The Government of the Community of Madrid recently announced significant updates to its popular ‘My First Home’ (Mi Primera Vivienda) program, aimed at helping more residents enter the housing market. The core of this update is to relax application conditions and increase flexibility to adapt to the changing socio-economic environment.
Age Limit Extension and Tiered Guarantee System
To include individuals who have postponed homeownership due to high property prices and difficulty saving, the new policy raises the maximum applicant age from 40 to 50.
Simultaneously, the policy introduces a tiered guarantee system linked to age to achieve more precise resource allocation:
- Applicants under 40: Can receive mortgage guarantee support for up to 100% of the property’s price.
- Applicants aged 40 to 45: Can receive a mortgage guarantee of up to 95%.
- Applicants aged 45 to 50: Can receive a mortgage guarantee of up to 90%.
This design prioritizes support for younger people while also assisting middle-aged buyers entering the market later.
Government Guarantee Lowers Down Payment Hurdle
The core mechanism of the program remains unchanged: reducing the buyer’s down payment burden through a government guarantee. Under normal circumstances, mortgages from Spanish banks typically do not exceed 80% of the property’s price, requiring buyers to prepare at least a 20% down payment plus related taxes and fees. Under the ‘My First Home’ program, the Community of Madrid government guarantees the portion of the loan exceeding 80%, enabling partner banks to offer higher loan-to-value mortgages to eligible applicants, effectively lowering the initial capital barrier to homeownership.
Property Price Cap and Eligibility Criteria
To align the policy with current market conditions, the price cap for eligible properties has also been raised from the previous €390,000 to €425,000 (excluding taxes).
Despite the adjustments, some basic requirements remain:
- Property Location: Must be within the Community of Madrid.
- Property Type: Both new and second-hand homes are eligible.
- Residency Requirement: The purchased property must serve as the buyer’s primary and permanent residence, and it must be held and lived in for at least five years after purchase. This measure aims to prevent the program from being used for investment or speculative purposes.
Part of a Broader Housing Strategy
This policy update is not an isolated measure but a key component of the Community of Madrid’s 2026-2027 Housing Response Plan. This broader plan aims to tackle housing market pressures from both the supply and demand sides. In addition to providing home-buying support for the demand side, the plan includes supply-side reforms such as promoting the construction of up to 18,000 homes within four years, adjusting urban planning to improve land use efficiency, and streamlining administrative approval processes to accelerate new project launches.
