Hungarian Central Bank Lowers Required Down Payment for First-Time Home Buyers in Budapest

Published: December 15 2023

The Hungarian Central Bank has recently made changes to the regulations regarding required down payments for first-time home buyers. From January 2024, young home buyers under the age of 41 will only need to provide a 10% down payment for their mortgage, as long as their bank approves. This change aims to fulfill the government's promise of making housing more accessible for young people.

Starting from January 2024, first-time home buyers under the age of 41 can obtain a mortgage with a down payment of only 10% of the property's value, if approved by their bank. Previously, the minimum down payment was 20%. This change allows young home buyers to enter the housing market with a lower financial burden.

In addition to the age requirement, there are certain conditions that must be met in order to qualify for the reduced down payment. The borrower and any co-borrowers must not have owned a property with a ownership share exceeding 50%. They are also not allowed to own any property that is encumbered by a legally-based usufruct right. The eligibility of the property and the borrower's declaration will be verified by the lending institution based on written statements and information from the land registry.

The new regulations also allow for an increase in the maximum loan-to-value (LTV) ratio. From January 2024, young home buyers and co-borrowers can receive a mortgage loan up to 90% of the property's value for construction or purchase purposes. However, banks are still able to set higher down payment requirements based on individual circumstances, such as the borrower's income and the specific property.

This change in required down payments is expected to have a significant impact on the mortgage market in Hungary. It will likely lead to banks offering mortgages with a lower down payment requirement for young home buyers. However, the actual down payment percentage may vary depending on the bank and the borrower's financial situation. It is important for potential home buyers to consult with different banks to compare their options and find the best mortgage terms for their needs.

In conclusion, the Hungarian Central Bank's decision to lower the required down payment for first-time home buyers aims to make housing more accessible for young people. With a reduced financial burden, more individuals will have the opportunity to enter the housing market and fulfill their dreams of homeownership.

What changes have been made by the Hungarian Central Bank regarding down payments for first-time home buyers in Budapest? The Hungarian Central Bank has modified the regulations regarding down payments for first-time home buyers in Budapest. Starting from January, young individuals buying their first home will only need to present a down payment of 10% of their housing loan, if their bank approves.

What is the current requirement for down payments for first-time home buyers in Budapest? Currently, banks in Budapest can provide residential loans up to a maximum of 80% of the property's market value. This means that home buyers are required to contribute a minimum of 20% down payment.

When will the changes in down payment requirements for first-time home buyers in Budapest take effect? The changes in down payment requirements will take effect from January 2024.

What is the age limit for customers and co-borrowers to be eligible for the increased loan amount? Customers and co-borrowers who have not yet reached their 41st birthday will be eligible for the increased loan amount for the purchase or construction of residential properties.

What is the maximum loan amount that can be provided for the purchase or construction of residential properties in Budapest? From January 1, 2024, the loan amount for customers and co-borrowers who have not yet reached their 41st birthday can reach up to 90% of the value of the residential property.

Are there any additional requirements to be eligible for the increased loan amount? In addition to the age requirement, it is also necessary that the borrowers do not have a stake of 50% or more in the financed property, or only own a property that is encumbered with a usufruct right based on legislation. The lending institution will verify this based on the written statements and property registration data provided by the customer or co-borrowers.

Will banks be obligated to provide loans with a down payment of only 10% for first-time home buyers in Budapest? No, banks are not obligated to provide loans with a down payment of only 10%. While the new regulation allows for a lower down payment, it is still up to the individual banks to determine the specific down payment requirement based on factors such as the customer's income and the property being financed.

What is the definition of a residential property according to the regulation? According to the regulation, a residential property is defined as a property registered or awaiting registration in the property register as a residential house or apartment that meets the conditions for habitation, together with the accompanying land.

Is there any other financial support available for first-time home buyers in Budapest? Yes, in addition to the changes in down payment requirements, the government has introduced the "CSOK Plusz" program, which provides additional financial support for first-time home buyers in Budapest.