How to buy a home with ICO Guarantees 2024?

From our Notary Office in Barcelona, we hope it will be helpful for you to learn how to apply for an ICO guarantee 2024.

To buy a house, most of us have to apply for a mortgage because we do not have the full amount of money to purchase it. For this reason, it is necessary to request financing from the bank, but current regulations, except in certain cases, limit the granting of financing to 80% of the appraisal value, in order to avoid situations like those in the past where banks were exposed to high levels of risk and default. Therefore, the buyer of a property must contribute 20% from their savings for the purchase, plus the costs and taxes of the transaction.

This is where ICO guarantees come in. Through the ICO guarantee line 2024, it is possible to finance 100% of the purchase. How? Well, the amount corresponding to that 20% deposit will be financed by the bank, in a similar way to the remaining 80%, but with the caveat that the 20% will be guaranteed by the Instituto de Crédito Oficial. In this way, in case of default by the debtor, the creditor bank will be able to collect it through the payment that the State will make, as it has guaranteed it. Thus, 100% of the property can be financed without increasing the risks for the bank.

The ICO guarantees are designed for young people who are no older than 35 years. In the case of a couple, it is necessary that neither of them has turned 36. Additionally, families with minors in their care can also benefit from the 2024 mortgage aid with ICO guarantees, in this case with no age limit.

In both cases, it will be necessary that it concerns the purchase of their first main residence and that they are residents in Spain.

In addition to those mentioned in the previous point, regarding age, it will be necessary to comply with the following:

• Be natural persons: to apply for the aid, applicants must be of legal age and under 35 years old, except in the case of families with minors in their care.
• Be legal residents in Spain: they must have resided in Spanish territory for the two years prior to the loan application.
• First usual and permanent home: it must be the first acquisition and located within the national territory, not being able to own other homes.
• Be the usual and permanent home: where the purchaser will have their usual residence and that of the family, the home cannot be used for economic activity at the time of formalising the loan.
• Not have CIRBE in default status: at the date of formalising the Mortgage Loan, not be in default on another loan. CIRBE is the Central Credit Register, a database that collects information on loans, credits, guarantees, and securities that each financial institution holds with its clients.
• Asset limit of €100,000: Not to have net assets exceeding €100,000. In the case of two purchasers, the limit applies to each one.
• Income limit: Access to ICO lines is limited by income, depending on the family situation these limits are set as follows, based on a limit of 4.5 times the IPREM.
  • Individuals: €37,800
  • Couples: €75,600
  • Family with one dependent child: €78,120
  • Family with two dependent children: €80,640
  • Single-parent family: the above values increase by 70%

There is a maximum purchase price limit to benefit from the ICO first home guarantee in 2024. This maximum limit will be set by each Autonomous Community and can be consulted in the list of maximum prices applicable by autonomous communities.

In Cataluña, this limit is €300,000. For the rest of the Autonomous Communities, the limit is as follows:

As we have said previously, the financing limit through ICO guarantees 2024 is 20% of the lesser of these two amounts:

• The appraisal value of the property 
• The purchase price of the property, excluding taxes and expenses.

Exceptionally, it may reach up to 25% if the acquired property has an energy efficiency certification with a rating of D or higher.

Furthermore, it should be noted that the approved ICO guarantee line has a budget allocation of 2.5 billion euros.

Firstly, the deadline to formalise the loan with a mortgage guarantee will end on 31 December 2025, although this deadline, depending on demand and the budget allocation, may be extended by two more years, until 31 December 2027.

The duration of the guarantee granted by the Ministry of Housing and Urban Agenda to the financial institution and managed by the ICO will be a maximum of 10 years, starting from the formalisation of the operation, without prejudice to the repayment of the loan.

Regarding the duration of the loan, it must be signed for a period longer than 5 years.

Finally, the acquired property must be intended as the habitual residence of the beneficiary acquiring it with the ICO guarantee for a period of 10 years, limiting the possibility to situations that require a change of residence.

At any bank affiliated with the ICO 2024 guarantee line for young people, it will be possible to apply for the mortgage loan with the 20% ICO guarantee. Gradually, the different banks will join the aforementioned lists.

The credit institution responsible for the operation will provide the necessary documentation and declaration forms that the home buyers must sign. The required documents include:

1. Prove legal residence in Spain during the previous two years, by means of:
   • DNI, NIE or passport
   • Municipal register of residence or equivalent certificate with the start date of residence
2. Where applicable, prove family status, whether it is a single-parent family or not, and the number of children. This can be proven by:
   • Family book or document accrediting registration as a civil partnership (if applicable)
   • Birth certificate of the children (if the family book is not available)
3. Prove that none of the buyers owns another property. This can be proven by:
   • The negative cadastral certificate.
   • Simple note from the Property Registry index service to confirm that they do not own another property.
4. Prove the energy rating of the property to be acquired with the energy certificate issued before or on the date of acquisition of the property
5. Prove the appraisal value of the financed property for contracting the mortgage loan
6. Prove the applicant’s income limit. This can be proven with:
   • The last submitted IRPF tax return
   • Negative certificate from the AEAT
   • Authorisation to the Ministry of Housing and Urban Agenda to consult data from the Tax Agency during the life of the guaranteed loan

As of today, there are mainly a series of tax reliefs to help young people acquire a home. Mainly two, one directly on the purchase, and the second on donations, provided that the donation is intended to acquire a home. We have already discussed all this on our blog, but let us recap both cases, focusing on the case of Catalonia, although the rest of the Autonomous Communities have similar measures.