What type of property can you purchase on the average income in Italy? According to a study by Tecnocasa using Istat data, the typical annual household income in Italy is €35,995, which breaks down to roughly €2,999 monthly. The question many Italian families face is: what kind of property can they afford with this income level?
To address this, experts performed a model mortgage calculation considering these parameters:
- Loan term: 25 years
- Average interest rate: 3.70%
- Maximum mortgage payment to income ratio: 30% (up to 900 euros monthly)
- Loan to Value (LTV): 80% (meaning the bank funds 80% of the property cost, and 20% must be paid by you)
Under these conditions, a family with an average income can buy a home worth 220,000 euros, with a mortgage involving a monthly payment of 900 euros.
How much money do you need to buy a home?
Despite mortgage availability, buying an apartment involves substantial upfront costs. To purchase a property for 220,000 euros, you will need:
- Initial payment (20% of the cost): 44,000 euros
- Bank fees (for application review, property appraisal, and loan opening): 1,500 – 3,000 euros
- Purchase taxes:
- If bought from a private seller – 2% of the cadastral value
- If bought from a developer (new building) – 4% VAT from the price
- Notary services: 2,000 – 4,000 euros
- Real estate agency commission (if used): 2-4% of the price (approx. 4,400 – 8,800 EUR)
Overall, the total amount needed for the transaction can range from 50,000 to 60,000 euros (including the initial payment and all related costs).
Problems and possible solutions
This review indicates that even with mortgage access, buying a home demands substantial savings. This is a major hurdle, especially for younger buyers and those without savings.
However, the market offers various solutions to help overcome these challenges:
- Mortgages with LTV of 90% or 100%, reducing the down payment size (mainly available to young people up to 36 years old)
- State benefits for purchasing a first home
- Subsidized mortgage programs offered by some banks
The choice of mortgage and real estate should be carefully considered. It is crucial to weigh financial capabilities and income stability over the long term. Therefore, it is advisable to compare different offers from banks and consult real estate professionals to optimize investments.
