One of the biggest challenges in Spain’s housing market is the difficulty millions face in purchasing a property, particularly among groups such as young people, families with children or dependent relatives and those with limited financial resources.
Macroeconomic, labour and social conditions, along with the need for substantial savings to secure a mortgage, a shortage of housing to meet growing demand and rising property prices, all create significant barriers for those hoping to move away from renting.
To help mitigate these challenges, various types of grants are available for home buyers. In this article, we explore the support options you can access in 2025 if you are a resident in Spain.
What do home-buying grants consist of?
There are various financial incentives designed to support the buying and selling of property, typically aimed at groups in need of greater protection.
The home-buying grants available are:
- Direct aid in the form of a guarantee: For example, the 20% mortgage guarantee for young people and large families, which was announced in May 2023 but not implemented until late 2024 due to delays in regulatory development.
- Direct aid in the form of reductions: These include reductions in certain taxes, such as the Tax on Legal Documents (AJD) and the Property Transfer Tax (ITP).
- Mortgage payment grants: Designed to ease the financial burden on those repaying a mortgage loan, these grants help mitigate the impact of rising interest rates that could threaten personal or family finances and the ability to meet monthly payments.
In this way, there is support available both for accessing home ownership and for maintaining it during particularly challenging economic periods.
Grants for young home buyers
Several state grant schemes are available for home buyers in 2025, provided they meet the requirements. The main categories include support for young people and large families, offered under the State Housing Plan 2022-2025.
For young people up to the age of 35, the primary grant scheme is a direct state subsidy of up to €10,800, capped at 20% of the property's purchase price.
Requirements for home-buying grants for young people
This grant is aimed at towns or population centres with 10,000 inhabitants or fewer. To qualify, applicants must meet certain requirements:
- The price of the property cannot exceed €120,000
- It must be located in a town with a population of up to 10,000 inhabitants.
- The property must be used as a habitual and permanent residence for a minimum period of five years.
- To qualify for this grant, you must not be the owner or usufructuary of any other property in Spain.
- Your household income must not exceed three times the Public Indicator of Multiple Effects Income (IPREM), which is €25,200 per year in 14 payments. This limit increases to four times the IPREM (€33,600 per year) for individuals with disabilities, and five times the IPREM (€42,000 per year) for those with severe disabilities.
If you qualify for the first home purchase grant, it is a regionally managed subsidy, meaning you will need to contact the relevant authority within your autonomous community to apply.
Large family grants
The main grant for large families purchasing a home consists of a discount on the Property Transfer Tax (ITP) when buying a second-hand property. For new homes, VAT or IGIC (in the Canary Islands) will apply instead.
For example, in the Community of Madrid, large families benefit from a reduced ITP rate of 4%, compared to the general rate of 6%, provided certain conditions are met. In the Canary Islands, large or single-parent families purchasing a primary residence enjoy an ITP reduction of 1%, down from the usual 6.5%, subject to compliance with specific economic criteria.
It is important to note that the ITP is a tax managed by the autonomous communities and the applicable rate ranges from 6% to 11%, with a few exceptions where lower rates apply (such as in the Community of Madrid, Navarre and the Canary Islands).
Each autonomous community has the authority to set its own ITP reductions for large families, single-parent families, etc., in relation to the general rate, as well as adjust the specific requirements.
Additionally, there are various deductions for large families in Personal Income Tax, which can be further enhanced by regional regulations. For the 2024 tax year, the general deduction for large families is €1,200 per year (equivalent to €100 per month), while for special large families, this deduction increases to €2,400 per year (a 100% increase).
Continuing with the 2024 Personal Income Tax, for each child who is part of a large family and exceeds the minimum number of children required for this status, the above amounts can be increased by up to €600 per year.
Additionally, more than one person may be entitled to the deduction for the same large family. In such cases, the amount will be prorated equally among all eligible individuals, unless the right to the deduction is transferred to one person, who will then receive the full amount.
Similarly, there is a deduction for legally separated or unmarried ascendants with two children who are not entitled to receive annual alimony payments (single-parent families with two children), as well as for ascendants or descendants with disabilities. These deductions are also part of the Personal Income Tax framework.
It is also important not to overlook potential local property tax (IBI) bonuses for large families, which may vary depending on the town or city.
ICO loans for young people and large families
Another form of aid available is the option of receiving a 20% mortgage guarantee for the purchase of a first home by young people and families with minors in their care.
This means you can apply for a loan covering 20% of the property's price, which is guaranteed by the State to help with the down payment.
This aid makes it easier to meet the portion of the home price typically required by financial institutions when granting a mortgage, a target that can be a difficult savings goal for many.
As explained by the Government, these guarantees are funded by the Ministry of Transport, Mobility and Urban Agenda budget and are designed to "facilitate access to the necessary financing for acquiring a first home in Spain for groups who, while financially solvent, lack sufficient savings."
What should you take into account when requesting an ICO loan?
Firstly, the guarantees are available to young people up to 35 years of age at the time of formalising the mortgage, as well as families with minors in their care (with no age limit).
Both young people and families with minors must purchase their first permanent home in Spain and meet the specific requirements for this guarantee programme. In very limited cases, it may be possible to benefit from these loans if you already own a property in Spain.
In any case, individual income must not exceed €37,800 gross per year (4.5 times the Public Income Indicator [IPREM by its acronym in Spanish). If two people are purchasing the property together, the income limit will be doubled.
There are also improvement factors based on the number of children and whether the family is single-parent. For each dependent child, the income limit will be increased by 0.3 times the IPREM (equivalent to €2,520 gross per year). Additionally, for single-parent families, the limit may be increased by an extra 70%. Furthermore, the guaranteed person's assets will be capped at a maximum of €100,000.
On the other hand, if the property has a minimum energy rating of D or higher, up to 25% of the loan principal may be guaranteed.
The period for formalising mortgages covered by this guarantee scheme will end on 31 December 2025, with the possibility of a two-year extension depending on demand and economic conditions.
The loan to be guaranteed may be for up to 100% of the lower value between the appraisal value and the purchase price of the home.
Finally, it is important to note that this guarantee will last a maximum of 10 years, regardless of the loan repayment period or whether there is a grace period. Additionally, the Ministry will share up to 20% of the risk of the full principal of each mortgage with the lending institution on equal terms.
Mortgage payment benefits in 2025
In addition to all of the above, the 2022 Code of Good Practice measures have been renewed for 2025 to assist those who already have a mortgage and are facing the effects of rising interest rates, though with certain limits.
Specifically, the application period for these measures has been extended until 31 December 2025 or until May 2026 for individuals residing in areas affected by the flash floods of October last year.
These measures are designed to mitigate the effects of inflation on citizens with mortgage loans. As a result, some of the provisions will be phased out this year due to the economic slowdown.
Here are the requirements to be eligible for the 2025 Code of Good Practices:
- The programme targets individuals who have loans or credits secured by a mortgage on their primary residence or the non-debtor mortgagor, with a purchase price not exceeding €300,000, as established up until 31 December 2022.
- The income threshold for eligibility for mortgage aid in 2025 will remain at €38,000 gross (4.5 times the IPREM, the same as in 2024). Furthermore, the family unit must have experienced a “significant change in its economic circumstances” (in terms of the effort to access housing), or “family circumstances of particular vulnerability” must have arisen. Another requirement is that the mortgage payment must be higher than 30% of the net income of the entire family unit.
People who meet these requirements will be able to access the following measures:
- Novation of mortgage loan
On one hand, it is possible to extend the repayment period by up to a maximum of 7 years, without exceeding a total period of 40 years from the date the loan was granted. However, the extension of the period cannot result in a reduction of the monthly instalment below the amount that was being paid as of 1 June 2022.
Another option is to establish, through a total or partial grace period for the principal, the monthly instalment to match the amount that was paid on 1 June 2022, or the amount of the first instalment for loans formalised after that date. This can be set for 12 months from the novation. The unamortised principal will accrue interest at a rate that results from applying a 0.5% reduction to the net present value of the loan.
These two measures can be used together.
- Changing from a variable rate mortgage to a fixed rate mortgage
The Code of Good Practices also includes the option to convert the initially agreed interest calculation formula from a variable to a fixed rate, based on the fixed rate offered by the lending institution.
However, as of 31 December, the benefit of not paying interest or commissions for the total or partial early repayment or amortisation of mortgage loans and credits at variable interest rates – as well as for converting a mortgage from a variable to a fixed rate – expired.
If you wish to benefit from any of these measures, you can use the simulator created by the Bank of Spain (BdE). Simply enter a series of details about your mortgage, income, and family situation to see which benefits you may be eligible for and how to apply.