New Hungarian Legislation Allows First-Time Home Buyers to Pay Only 10% Down Payment

Published: December 15 2023

A new legislation has been published in Hungary that provides favorable regulations for first-time home buyers. The new regulations allow for a down payment of only 10% of the purchase price. However, not all applicants for the Family Home Purchase Subsidy (CSOK Plusz) will benefit from these rules.

To qualify for the lower down payment of 10%, there are a few conditions that must be met. Firstly, the borrower must be under the age of 41 at the time of applying for the loan. This requirement also applies to any co-applicants involved in the loan transaction. This ensures that only young individuals can take advantage of this favorable opportunity. Another requirement is related to the existing properties owned by the borrower and co-applicants. None of them can have a property ownership share exceeding 50%. However, there is an exception to this rule. If the ownership share is based on a legal usufruct right, it can exceed 50% without affecting eligibility for the lower down payment.

Interestingly, there are inconsistencies between the new legislation and the requirements for the CSOK Plusz subsidy. Some applicants may meet the new "debt brake" rule without intending to take out a CSOK Plusz loan. On the other hand, there may be CSOK Plusz applicants who qualify for the subsidized loan but are not eligible for the lower down payment requirement. These inconsistencies can be attributed to two factors. Firstly, the CSOK Plusz requirement specifies that the wife must be younger than 41. In the MNB (Hungarian National Bank) regulation, this requirement also applies to co-applicants, which in the case of the subsidized loan, is typically the husband. Therefore, for CSOK Plusz applicants, the 10% down payment may only be sufficient if the husband is also under the age of 41. There are also significant differences when it comes to the definition of a first joint home. For CSOK Plusz, the property is considered a first joint home if, at the time of application, neither spouse has or had joint ownership in any property. However, the MNB regulation contains completely different requirements on this issue. In the case of CSOK Plusz, the application may still be considered for a first joint home even if one spouse owns a separate property. However, in this situation, the loan amount cannot exceed 90% of the property's value. In conclusion, the new legislation allows for a lower down payment of 10% for first-time home buyers in Hungary. However, the eligibility requirements and inconsistencies with the CSOK Plusz subsidy may affect who can benefit from this favorable rule. It is important for potential applicants to carefully review the requirements and use tools available, such as the Bankmonitor calculator, to understand the implications of applying for CSOK Plusz.

What is the new Hungarian legislation regarding first-time home buyers? The new Hungarian legislation allows first-time home buyers to pay only 10% down payment instead of the usual 20%.

When will the new legislation come into effect? The new legislation will come into effect in January 2024.

Who is eligible to take advantage of the new favorable conditions for first-time home buyers? First-time home buyers who are under 41 years old at the time of applying for the loan, and who do not have a property with a ownership share of more than 50%.

Are there any exceptions to the ownership share requirement? There is an exception for properties with a ownership share of more than 50% if it is under a legal usufruct right.

How does the new legislation relate to the CSOK Plusz program? The new legislation does not align with the requirements of the CSOK Plusz program. There may be applicants who meet the new "debt brake" rule but are not eligible for the favorable loan coverage ratio that the CSOK Plusz program offers. On the other hand, there may be CSOK Plusz applicants who meet the requirements of the program but do not qualify for the favorable loan coverage ratio.

What are the requirements for the CSOK Plusz program in relation to age? For CSOK Plusz applicants, the spouse must be younger than 41 years old. The MNB regulation states that the age requirement applies to both borrowers, which in the case of CSOK Plusz means the husband. Therefore, in order to qualify for the 10% down payment, both spouses must be under 41 years old.

How is the definition of "first joint home" different between the CSOK Plusz program and the new legislation? In the CSOK Plusz program, a property is considered a first joint home if, at the time of the application, neither spouse has had or currently has ownership share in any other property. However, the new legislation has different requirements. According to the new legislation, even if one of the spouses has their own property, they could still qualify for the first joint home requirement. However, in this situation, the loan amount cannot exceed 90% of the value of the property.

How can I calculate the benefits of the CSOK Plusz program for myself? You can use the Bankmonitor calculator to calculate the benefits of the CSOK Plusz program for yourself.