Portugal's New Credit Rules Reduce the Maximum Repayment Burden to 45% of a Borrower's Income
From 1 August, the Banco de Portugal's revised rules cut the maximum debt-service-to-income ratio on new loans from 50% to 45%, narrow the exceptions banks can grant, and replace the average-maturity rule with age-based limits of up to 40 years for the under-35s.
Anyone weighing a mortgage or a big loan in Portugal is now doing so under a stricter rulebook. From 1 August, a revised recommendation from the Banco de Portugal (Bank of Portugal) tightens the conditions under which banks may lend to households, replacing a framework that had stood since 2018. The headline change is a lower ceiling on how much of a borrower's income can be swallowed by loan repayments — a shift that will shape who qualifies for credit, and for how much.
At the centre of the overhaul is the taxa de esforço, or debt-service-to-income ratio: the share of a household's monthly income absorbed by the instalments on all its loans, measured against a hypothetical rise in interest rates. The maximum has fallen from 50% to 45%, and the limit now covers consumer credit as well as home loans. In practice, that means banks must assume a borrower can still cope if rates climb, and turn away applications where repayments would eat up more than 45% of income under that stress test.
The central bank has also narrowed the room banks have to bend its own rules. The margin of exceptions — loans they can grant above the general limit — drops from 15% to 10% of the credit each institution advances every half-year. The regulator notes this largely codifies existing behaviour, since banks used only around 6% of the available exceptions in 2025.
Maturity limits have been redrawn too. The old average-maturity criterion is gone, replaced by two direct caps tied to the borrower's age: loans can run up to 40 years for those aged 35 or under, and up to 35 years for older borrowers. A special allowance that let banks lend the full 100% of the value of properties they had themselves repossessed has also been withdrawn, aligning those sales with the standard loan-to-value rules.
Taken together, the measures are designed to keep household borrowing sustainable as Portugal's housing market stays hot and credit demand recovers. The Banco de Portugal has signalled it may eventually convert the recommendation into binding rules, which would remove even the current deviation margin — a sign that the supervisor sees today's guidance as a floor for prudence rather than a ceiling.
For expats, the practical takeaways are clear. If you are house-hunting, expect banks to scrutinise your total debt load more closely, and to model repayments against higher rates than you pay today — so the amount you are offered may be smaller than a simple affordability calculator suggests. Younger buyers gain something in exchange: the age-based maturity rules explicitly allow longer 40-year terms for the under-35s, which can lower monthly instalments. Consolidating or clearing other loans before you apply will now count for more, since consumer credit sits inside the same 45% ceiling. And if a bank quotes you a deal that seems to stretch the limits, remember the exceptions window is smaller than it was — the safest assumption is that the 45% rule will hold.
