What is the young buyer mortgage in the Balearic Islands and how does the IBAVI guarantee work?

It’s the IBAVI’s Nova Hipoteca Jove: the Balearic Housing Institute acts as guarantor for the slice of your mortgage between 80% and 100% of the home’s value, exactly the part banks don’t usually lend. That way the bank can lend you the full amount, calculated on the valuation or the price, whichever is lower.

The name is Catalan for “new young mortgage”, and you’ll often see it shortened to “hipoteca jove”. And it isn’t a gift: you pay that slice back through your monthly repayments, and every euro of capital you repay comes off the guaranteed part first, until it’s gone.

There is a cost, though: a one-off payment of 0.50% of the guaranteed amount. You also sign a counter-guarantee before a notary: if you stop paying, the IBAVI pays the bank and then claims the money back from you. The scheme has a budget of €30 million, and both the application and the signing of the mortgage have to happen before 1 February 2028, while funds last.

How does the ICO mortgage guarantee work for under-36s?

It’s the Ministry of Housing’s guarantee scheme, run by the ICO (Instituto de Crédito Oficial, Spain’s state-owned bank): the state guarantees up to 20% of your loan, or 25% if the home has an energy certificate rated D or better, for ten years and free of charge. It’s for buyers who haven’t turned 36 when they sign, and for families with children under 18 in their care, whatever the parents’ age.

What many people search for as the “ICO mortgage guarantee” changed in 2026: an addendum published in the BOE on 2 July, Spain’s Official State Gazette, extends the scheme until 31 December 2027 and raises the net asset limit to €150,000 per buyer. And since 19 June, the Balearic Islands have been in the highest income band, 7.5 times the IPREM (the public income index Spain uses to set eligibility thresholds), according to the ICO’s page on the scheme.

What are the requirements for the IBAVI and ICO guarantees in 2026?

Both require that you don’t own another home and that you’re going to live in this one. Beyond that, the IBAVI asks for five years in the Balearics and accepts pricier homes; the ICO asks for fewer roots here, but has a lower price cap and limits your assets.

If you moved to the islands from abroad, look at the residence row first. The IBAVI counts five years here even with gaps, and you prove them with your empadronamiento (your registration on the padrón, the town hall’s register of residents); the ICO wants two unbroken years of legal residence in Spain immediately before you apply for the loan.

If you’ve read “6.5 times the IPREM” next to a different figure, there’s no contradiction: the IBAVI applies that 6.5 to the 2023 IPREM (€8,400) divided by 0.9 (one person) or 0.8 (two or more), and that’s where the figures on its requirements page come from.

IBAVI or ICO guarantee: which one can you get at your age?

You can’t use both: the ICO doesn’t allow another public guarantee on the same loan. Until you turn 36, with a home of €275,000 or less, you can choose, provided you qualify for both. From 36, the ICO only works if you have children under 18 in your care, and the IBAVI covers 20% until you turn 40; from 40, it’s 15%, unless you’re a large or single-parent family, or one of you or a dependant has a disability.

In Palma, at the average valuation of homes more than five years old (€3,791.6/m² in the second quarter of 2026, according to Spain’s Ministry of Housing), the ICO’s price cap stretches to about 72 m² and the IBAVI’s to about 100.

Then there are tied products: with the IBAVI, the bank can’t make you take out any additional banking products; with the ICO, they’re negotiable. Before you accept a life policy, read whether mortgage life insurance is mandatory.

What help can young people get to buy a home in the Balearic Islands in 2026?

On top of the guarantee, the young buyer mortgage in the Balearic Islands relies on two more pieces, both compatible with either guarantee: the €10,000 grant from the Govern (the Balearic Government) for buyers aged 40 or under, and lower ITP, the property transfer tax (the Spanish counterpart of stamp duty): a 2% rate if you’re under 36 and 100% relief if you’re under 30, on the first €270,151.20.

If you’re looking for help to buy a home as a young person in the Balearics, here’s the small print.

Order 21/2026 from the Govern, published in the BOIB (the Balearic official gazette), gives €10,000 per home (split between you if two of you buy) if you’re 40 or under, have lived in the Balearics for five consecutive years, don’t own another home and buy on or after 1 January 2026 for €382,000 at most. You can apply until 31 December 2027, on a first-come, first-served basis: €6 million is enough for about 600 purchases. Watch out: the standard income cap is 6.5 times the IPREM for all of you together, €54,600 if you apply in 2026.

For ITP, a main home in Mallorca worth up to €331,859.70 pays 4% (2% if you’re under 36 and it’s your first home) on the first €270,151.20, and 8% on the rest. If you’re under 30, that €270,151.20 gets 100% relief when, among other requirements, you’ve lived in the islands for three years, the total taxable base on your most recent tax return whose filing period has closed is no more than €52,800 (€84,480 on a joint return) and the mortgage covers at least 60% of the valuation, according to the Balearic consolidated law on ceded state taxes. The ATIB, the Balearic tax agency, calculates that 60% on whichever is higher: the price in the deed or the reference value set by the Catastro, Spain’s cadastral register.

How much money do you really need with a 100% young buyer mortgage?

At the very least, the taxes and costs, because neither the bank nor the guarantees finance them. On a €260,000 resale flat in Palma, bought half each in 2026 by two 33-year-olds, that means €5,200 in ITP, €260 for the IBAVI guarantee (nothing with the ICO), the valuation and your share of the notary and Land Registry fees.

The breakdown, as a rough guide:

• Mortgage: €260,000, all from the bank; the guarantee backs the last €52,000, the part above 80%.
• ITP at 2%: €5,200, compared with €20,800 without any reduced rate.
• Guarantee: €260 with the IBAVI (0.50% of €52,000), paid before signing; €0 with the ICO.
• Valuation: you pay for it, under Law 5/2019, Spain’s mortgage credit law.
• Notary and Land Registry: unless agreed otherwise, the seller pays for the deed and you pay for your copy and the registration, as Spain’s Civil Code provides; for the mortgage, the bank pays.
• Arras: the reservation deposit you pay under the arras contract (a private purchase contract) comes out of your savings, because it’s due before the mortgage is signed.

And here’s the key point if you came looking for a “100% mortgage Mallorca”: with the young buyer mortgage, the €52,000 deposit disappears, but you still have to put in at least €5,460 of your own money with the IBAVI, or €5,200 with the ICO, plus those costs. The €10,000 grant comes later: the Order earmarks it for the purchase price, but if you go with the IBAVI, its scheme requires you to use it to pay down the guaranteed mortgage. You’ll find the whole process in how to get a mortgage in Mallorca, step by step.

How do you apply for the IBAVI guarantee, and what difference does an advisor make?

1. You apply for the mortgage at a bank that has signed up to the scheme.
2. You provide your income tax return, a nota simple (a Land Registry extract) from the Registry’s index service, proof of five years’ empadronamiento, the valuation and the reservation or arras contract.
3. If the bank approves the mortgage, it sends its assessment to the IBAVI.
4. The IBAVI notifies you of its decision in your carpeta ciudadana (your online folder for official notifications); you have 15 days to appeal.
5. You pay the 0.50% and sign before a notary, with an IBAVI representative present.

As a mortgage broker in Majorca, my work starts earlier: comparing what each participating bank offers, choosing between the IBAVI and the ICO with you, putting together a complete application and negotiating the tied products. Law 5/2019 bans banks from selling you the mortgage only as part of a package.

When NOT to take out a 100% mortgage in Mallorca as a young buyer

When the monthly repayment eats up too much of your salary, when your income isn’t stable or when signing leaves you with no safety net. A young buyer mortgage in the Balearic Islands solves the deposit, not your ability to repay: if you stop paying, the guarantee covers the bank, but the debt is still yours.

• Your repayments would go above 30-35% of your income, the limit banks usually apply, according to the Bank of Spain. At the average home mortgage rate for July 2026 (3.01%, according to the INE, Spain’s national statistics institute), €260,000 over 30 years comes to about €1,098 a month: your household needs a monthly income of roughly €3,140 to €3,660, with no other debts.
• Your income isn’t stable. On a temporary contract or with a business that’s just getting started, 100% leaves no margin for a bad year. If you’re self-employed (autónomo), read the guide to mortgages for the self-employed in Mallorca first.
• You can only make it work by stretching the term. At that rate and over 30 years, borrowing the €52,000 instead of putting it down as a deposit costs about €27,000 in interest.

Check your young buyer mortgage before you sign the arras contract

If you’re weighing up the young buyer mortgage Balearic Islands residents can apply for, run the numbers before you pay the arras deposit: after that, the contract’s deadlines call the shots. In a free, no-obligation first consultation, we’ll look at which guarantee applies to you, whether you qualify for the grant and how much you need to save. Write to me through the contact page.

This content is for guidance only and does not replace personalised financial advice. Requirements can change, so check them before you sign.