Key figures — as of 2026-08-28: Bank of Portugal's maximum recommended debt-service-to-income (DSTI) ratio dropped from 50% to 45% on 1 August 2026 — applying to every mortgage and consumer-credit affordability check carried out from that date onward; 100% financing on bank-owned properties has been abolished; analysts quoted by The Portugal News expect new home-loan volumes to fall 10–15%.
The number that matters
Forty-five per cent. That's the new ceiling on how much of a borrower's income Portuguese banks can count toward mortgage and other debt repayments, down from 50%. The rules affect all new credit applications whose affordability assessment is carried out from August 1 onwards, with the most significant change being a reduction in the maximum debt service-to-income ratio. For anyone mid-house-hunt — including the foreign buyers and remote workers who make up a growing share of Portugal's residential market — that shift lands right in the window between making an offer and signing the contrato de promessa de compra e venda (CPCV).
What actually changed on August 1
Portugal's central bank tightened its macroprudential lending rules by lowering the recommended debt-service ratio for new loans, in a bid to curb rising household indebtedness amid soaring house prices. The most significant change reduces the recommended debt-service ratio from 50% to 45%, including stress tests that assume a sharp rise in interest rates.
Two other changes matter for buyers financing through a bank. First, the Bank of Portugal has removed the special rule allowing banks to lend up to 100% of the value of properties they own, meaning those transactions are now subject to the same loan-to-value limits as all other property purchases. Second, the recommendations replace rules first introduced in 2018 and apply to all banks and financial institutions authorised to lend in Portugal.
It's worth being precise about the legal weight here: the recommendations are not legally binding, but lenders must justify any cases where they exceed the prescribed limits — and central bank governor Álvaro Santos Pereira is already calling for the recommendations to become mandatory. In practice, banks tend to treat BdP recommendations as hard limits anyway, since deviating invites regulatory scrutiny.
Why this hits foreign buyers harder
Non-resident buyers were already working with a smaller borrowing envelope than Portuguese residents before this change. The DSTI cut stacks a second constraint on top of the existing one: banks now cap both how much of the property value they'll lend to a non-resident (loan-to-value) and the tighter affordability math on top of it. A foreign buyer who cleared the old 50% threshold comfortably may now find their maximum loan offer has shrunk, even with identical income and identical property price.
The timing catches people off guard because the CPCV — the promissory contract that typically requires a 10–20% deposit — gets signed before the final mortgage terms are locked in. If a bank's updated affordability assessment (now under the 45% cap) approves a smaller loan than the buyer budgeted for, the gap has to be covered in cash or the deal is at risk.
The euro number behind the percentage
Here's GrowIN's own calculation to make the 50%-to-45% shift concrete. Take a buyer with €3,000 net monthly income and no other debt, applying for a 30-year mortgage at a typical non-resident rate of around 3.5%. Under the old 50% cap, that income supported roughly €1,500/month in debt service — enough to borrow approximately €334,000. Under the new 45% cap, the same income supports only about €1,350/month — a maximum loan of roughly €300,000. That's a swing of around €34,000 in lost borrowing power, purely from the ratio change, before non-resident LTV limits are even factored in. It's a tidy match with the 10–15% drop in new lending that analysts are already forecasting.
"A five-point cut in the debt ratio sounds technical, but it can knock tens of thousands of euros off what a foreign buyer is approved to borrow — right when they've already put down a deposit," says GrowIN Portugal Editorial.
What to watch next
Keep an eye on two things. One, whether the "recommendation" becomes mandatory, as the governor has floated — that would remove any bank discretion to exceed 45% even for strong applicants. Two, how individual banks apply the rule to non-resident income streams (foreign salaries, rental income, pensions), since the changes are intended to strengthen responsible lending and reduce the risk of households becoming over-indebted, while promoting the stability of the financial system. Banks that already apply conservative haircuts to foreign income may tighten further rather than simply adopting the new floor.
Practical takeaway
Get a written, updated affordability assessment from your bank before signing a CPCV, not after. If you're relocating and financing a purchase as part of a wider move, it's worth reviewing your numbers through our relocation guide before committing a deposit. As always with lending and tax matters, treat bank pre-approvals as indicative rather than guaranteed — the final number depends on the institution's own risk assessment under these new rules.
The mortgage math changed quietly this month, but it changes the number on the offer letter, not just the paperwork.