to simply have the traditional 20% deposit. While the general rule states that financial institutions fund up to 80% of the valuation or sale price, notary data shows that actual financing is often lower, and associated costs require a significantly larger liquidity buffer.

The 80% Rule vs. the Reality of Land Registry and Notary Data

In the financial sector, the term LTV (Loan-to-Value) is used to determine what percentage of the property's price the bank will lend you. The usual prudential standard sets a limit of 80% for primary residences and 60-70% for secondary residences or investments. However, this 80% is almost always calculated on the lower of two values: the purchase price agreed in the deposit contract (arras) or the official valuation.

If the valuation is lower than the price agreed with the seller, the institution will grant 80% of that lower valuation, requiring you to provide the difference from your own pocket. Furthermore, official statistics reflect an even more cautious lending policy from institutions.

This means that, on average, buyers signed deeds contributing almost 28% of their own funds just for the deposit, far from the 20% usually assumed on paper.

Cost Breakdown: What You Pay and What the Bank Covers

Since the entry into force of Law 5/2019 regulating real estate credit contracts, banks assume the notary fees for the mortgage, the costs of registration in the Land Registry, the fees of the bank's administrative agency, and the Stamp Duty (IAJD) for the loan. However, all expenses and taxes corresponding to the sale and purchase of the property remain the sole responsibility of the buyer.

• Property Transfer Tax (ITP): applies to second-hand properties and ranges between 6% and 10% of the reference value or the purchase price (whichever is higher), depending on the autonomous community.
• VAT and Stamp Duty (AJD): if you acquire a newly built property, you will pay 10% VAT plus the AJD for the purchase deed (usually between 0.5% and 1.5%).
• Notary and Land Registry fees: corresponding to the purchase deed, these usually total between 800 and 1.500 euros depending on the value of the flat.
• Official valuation approved by the Banco de España: this is the only direct upfront mortgage cost assumed by the buyer, usually ranging between 300 and 550 euros.
• Purchase administrative agency fees: around 300 to 500 euros for processing taxes and registration.

Illustrative Numerical Example: The Money Needed for a 200.000 euros Flat

To understand the exact amount you should have available in your current account before formalising the transaction, let's analyse a practical case representing a second-hand property worth 200.000 euros in a community with an ITP of 8% (such as Cataluña, Galicia or Andalucía in their mid-range brackets):

Concept	80% LTV Scenario	Average Notary Scenario (72.3% LTV)
Purchase Price	200.000 €	200.000 €
Loan granted by the bank	160.000 €	144.600 €
Own funds deposit	40.000 € (20%)	55.400 € (27.7%)
Property Transfer Tax (ITP 8%)	16.000 €	16.000 €
Notary, Registry, Administrative Agency, and Valuation (estimated)	2.500 €	2.500 €
Total upfront savings required	58.500 €	73.900 €

As the table reflects, the total capital needed is not 40.000 euros (the initial 20%), but rather in a range between 58.500 and 73.900 euros, representing between 29% and 37% of the property's total value.

Interest Rates, Euribor, and Repayment Capacity

Having savings is not the only requirement: the bank will analyse your debt-to-income ratio or DTI (Debt-to-Income). As a general guideline recommended by the Banco de España, your monthly mortgage payment combined with your other debts should not exceed 30-35% of your stable net monthly income.

In this analysis, the evolution of financing costs is crucial. In agosto de 2024, the 12-month Euribor stood at 3.166%, recording a year-on-year decline of 0.907 points compared to 4.073% in the same month of the previous year. Likewise, INE data for julio de 2024 reflected the signing of 36.260 mortgage loans on properties (+23.5% year-on-year), with an average financed amount of 151.944 euros and an average initial interest rate of 3.17%.

Regarding the chosen modality, the National Institute of Statistics confirmed in junio de 2024 that 57.4% of new home loans were contracted at a fixed rate and 42.6% at a variable rate, with average initial rates of 3.44% and 3.06% respectively. Opting for a fixed or mixed rate allows for stabilising the payment and accurately forecasting that 35% long-term debt limit.

Ways to Buy a Property if You Don't Have the Estimated Savings

When the volume of available liquidity falls below 30% of the desired property's price, there are legal and financial alternatives to bridge that gap:

1. Public guarantee lines (ICO and regional): official programmes designed for young people under 35 and families with dependents that guarantee up to 20% of the amount not covered by traditional banking, allowing up to 100% financing of the purchase or valuation price.
2. Off-plan purchase with deferred payments: in new build developments, the deposit is split during the 18 or 24 months of construction through monthly instalments, making it easier to accumulate savings as the work progresses.
3. Double mortgage guarantee: providing a second property free of charges (usually from direct relatives) to guarantee that initial 20%, releasing that charge once that part of the loan has been repaid.