Buying a home in Portugal with a mortgage: what the bank checks at each stage

Buying a home looks like a simple sequence: search, visit, make an offer, sign a contract and complete. If you need a mortgage, a second sequence runs at the same time. It belongs to the bank, and it has its own rules and deadlines.

If you only start on the mortgage once your offer is accepted, problems show up late. Sometimes after you have already paid a deposit. This article walks through the five stages of a purchase and explains what the bank checks at each one.

How buying a home works in Portugal

A few steps may be new to you. After your offer is accepted, you and the seller usually sign a promissory contract (CPCV, contrato-promessa de compra e venda). It commits both sides to the sale on a future date. You normally pay a deposit (sinal) at this point.

The sale itself happens later, at completion (escritura), when the deed is signed and the mortgage is drawn down. The rules banks follow are set by Banco de Portugal, the country's central bank and regulator.

Stage 1: how much will the bank lend?

The budget you have in mind rarely matches what the bank will lend. The bank does two calculations.

The first is the affordability limit: the share of your monthly net income that goes to loan repayments. Since 1 August 2026, Banco de Portugal asks banks to keep it within 45%. The bank tests your repayment at a higher simulated interest rate, to check you could cope if rates rise.

The second is the LTV (loan-to-value): the share of the property's value the bank will lend. For your main home, the recommended limit is 90%. You pay the rest from your own savings.

If you are self-employed or own a company, one point often surprises people. As a rule, the bank looks at the income you declare to the Portuguese tax authority, not your company's turnover or the money moving through your account. Low declared income means a smaller loan. If your income comes from abroad, the bank will also ask for proof of it, often translated.

Stage 2: view homes within the right budget

A feasibility check before viewings tells you your real ceiling. You save weeks looking at homes the bank will not finance. And you avoid finding the right home only to learn you cannot reach it.

A feasibility check is not an approval. The lending decision is always the bank's, after it reviews your full application and the specific property.

Stage 3: what happens to your deposit if the mortgage is refused?

This is the most sensitive stage. Under the general rule of the Portuguese Civil Code, if you as the buyer pull out, you lose your deposit. A mortgage refusal is not, in itself, a reason to get it back, unless the contract says so.

Three points to check in the promissory contract, ideally with a lawyer:

• A clause for mortgage refusal. It says what happens to your deposit if the bank does not approve the loan.
• A realistic completion date. The mortgage process, including the valuation, takes several weeks. A date that is too tight can put you in breach of contract.
• A sensible deposit. The bigger the deposit, the more you risk if the deal falls through.

Stage 4: what if the valuation comes in below the price?

Once you apply, the bank sends a valuer to the property. The bank bases the loan on the lower of the purchase price and the valuation. If the valuation comes in below the price, your loan shrinks.

So it helps to know local market prices before you agree a price. And to keep some margin in your savings.

Stage 5: approval and completion

Approval usually comes with conditions tied to the price of the loan: insurance, having your salary paid into the bank, sometimes other products. The bank can require that the property and the borrowers are insured, but by law it cannot make you buy the insurance from the bank or take the other products. It can offer a lower rate if you do. Before the loan contract, the bank gives you the ESIS (European Standardised Information Sheet), called FINE in Portugal. It sets out all the loan's terms and costs. Once you receive the final offer, the law gives you at least seven days to think it over.

At this stage, anything not dealt with earlier comes up at once: missing documents, conditions that change the loan amount, the promissory contract deadline getting close. When the earlier stages were well prepared, completion is just the last signature.

What to prepare before you start

• Get a feasibility check before viewings. Knowing how much the bank will lend sets your maximum price.
• Gather your income documents. Tax returns, payslips and, if you are self-employed, figures from your accountant.
• Budget for costs beyond your own contribution. Taxes, the valuation, registration fees and the deed are paid separately, from your own money.
• Do not pay a deposit without protection. The promissory contract should say what happens if the mortgage is refused.
• Leave room for the valuation. A valuation below the price has to be covered from your own money.

How FINOVA can help

The difference is the order of the steps: the mortgage comes before the offer, not after the deposit. Starting early saves weeks of pointless viewings and avoids rushed decisions. That is FINOVA's work across the five stages.

• Before viewings: know how much is realistic to borrow. FINOVA reviews your income, your existing loans and the affordability limit, and asks several banks for a feasibility check. It is not an approval, but it sets the maximum price worth searching for.
• If you are self-employed: prepare the file with your accountant. FINOVA tells you which documents banks ask for, including proof of income from abroad, and how your declared income weighs in the analysis, so the bank's first answer holds no surprises.
• Before the promissory contract: read the CPCV with the mortgage in mind. FINOVA does not give legal advice. But it points out the mortgage-refusal clause, the completion deadline and the size of the deposit, and tells you when a lawyer is worth it.
• At valuation: redo the numbers before you agree a price. FINOVA shows how much the loan and your own contribution change if the valuation comes in below the price, using the bank's own criteria.
• At approval: compare offers and explain the ESIS. FINOVA compares offers from several banks, explains each condition and cost in plain words, and helps you set a completion date within the period the bank's offer is valid.

Sources

Affordability limit, LTV, simulated rate rise and lending on the lower of price and valuation: Banco de Portugal, Macroprudential Recommendation no. 1/2026, applying from 1 August 2026 (in Portuguese).

Review of the recommendation: Banco de Portugal, press release of 2 July 2026 (in Portuguese).

Deposit rules in promissory contracts: Civil Code, article 442, in Diário da República (in Portuguese).

ESIS, the reflection period and tied products: Decree-Law no. 74-A/2017, consolidated version in Diário da República (in Portuguese).