90 percent mortgage – Who has a chance to get it?

Introduction to 90% Mortgage in the Czech Republic

Owning property in the Czech Republic is becoming increasingly expensive. As real estate prices continue rising faster than incomes, prospective homebuyers need larger mortgages to finance their purchases. This has led to growing demand for high loan-to-value (LTV) mortgages that require smaller down payments.

A 90% LTV mortgage covers 90% of the property’s value, while the borrower must provide the remaining 10% as a down payment from their own funds. These types of mortgages used to be more widely available, but regulatory changes over the past years have made them harder to obtain.

Tighter Mortgage Rules Set by the Czech National Bank

In response to rapidly rising property prices, the Czech National Bank (CNB) has introduced several measures to cool down the real estate market. One of their main tools has been setting stricter rules on the loan-to-value ratios that banks can offer.

The CNB’s binding regulation currently sets the maximum LTV limit at 80% for borrowers taking out their mortgages. These strict limits have caused banks to reduce offers of 90% LTV mortgages.

90% Mortgages Still Available for Certain Borrowers

Despite the central bank’s tighter regulations, 90% LTV mortgages can still be obtained by buyers under 36 years old taking a mortgage. The CNB created this exception for young buyers to make homeownership more accessible during rising property prices.

Borrowers over 36 can typically only receive mortgages covering up to 80% of the property’s value. Additionally, banks closely examine each applicant’s financial situation before approving 90% LTV loans, even for those meeting the age requirement.

Eligibility Criteria for 90% Mortgages

While 90% LTV mortgages are still reachable for certain borrowers, the eligibility requirements are strict. Meeting the age limit is the first barrier, but banks also carefully evaluate each applicant’s financial profile before approving such high-risk loans.

Age Limit for 90% LTV Mortgages

As of 2025, only mortgage applicants under 36 years old can obtain approval for a 90% LTV mortgage in the Czech Republic. The CNB created this age exemption to promote homeownership among young people who often lack the savings for large down payments.

Applicants over 36 currently face an 80% LTV limit when taking out a mortgage. This makes the 36-year limit highly significant for prospective homeowners without existing property assets.

Factors Beyond Age Under Bank Consideration

Age may open the door for 90% financing, but banks examine borrowers’ incomes and existing debts before approving such loans. Applicants often get rejected for having inadequate finances despite meeting the age requirement.

Some key factors lenders evaluate include:

Stable Income – Banks analyze pay slips and tax returns to verify incomes can support mortgage repayments. Self-employed borrowers face more examination as their incomes tend to fluctuate more.

Low Existing Debts – Lenders are cautious of applicants carrying a large credit card, auto, or student loan balances in addition to a mortgage. Total monthly debt payments play a key role.

Ultimately, age provides no guarantees given banks’ income, leverage, credit health, and savings evaluations. Yet for well-qualified borrowers under 36, higher LTV mortgages remain achievable.

Impact of Central Bank Policies on Mortgage Lending

While the CNB created an exception for borrowers under 36 to access 90% LTV mortgages, its broader policy changes have restricted high-risk lending. By setting tighter loan approval standards, the central bank has forced banks to take a more conservative approach.

Reduced Availability of High LTV Mortgages

Ever since the CNB acted to cool the real estate market, banks have reduced their offerings of mortgages exceeding 80% LTV for first-time buyers. High LTV loans carry greater risk for lenders, so stricter regulation has decreased their frequency.

In the past, banks more freely offered 90% LTV mortgages during periods of less strict policy. However, through its binding LTV caps the CNB has purposely restricted the highest-risk loans which previously fueled house price growth.

This disproportionately impacts borrowers who fail to meet the strict loan approval criteria but still need to finance over 80% of a property’s value. While some turn to riskier non-bank lenders as an alternative, high LTV mortgages are now harder to obtain from traditional banks due to central bank policies.

Trends in Mortgage Interest Rates

As the CNB has raised rates to restrain lending, mortgage interest rates have correspondingly surged. This has further reduced affordability and made financing property purchases more costly.

Sharp Growth in Mortgage Rates Since 2021

Mortgage interest rates in the Czech Republic have risen dramatically alongside the CNB’s policy rate hikes targeted at controlling inflation. Since mid-2021 when the key rate sat near zero, banks have had to pass higher funding costs to consumers. Fixed-rate mortgages now sit around 4% on average versus below 3% as recently as 2020. While fixed rates initially provided some protection from rising changing rates, increased capital costs have pushed banks’ long-term lending rates up across the board.

This represents the fastest pace of mortgage rate growth since the 2008 financial crisis.

Impacts on Affordability and Lending Volumes

The surge in interest rates has two key impacts – lower mortgage affordability for buyers and reduced demand for new loans.

At current rates, monthly payments on a typical mortgage are higher than 2020 levels even if home prices stayed constant. This pressures prospective buyers dependent on debt financing. Additionally, higher rates encourage some buyers to delay purchases and wait for better conditions. If rates continue rising these trends threaten to depress the housing market and the broader economy. However, the Czech National Bank recently reduced the two-week repo rate by 0.25% to 3.50%, an action that, could lead to more favorable terms in the housing mortgage market.

Changes in Mortgage Lending for Foreigners

Foreign buyers have historically seen the Czech Republic as an attractive market to invest in property given relatively lower prices compared to other European countries. However, regulatory changes have made obtaining mortgages more difficult for non-residents.

Stricter Income and Employment Requirements

Whereas foreigners could previously qualify for Czech mortgages with overseas income, some banks now require borrowers to demonstrate local employment and pay sources, although approval is still possible with foreign income if the borrower has, for example, a Czech spouse or residency. This proves challenging for foreign investors who do not have ties or domestic pay sources. Banks justify this shift by arguing overseas incomes brought an increased risk of defaults when converted to local currency. Verifying foreign salaries also introduced greater administrative challenges. As a result, foreigners now typically need to show some relevant ties to the Czech Republic, and income sources stretching back 6-12 months. This prevents most short-term residents from obtaining mortgages.

Reported Incomes Examined More Closely

Another challenge foreign professionals face is a stricter examination of income statements required for lending approvals. In the past, banks more readily accepted borrowers’ reported salaries from employers abroad. However, today, increased pressures require deeper verification to confirm incomes listed on pay slips match net monthly amounts hitting Czech bank statements.

Affordability Squeezed Further by Currency Effects

Even qualified foreign residents meeting the tighter employment and income rules struggle with affordability as the Czech Koruna drops against major currencies.

Since 2021, the Koruna has lost value against the US Dollar mostly driven by monetary policy differences and inflation gaps. This significantly raises the effective cost of mortgage payments for foreigners paid in appreciating currencies.

Together with higher housing prices and interest rates, weakened exchange rates create substantial budget hurdles for international buyers dependent on mortgage financing to purchase Czech real estate.

The added examination on overseas income and weaker Koruna compound affordability pressures foreign investors. While the market remains relatively attractive, obtaining debt funding creates increasing challenges.

Conclusion

For prospective Czech homebuyers — especially younger generations — owning property seems increasingly out of reach given rapid price growth in recent years. With homes becoming less affordable, demand has risen for high LTV mortgages requiring smaller down payments.

However, regulatory changes have caused banks to restrict lending at 90% LTV primarily to borrowers over 36 taking out their mortgage. The central bank sees high LTV loans as risky, though some exceptions have been made to promote young buyers.

Beyond age, applicants still face strict income, and debt checks to qualify at such high leverage. Additionally, rising rates, stricter debt limits, and currency weakness have further eroded affordability. Foreign buyers, in particular, face additional checks when obtaining mortgages locally.

While Czech real estate retains some relative appeal across Europe, buyers must now overcome tighter lending standards reflecting broader economic precautions taken by the central bank. This challenges aspirations of home ownership against smart financial policy aimed at stability. Achieving both social and economic goals presents an increasing challenge.