Otthon Start Home Loan: Everything You Need to Know for Smooth Processing

The Otthon Start program, with its fixed 3% interest rate and loan structure of up to 50 million forints, undoubtedly creates an attractive opportunity for first-time home buyers in the current market environment. However, behind the favorable financial conditions lies an extremely strict and complex legal and banking requirement system, the neglect of which can result in serious financial consequences.

The greatest risk arises when the applicant commits to purchasing a property – typically by signing a purchase agreement while simultaneously paying a deposit – without having fully assessed their own eligibility and that of the target property in advance. If the loan application is subsequently rejected, the applicant faces two extremely unfavorable situations: either they lose the deposit paid, which often amounts to 10% of the purchase price, or – based on their contractual obligation – they are forced to finance the purchase price through a much more expensive market loan with current interest rates around 6-7%, which can mean several tens of millions of forints in additional costs over the entire term. Therefore, expert legal assistance is essential already in the contract preparation phase.

Defining the Eligible Group: Personal Requirements of Otthon Start Eligibility

The basis for accessing the Otthon Start program is the complete fulfillment of strict personal requirements. The regulation precisely defines the circle of eligible persons, and in practice, the interpretation of these criteria raises the most questions.

Eligible Applicants for the Otthon Start Loan Program

The applicant must be a natural person who has reached at least 18 years of age and is either a Hungarian citizen or a natural person with a residence permit exceeding three months as defined in the regulation. Essential requirements include a clean criminal record and freedom from public debts; any debt registered with the state tax authority exceeding 5,000 forints constitutes grounds for exclusion.

Proof of Social Security Status

One of the cornerstones of the program is the existence of at least two years of continuous social security (TB) status, which must be proven with documentation no older than 30 days at the time of loan application. The regulation accepts employment relationships, entrepreneurial legal relationships, as well as full-time student status (the latter until the age of 25). A maximum interruption of 30 days is permitted during the two-year period, which is not added to the two-year period. Foreign TB status can also be taken into account, but an applicant must have a Hungarian legal relationship for the 180 days preceding the application submission.

The Concept of “First-Time Homeowner” – What Counts as First Home Ownership?

Due to the targeted nature of the program, the most complex requirement system is related to proving “first-time homeowner” status. The main rule is that the loan can be applied for by someone who, at the time of application submission and for the preceding ten years, did not hold ownership rights in a residential property within the inner areas of Hungary.

However, this definition is not absolute; the legislator has established numerous precisely defined exceptions that require thorough examination:

• 50% ownership share: It is not a disqualifying factor if the applicant held or holds a maximum 50% ownership share in at most one residential property within an inner area.
• Low-value property: It also does not exclude eligibility if the total value of ownership shares (or sales price at the time of sale) in one or more residential properties did not exceed 15 million forints.
• Property burdened with usufruct: The loan can also be applied for if the applicant acquired ownership in a residential property burdened with a usufruct right, and the usufructuary lives in the property.
• Property condemned for demolition: A property condemned or authorized for demolition by an authority does not count as existing ownership.

These exceptions mean that determining eligibility is not a simple yes/no question, but requires a detailed legal and financial analysis of the applicant’s ten-year ownership history.

Special Rules for Spouses and Disqualifying Factors

In case of joint application by spouses, the regulation contains significant relief: it is sufficient if only one party meets the definition of “first-time homeowner” and the requirement for a two-year TB status. However, it is important that both will appear as debtors in the loan agreement.

The regulation also establishes strict incompatibility rules: the seller or the contractor performing the construction activity cannot be the applicant’s close relative or domestic partner under the Civil Code. If the seller or contractor is a business entity, the applicant may not hold an ownership interest in it.

Requirements for Target Property Purchasable with Otthon Start 3% Subsidized Loan

In addition to meeting personal requirements, the property to be financed must also meet a series of strict financial, technical and legal requirements.

Property Type and Financial Limits

The 3% loan can exclusively be used for the purchase or construction of apartments, single-family residential buildings (houses), homesteads or farming centers located within inner areas on the territory of Hungary. The regulation sets a two-tier value limit:

• Price per square meter limit: The purchase price or acquisition cost may not exceed gross 1.5 million forints per square meter. Verifying compliance with this limit requires particular care due to the special calculation method of floor area.
• Maximum purchase price/acquisition cost: For apartments, this amount is at most gross 100 million forints, while for single-family residential buildings, homesteads or farming centers it is at most gross 150 million forints.

Legal and Technical Requirements

The Otthon Start program cannot be used to finance any ownership structure. The most important legal disqualifying factors are as follows:

• Prohibition on acquiring partial ownership: The loan cannot be applied for to acquire a part (ownership share) of an existing property. An exception to this is when spouses jointly acquire exclusive ownership of the property in a 1/1 ratio, and in accordance with the purpose of the subsidized loan structure, semi-detached houses and townhouses constitute exceptions, so the prohibition on acquiring partial ownership does not apply to separate residential units. In the application of the regulation, it is not considered acquisition of partial ownership if, in the case of a property consisting of several independent homes in undivided common ownership, the applicant becomes the exclusive owner of the property part representing the home intended for the loan purpose.
• Usufruct right: A property burdened with a usufruct right cannot be purchased with the loan.
• Undivided common ownership: Financing a property in this legal situation is possible, but only if the parties have a usage allocation agreement certified by a lawyer, which clearly records the exclusive use of the residential part to be purchased, its physical and technical separation.

From a technical perspective, the basic requirement is that the property must be in a condition suitable for meeting housing needs as determined by the credit institution’s appraiser.

Key Question in Practice: The Methodology for Calculating Floor Area in Connection with the 1.5 Million Ft/m² Limit

Compliance with the 1.5 million Ft/m² price per square meter limit is one of the more critical points of the loan application, the fulfillment of which is strictly verified by banks. Within the framework of the Otthon Start program, the Ministry of National Economy, credit institutions and the Hungarian Banking Association have developed a specific calculation methodology for determining the price per square meter for uniform legal application, the disregard of which results in automatic rejection of the application.

According to this, the basis for calculating the price per square meter limit is: the net floor area of the apartment, to which 50% of the floor area of balcony, loggia or terrace must be added. For smooth bank processing, it is essential that the purchase agreement already contains this calculated, aggregated floor area data.

To avoid misunderstandings, it is important to distinguish this special calculation method from the concepts defined in the Act on Hungarian Architecture:

• Net floor area: The area calculated in horizontal projection of a room or space partially or wholly enclosed by building structures. More simply, this is the interior “usable” area bounded by walls.
• Useful floor area: That part of the net floor area where the clear height is at least 1.90 meters. This concept is particularly significant for attic properties.
• Gross floor area: The net floor area increased by the floor area of building structures.

Otthon Start Loan with 10% Down Payment? The Significance of MNB Debt Cap Rules

The Otthon Start program is not an independent structure separate from market regulations. Every loan application must comply with the so-called debt cap rules created by the Hungarian National Bank (MNB) to prevent excessive indebtedness, which are set forth in MNB Regulation 32/2014. (IX. 10.). These prudential requirements rest on two main pillars: the Loan-to-Value Ratio (LTV) and the Debt-to-Income Ratio (DTI) limits.

The Loan-to-Value Ratio – The Question of Down Payment

The Loan-to-Value Ratio (LTV) determines what maximum portion of the market value of the property serving as collateral the loan amount taken can constitute.

• The general rule: For forint-based mortgage loans, according to Section 3 (1) of the regulation, the exposure (loan amount) may not exceed 80% of the property’s market value. In practice, this means that most home loans require at least 20% down payment.
• Exception for first-time homeowners: The most important provision for the Otthon Start program is Section 3 (1a) of the regulation, which makes an exception for first-time homeowners. In their case, the loan amount can reach up to 90% of the property’s market value. This regulatory allowance creates the legal basis for the widely advertised minimum 10% down payment opportunity in the program.

However, it is important to emphasize that the 10% down payment is a legal possibility, not a guaranteed right. The MNB regulation sets the maximum financing ratio, but credit institutions may impose stricter conditions based on their own internal risk management policies. In practice, a bank may decide to require 15-20% down payment based on the property’s location, condition, or the applicant’s creditworthiness. This is one of the most common pitfalls that applicants must be prepared for.

The Debt-to-Income Ratio – Income Burden Capacity

The Debt-to-Income Ratio (DTI) limits what percentage of the applicant(s)’ certified monthly net income can be allocated to all loan repayment obligations.

• The 600,000 forint income threshold: Section 6 of the regulation applies a two-tier system.
  • If the household’s aggregate certified monthly net income does not reach 600,000 forints, the upper limit of DTI is 50%.
  • If the income reaches or exceeds 600,000 forints, the burden capacity increases to 60%.
• The role of the interest period: The maximum level of DTI is also influenced by the length of the loan’s interest period. Since the Otthon Start loan provides a fixed 3% interest rate for the entire term of up to 25 years, it falls into the most favorable category for interest periods longer than 10 years, allowing maximum utilization of income. In contrast, much stricter limits would apply to market loans with shorter interest periods or variable interest rates.

The Guarantee of Successful Credit Assessment: Mandatory Content of the Purchase Agreement

In a property purchase financed with an Otthon Start loan, the purchase agreement becomes a complex document that secures both the credit institution’s and the state’s interests. During credit assessment, banks systematically verify the existence and accuracy of the following special content elements.

• Formal requirements and breakdown of purchase price: The document must be drafted and certified by a lawyer. The contract must contain in forints, precisely and in detail, the total purchase price, as well as its sources: the amount of down payment (equity), the amount of the Otthon Start loan and any other subsidies.
• The order of bank disbursement and debt relief: The contract must stipulate that the loan amount represents the last part of the purchase price, and the bank – following proof of down payment fulfillment – will disburse it directly to the seller(s)’ bank account specified in the document. If the property is burdened by the seller’s mortgage and debt relief occurs from the purchase price, the document must describe in detail the precise legal and financial mechanism, including the designation of the creditor bank and the account number required for final repayment.
• The critical role of lawyer’s escrow: The seller must simultaneously with signing the contract place in lawyer’s escrow the unconditional and irrevocable consent statement (ownership registration permit) necessary for registering the buyer’s ownership right. The contract must precisely regulate the conditions for managing the escrow and submitting it to the land office, which is typically tied to the complete payment of the entire purchase price.
• Prohibition of suspensive or dissolving conditions: According to the uniform internal risk management policy of banks, the purchase agreement may not contain any suspensive or dissolving conditions that could result in the contract’s invalidity or ineffectiveness after loan disbursement. This is not a requirement of the program regulation, but of creditor interest protection. The professional formulation of conditions that protect the buyer’s interests but also comply with this principle (e.g., in case of loan application rejection) is a paramount legal task.

Combining Subsidies: Combining Otthon Start with Other Benefits

The government has deliberately harmonized the requirement systems of various homeownership programs, allowing their joint application, with which applicants can create extremely favorable, complex financing packages.

• Coordinated rules: For spouses acquiring their first joint home, the purchase price limit is identical for both programs: 100 million for apartments, 150 million forints for houses. The concept of “first joint home purchaser” has also been unified.
• Practical application: A couple meeting the conditions of both programs and expecting child(ren) can apply for up to 50 million forints in Otthon Start loan and – depending on the number of children – up to an additional 50 million forints in CSOK Plusz loan for purchasing the same property, provided the purchase price does not exceed the limits and the household income can bear the combined monthly installments of both loans.
• Credit assessment: The bank will examine the Debt-to-Income Ratio based on the combined monthly repayment of all the household’s loans (Otthon Start, CSOK Plusz, any market loans).

Additional Combination Options

• “Babaváró” Loan as down payment: Banks widely accept the amount of the free-use Babaváró loan without property collateral as a source for the down payment required for the Otthon Start loan. This significantly reduces the need for cash equity, making market entry easier for young couples.
• “Falusi CSOK” as non-refundable subsidy: The non-refundable subsidy portion of Falusi CSOK available in preferred small settlements can also be used to supplement down payment, reducing the required loan amount.

Summary: Expert Legal Assistance as a Guarantee for Otthon Start Loan Application

The Otthon Start program undoubtedly creates an attractive opportunity for first-time homebuyers. However, the detailed analysis clearly shows that the price of favorable interest rates is an extremely complex legal and administrative process fraught with pitfalls. The nuanced conditions for establishing eligibility, the special methodology of floor area calculation, the mandatory content elements of the purchase agreement, and long-term restrictions are all areas where even the smallest error can lead to application rejection or later serious sanctions.

The success of the loan application and the avoidance of future legal risks both depend on a precisely prepared, legally flawless purchase agreement that fully complies with banking and regulatory expectations in all respects. In this process, the involvement of an experienced real estate attorney is not merely one of many administrative steps, but a fundamental investment guaranteeing the transaction’s security and the borrower’s legal protection. An expert lawyer is capable of preliminary assessment of the applicant’s situation, drafting a document complying with banking requirements, and professionally managing the entire process, thereby minimizing risks. If you are also planning to utilize the Otthon Start program, contact our office with confidence so we can provide expert assistance on your path to your first home.