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Updates on the loan cap

The Board of the Finnish Financial Supervisory Authority reinstated the home loan cap to 90%, raising it from 85%. The change took effect on 20 December 2023.

In summer 2021, the Financial Supervisory Authority lowered the home loan cap to 85% of the value of the collateral available for the home. Therefore, the revision made in December 2023 restored the cap to its past level.

In practice this means that the amount of a home loan may not exceed 90% of the fair value of collateral put up for the home. Now, the homebuyer’s self-financing share must be at least 10%, compared to a minimum of 15% before the revision. The self-financing share can consist of savings or a corresponding amount of other collateral.

The home loan cap for first-time homebuyers remains at 95%, which means their minimum self-financing share is 5%.

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The loan cap in brief:

  • The maximum home loan amount you can take out is 90% of the fair value of the collateral provided for the loan.
  • The loan cap for first-time home buyers is 95% at maximum. For ASP loans, the maximum amount remains at 90%.

The fair value refers to the purchase price of a home when no other collateral than the home itself is used.

An example of the loan cap and collateral:

  • The purchase price of the home is 100,000 euros.
  • The maximum home loan amount you can take out is 90,000 euros (loan cap).
  • The collateral value of the home to your bank is 75,000 euros at maximum.
  • You will need to have savings totalling 15,000 euros or provide other additional collateral for the proportion that exceeds the collateral value of the home. OwnGuarantee can be used as the additional collateral.
  • If you take out a loan exceeding 90,000 euros, you will also need to have savings or provide other collateral to cover the proportion exceeding the loan cap.

Self-financing share  

As a home buyer, you must have at least 10% (or 5% if you are a first-time home buyer) of the purchase price in savings or a corresponding amount of other collateral. For an ASP loan, the required self-financing share is still at least 10%. You can’t buy a home wholly with debt by using your future home as the only collateral and you can’t fill the gap between the loan cap and the collateral value of your home with a personal guarantee.

The loan cap is only applicable to the acquisitions of shares in a housing company or residential property and to loans intended for basic renovation. In addition to loans granted for the purchase of a permanent residence, the loan cap is applicable to loans granted for the purchase of a holiday home or an investment property.

When applying for a home loan, you must have sufficient loan servicing capacity for your total loan amount, which is considered to cover both your existing and any planned loans. Alternatively to covering the 10% self-financing share with your savings, you can cover it with collateral if you have additional collateral available to you and your loan servicing capacity is sufficient.

What is a deposit?

When you are buying a home, a deposit is the amount of money you pay upfront to the seller. A deposit confirms your purchase offer

Read more about making an offer on a home and paying your deposit.

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