Lately, many friends on the forum have been discussing buying a property, and the most common question is: How much do I really need for a down payment? Many people think that if the bank lends 80%, they only need to prepare 20%. But this is a huge misconception! A hard lesson learned from experience… In Spain, in addition to the 20% of the property price, there is also the down payment for buying a property in Spain that includes a whole bunch of other fees to factor in. Today, I’m sharing the research I’ve compiled to help those of you who are currently house-hunting.
The Two Main Components of Your Upfront Costs
Simply put, your total initial budget should be divided into two main parts: the money for the seller and the money for the government and various agencies.
- The Down Payment on the Property Price: Typically, if you are a tax resident in Spain, banks will approve a mortgage for up to 80% of the property price. This means you need to cover at least 20% yourself. If you are a non-tax resident, this percentage is lower. You might only get a loan for 60%-70%, which means the down payment for buying a house in Spain would need to be 30%-40%.
- Taxes and Fees: This is the part that is most easily overlooked but accounts for a significant portion. You should typically budget an additional 10%-15% of the property price for these costs.
What Are the Specific Taxes and Fees?
These costs vary significantly depending on whether you are buying a new build or a resale property. I’ve created a simple table to make it clearer:
| Cost Item | New Build | Resale | Notes |
|---|
| Main Tax | 10% IVA | 6%-10% ITP | ITP rates vary by region |
| Stamp Duty (AJD) | 1%-1.5% | Sometimes required | Usually mandatory for new builds |
| Notary Fees | Approx. 0.5% | Approx. 0.5% | Varies based on property price |
| Property Registry Fees | Approx. 0.4% | Approx. 0.4% | To register the property in your name |
| Bank Valuation Fee | €300-€600 | €300-€600 | Done by the bank before mortgage approval |
| Legal/Gestoría Fees | €300-€800 | €300-€800 | For handling paperwork and processes |
See? These costs add up quickly! Especially the ITP tax on resale properties, which varies by autonomous community. For example, it’s 6% in Madrid, while it’s 10% in Catalonia and Valencia. Make sure to check the specific tax rate for your region before buying!
Let’s run through an example. Suppose you’re interested in a resale property in Madrid valued at €300,000. You are a tax resident and can get an 80% mortgage. The funds you would need to prepare are approximately:
- Down Payment on Property Price: €300,000 * 20% = €60,000
- ITP Tax: €300,000 * 6% = €18,000
- Other Fees: Notary, registry, gestoría, etc., approx. €300,000 * 2% = €6,000
Adding it all up, the total initial funds you need are approximately: €60,000 + €18,000 + €6,000 = €84,000! That’s not 20% of the property price, but closer to 28%! So, make sure you budget enough!
A safe rule of thumb is to budget 30%-35% of the property price for your total upfront costs. This should cover all initial expenses and prevent any last-minute stress. Of course, every individual’s situation and property is different, so the final numbers may vary. I hope this post helps clarify the process. Feel free to discuss and share your own experiences!
