Since 1 August 2026, new recommendations from the Bank of Portugal have come into force, making the assessment of the Debt-to-Income Ratio more stringent and changing the maximum loan term based on the borrower’s age.
What Changes to the Debt-to-Income Ratio?
The main change is the reduction of the maximum Debt-to-Income (DTI) ratio recommended for banks.
Until now, repayments on all your loans could generally account for up to 50% of your monthly net income.
Under the new rules, this limit is reduced to 45%.
For example, if your household has a monthly net income of €2,000:
- Before: maximum recommended monthly repayments of €1,000
- Now: maximum recommended monthly repayments of €900
In other words, there is less room to take on a new mortgage, particularly if you already have other loans.
The Debt-to-Income Ratio Is Not Calculated Based Only on Your Current Repayment
To assess your ability to make repayments, banks simulate a less favourable scenario, taking into account a potential increase in interest rates. The repayment amount used to calculate your Debt-to-Income Ratio may therefore be higher than the initial repayment shown in the simulation.
For this reason, even if your expected monthly mortgage repayment is €700, the bank may use a higher amount to assess whether you would still be able to afford the loan if interest rates were to rise.
Have Maximum Loan Terms Also Changed?
Yes. The Bank of Portugal has simplified the maximum loan terms, with only two age brackets now applying:
- Up to 35 years old: maximum loan term of 40 years
- Over 35 years old: maximum loan term of 35 years
A longer loan term can result in a lower monthly repayment, making it easier to meet the new Debt-to-Income Ratio requirements.
Why Were These New Rules Introduced?
The aim is to reduce the risk of excessive debt.
By limiting the percentage of income that can be allocated to loan repayments, the Bank of Portugal aims to ensure that consumers can continue meeting their financial obligations, even if interest rates increase.
How Can You Increase Your Chances of Mortgage Approval?
- If you are considering applying for a mortgage, there are several steps you can take to strengthen your profile with banks:
- Reduce or pay off existing loans before applying for financing
- Lower your outstanding credit card balances
- Avoid taking out new loans in the months leading up to your application
- Increase your down payment
- Use a Mortgage Calculator to understand what your monthly repayment and Debt-to-Income Ratio could be
Calculate Your Debt-to-Income Ratio and Mortgage
At Aprova, we help you compare offers from several banks and understand which solution is best suited to your profile.
Calculate your Debt-to-Income Ratio and your mortgage to find out what your budget could be when buying a home.