"How much money do you need to have to buy a house?"?"

How much money do you need to have in your account to get a mortgage? This is one of the most common questions among those looking to purchase real estate, especially their first home. Most lending institutions, with rare exceptions, do not provide 100% of the property's value. Therefore, you need to come to the bank meeting with some amount that you can invest in your purchase. Determining the amount you need to save to increase the likelihood of mortgage approval is not so simple. Many factors come into play, from the property's value to your ability to repay the debt. Below are some useful considerations.

Mortgage: average interest rates offered by banks

Before understanding how much money you need to have in your current account to buy a house, it's useful to study the current mortgage market. As mentioned, banks do not provide the entire amount needed to purchase real estate, with rare exceptions. Typically, loans for the purchase of a first home cover 80% of the property's value: this means that if the desired property costs 80,000 euros, then 20,000 euros must be invested from personal funds. It should be noted that the maximum percentage is not a result of the specific desires of lending institutions, but rather a consequence of existing regulations: this is defined in the Unified Banking Code (T.U.B.), approved by the Bank of Italy since 1995.

In this regard, is it possible to get a mortgage for 100%? In fact, there are two alternative options, provided that you meet certain criteria.

Guarantee fund for first housing

The first opportunity to obtain a 100% mortgage is to take advantage of the Housing Guarantee Fund for first-time homebuyers. With this measure, the government acts as a guarantor for 50% of the property's value, allowing for full financing for its purchase. However, to gain access to the fund, certain requirements must be met:

• To be married or to live in a civil partnership for at least two years, with one of the spouses being under 36 years old. Preferential mortgage loans are available for young people.
• being a single parent with minor children;
• to have the right to social housing;
• to choose real estate in Italy that is not considered luxury development;
• Request a loan for an amount not exceeding 250,000 euros.

Bank mortgage loans at 100%

As an alternative, some banks offer the possibility of obtaining a 100% mortgage under certain conditions set by each individual lending institution. But how is this possible, considering that the limit is set at 80% by the Bank of Italy? In this case, banks can deviate from the restrictions established by the Unified Banking Code by using an insurance policy that covers the missing part of the mortgage, that is, the remaining 20%. This, of course, makes the mortgage more expensive due to the additional insurance policy, and to date, there are not many lending institutions that provide this option.

How much money do you need to save to get a mortgage?

After the necessary preliminary explanations about how mortgage loans work, it is important to understand how much you need to save in order to easily obtain financing. You cannot rely solely on the interest provided by the bank, as there are other expenses to consider.

Mortgage application: expenses to consider

As in the previous example, let's assume you want to purchase a property worth 100,000 euros: the bank will likely provide a mortgage for 80%, which is 80,000 euros. Now, it would be a mistake to think that saving just 20,000 euros is enough, as there are other expenses associated with taking out a loan that affect your investment capacity.

• notary fees;
• Application processing fees: these are the costs that the bank requires for reviewing a mortgage application.

Continuing with the example of real estate worth 100,000 euros, if we apply the highest rates, we will get:

• notary fees;
• application processing costs;
• about 300 euros for the expertise;
• approximately 250 euros of substitute tax if this is the first home;
• About 500 euros for insurance and maintenance costs.

Therefore, having savings of 20,000 euros is not enough; you may need at least 23,850 euros to afford a mortgage.

Other expenses that need to be considered

Obviously, when buying your first home, there are other expenses to consider. And although they are not directly related to the bank and the mortgage application, they are still costs that need to be paid upfront at the time of purchase.

For example, if you contact a real estateagency, you need to consider the commission. Additionally, the chosen accommodation is likely to be unfurnished or may require some minor repairs before you can move in. In general, it is recommended to always have around 10,000 euros in your account in addition to your existing savings for the bank, to cover these expenses and handle any unforeseen situations. Again, based on the previous example, it is advisable to have an amount of 33,000 to 35,000 euros in your account.

Mortgage and savings in the account: the most common questions

Planning such an important investment as buying your first home always brings some anxiety. It's not just about the amount of money you need to save before applying for a mortgage, but also about the real possibility of paying off the mortgage over time. But what are the most common questions?

How much do you need to have in your account for a mortgage?

As explained earlier, banks usually lend up to 80% of the property's value, and only in rare cases can you get 100%. Therefore, you need to have at least the remaining 20% in your account. However, you must also consider additional expenses—taking out a mortgage comes with costs, from notary fees to transfer taxes, as well as real estateagency commissions and expenses for furniture and renovations. Therefore, you should have at least 10,000 euros—preferably 15,000—on top of the accumulated amount to secure a loan.

What kind of mortgage can you get with a salary of 1,200 euros?

In general, mortgage payments should not exceed one third of monthly income, as otherwise it can be risky for the bank, which may find itself in a situation where the debt remains unpaid, and it can also be a heavy burden for those who take it on. Therefore, for those with an average income of 1,200 euros per month, the maximum payment is around 400 euros. Depending on the interest rate, whether variable or fixed, one can hope to obtain a mortgage for 80% of the amount of 80,000 or 100,000 euros.

What kind of mortgage can you get with a salary of 2,000 euros?

The reasoning is similar to the case with 1,200 euros, meaning that the mortgage payment should not exceed one-third of the monthly income. In this case, we are dealing with financing with maximum payments of 600/650 euros per month. Depending on the chosen interest rate, whether fixed or variable, one can apply for a mortgage of 80% of an amount ranging from 140,000 to 180,000 euros.

What should the salary be to get a mortgage?

As always, to take out a mortgage, the payment should not exceed about a third of your monthly income. Of course, the amount of the payment can vary significantly depending on the amount of savings you decide to invest in the mortgage: the closer the provided amount is to 80%, the higher the monthly payment will be. As explained in previous examples, a worker with a monthly income of 1,200 euros can expect a mortgage for 80% of the value of 80,000 or 100,000 euros, while someone with 2,000 euros a month can apply for a mortgage for 80% of 140,000 to 180,000 euros. There is no minimum income requirement for obtaining a mortgage; the ability to repay the debt will be assessed based on your economic stability. The minimum loan amount is 30,000 euros.