Hipoteca Joven Mallorca & Aval: How the 100% mortgage works for first-time buyers

Anyone who is young, lives in Mallorca, and finally wants to buy their own flat is faced with what seems like an insurmountable problem: property prices on the island are among the highest in the whole of Spain, and standard bank mortgages finance a maximum of 80% of the purchase price. Raising the missing 20% plus transaction costs as equity is simply impossible for many people. This is precisely where the Hipoteca Joven Mallorca comes in: the IBAVI (Institut Balear de l'Habitatge) guarantees up to 20% of the purchase price, allowing the bank to finance up to 100% — with no equity deposit required. On top of that, there is the national Aval ICO scheme for first-time buyers. This guide explains how both programmes work, what requirements you need to meet, what tax advantages are available on top, and how to approach the process step by step — with all the concrete figures confirmed by our research.

Would you like to know whether you qualify for the IBAVI Aval, the ICO guarantee, and the ITP exemption at the same time?

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• An overview of all costs when buying a property in Mallorca

What is the Nova Hipoteca Jove from IBAVI?

The Nova Hipoteca Jove is not a direct state loan — IBAVI does not pay money out to you. Instead, the programme provides a public guarantee (Garantía) to the lending bank. This guarantee covers the portion of the purchase price that a standard bank would not finance: up to 20% for young buyers under 40, as well as for large families, single parents, and people with disabilities. For all other eligible applicants, the guarantee amounts to up to 15%.

The bank can therefore grant a mortgage of up to 100% of the purchase price — provided that the bank's own lending criteria permit this. In practice, lenders currently offering mortgage agreements under this programme include CaixaBank, Colonya Caixa d'Estalvis de Pollença, and Cajamar Caja Rural, among others.

Please note: The IBAVI guarantee is not a free pass — the bank will still assess your creditworthiness, your income, and your ability to service the debt. No Aval will be granted without a positive lending decision from the bank.

Who can use the programme? The IBAVI requirements in detail

Personal requirements

In order for the IBAVI to approve your guarantee, you must meet all of the following criteria:

1. Nationality / residence: Spanish or EU nationality, or legal residence in Spain.
2. Residence in the Balearic Islands: At least 5 years of uninterrupted or cumulative residence on the islands.
3. No other residential property in Spain — with few exceptions (inherited share, loss of ownership through divorce, natural disaster, domestic violence, terrorist attacks, or disability where the existing property lacks accessibility).
4. Income limits (gross annual income):

5. Age limit for the 20% aval: under 40 years of age. Older applicants who meet all other criteria will receive a maximum of 15%.

Property requirements

• Located in the Balearic Islands (Mallorca, Menorca, Ibiza, Formentera)
• To be used as a permanent primary residence (primera residencia habitual y permanente)
• Purchase price including ancillary buildings (garage, cellar) maximum 382.744,84 € — ancillary costs and taxes not included

Please note: The previous price limit was 270.000 €. The increase to 382.744,84 € was announced in March 2025 and opens up access to the programme for significantly more buyers in Mallorca.

The Aval ICO: the national complement to the IBAVI programme

Alongside the regional IBAVI programme, there is the national Aval ICO (Instituto de Crédito Oficial), which likewise guarantees up to 20 % of the purchase price — and up to 25 % for properties with an energy efficiency rating of A to D.

According to our research, this guarantee was valid until 31 December 2025. Whether and in what form it will continue in 2026 had not been conclusively confirmed at the time this article went to press — check directly with the ICO or your bank for the current status.

Please note: The IBAVI guarantee and the Aval ICO are alternative, not cumulative programmes — as a rule, you can only use one of them for the same transaction. Since the IBAVI guarantee has significantly higher income thresholds and is tailored to the Balearic market, it is the more attractive option for many buyers in Mallorca. Ask your bank and a financial adviser to run the numbers for both scenarios.

ITP exemption and tax advantages: what you can actually save

In addition to the mortgage guarantee, the Balearic Islands offer a tiered system for the Impuesto sobre Transmisiones Patrimoniales (ITP), the property transfer tax equivalent for existing properties. With a purchase price running into several hundred thousand euros, this is often the single largest item among the ancillary costs.

Please note: The ITP price threshold for the special rates is currently 270.151,20 € — this is not the same as the new IBAVI purchase price ceiling of 382.744,84 €. If the purchase price falls between these two figures, you will benefit from the IBAVI guarantee but will no longer qualify for the full ITP exemption or the 2 % rate.

A complete overview of all purchase ancillary costs can be found in our guide to buying costs in Mallorca.

Direct subsidies: up to 10.800 € as a grant

In addition to tax reliefs and mortgage guarantees, the Balearic government awards young first-time buyers a direct subsidy. According to the sources researched, buyers under 36 years of age with a purchase price of up to 270.151,20 € can receive a grant of up to 10.800 € — subject to defined income thresholds.

Please be aware: This direct grant is tied to specific income and purchase price limits and must be applied for separately. It can be combined with the IBAVI guarantee, but not necessarily with all other funding components at the same time. Before purchasing, seek advice from an accredited advisory body or a gestor regarding the current combinability rules.

Bank products: what the partner banks actually offer

The IBAVI programme is only available through accredited partner lending institutions. As of March 2025, these are CaixaBank, Colonya Caixa d'Estalvis de Pollença, and Cajamar Caja Rural. Other banks offer their own first-time buyer mortgages with higher loan-to-value ratios, but without the IBAVI guarantee these typically cap out at 90–95 %.

As an example: the financial institution Imagin (a CaixaBank subsidiary) offers financing of up to 90 % of the lower of the purchase price and the assessed value under the Balearic programme, with a fixed tied interest rate of 2,85 % NIR (3,574 % APR) when salary is paid into the account and home and life insurance is taken out; without these tie-ins the rate is 3,60 % NIR (4,084 % APR). These terms are subject to change — treat them as a guide, not as binding offers.

Step by step: How to apply for the IBAVI aval and mortgage

1. Check personal eligibility: Age, proof of income (IRPF for recent years), residential registration (Empadronamiento) for a minimum of 5 years in the Balearen, no ownership rights to other properties in Spain.

   

2. Select a property: Purchase price ≤ 382.744,84 € (including garage/basement), located in the Balearen, intended for use as a permanent primary residence.

3. Have the land registry entry checked: Before signing the reservation contract, check the Nota Simple at the Registro de la Propiedad for encumbrances, mortgages and planning status. More on this: Checking the Spanish land registry.

4. Sign the reservation contract: Typically with a deposit of 1% to 3% of the purchase price. Details: Reservation contract in Spain.

5. Submit the mortgage application to an IBAVI partner bank: DNI/NIE, current IRPF tax returns, employer's certificate or proof of income for the self-employed, Nota Simple for the property, valuation report (tasación) — this is arranged by the bank.

6. Apply for the IBAVI guarantee: This usually runs in parallel with the bank application via the lending institution. Processing fee: 0,50% of the guaranteed amount (one-off, payable by the buyer).

7. Arras contract (preliminary contract): Following a positive mortgage decision, a private purchase contract (contrato de arras) is signed, typically with a 10% deposit.

8. Notary and escritura pública: Notarisation of the purchase with the notary, mortgage registration. More on the process: Property purchase: Legal process.

9. Pay ITP and register with the Land Registry: Register the ITP (with special rate or exemption if applicable) within 30 days of notarisation with the ATIB (Agència Tributària de les Illes Balears).

10. Submit subsidy application to IBAVI: If you meet the conditions for the direct grant (up to 10.800 €), apply for it separately.

Note: IBAVI address: C/ de Manuel Azaña, 9, Palma. Tel.: 900 700 003. Website: ibavi.caib.es

Worked example: what the IBAVI guarantee means in practice

Let's take a 30-year-old female buyer with an annual income of 38.000 € who wishes to purchase a flat in Palma for 280.000 € (existing property).

Without the IBAVI guarantee, the same buyer would have needed 56.000 € in equity for the deposit plus approximately 8.000 € in ancillary costs with 80 % financing — around 64.000 € in total. The guarantee reduces this to the ancillary costs alone.

Please note: In this example, the purchase price exceeds the ITP exemption threshold of 270.151,20 €, meaning the 2 % rate applies (age 30, full exemption no longer available). Anyone under 30 who purchases a property below 270.151,20 € and meets all income limits pays 0 % ITP — at 270.000 € that saves up to 21.600 € (at the standard rate of 8 %) or at least 5.400 € (at the 2 % rate).

Most common mistakes with the Hipoteca Joven on Mallorca

1. Purchase price just above 270.151,20 € — ITP benefit lost, but IBAVI guarantee still available. Many buyers are unaware that the tax exemption threshold (270.151,20 €) and the IBAVI purchase price ceiling (382.744,84 €) are different figures. Someone buying for 280.000 € loses the 0 % ITP rate but retains the IBAVI guarantee.

2. Proof of residence is missing or incomplete. The IBAVI guarantee requires 5 years of residence in the Balearen. Anyone who has only recently moved there does not qualify — not even through retrospective re-registration.

3. Applying for the Aval ICO and the IBAVI guarantee simultaneously. The two guarantees cannot be combined for the same transaction. Anyone who applies for both risks having one or both applications rejected.

4. Tasación (valuation report) too low — financing shortfall. The aval covers up to 20 % of the purchase price, not the valuation. If the tasación comes in below the purchase price, the bank will finance a maximum of 100 % of the valuation. You will need to cover the difference between the valuation and the purchase price from your own funds.

5. Direct subsidy not applied for separately. The direct grant of up to 10.800 € is not automatically included in the mortgage application — it is a separate process with the IBAVI.

6. Already owning a property in Spain (even partially or encumbered with debt). Even a small inherited share can breach the eligibility criteria if none of the exemption provisions apply.

What happens after the purchase?

Your list of obligations does not end with the notary appointment. As a property owner on Mallorca, you will face regular costs and reporting requirements:

• IBI (property tax): Annual municipal tax based on the cadastral value. More on this: IBI Steuer Spanien
• Comunidad de Propietarios: For flats, you are a member of the owners' community with an obligation to contribute to shared costs. Everything you need to know: Eigentümergemeinschaft Spanien
• Wealth tax: Taxable in Spain above certain tax-free allowances. Vermögensteuer Spanien
• Energy certificate: Mandatory if you later let or sell the property. Energiezertifikat Spanien
• Contents insurance: Often a condition of the bank. Hausratversicherung Spanien

If you are thinking of letting the property on a long-term basis at some point, you will find everything you need under Langzeitmiete Mallorca.

Checklist: Am I ready for the Hipoteca Joven & IBAVI aval?

• I am under 40 years of age (for the 20 % aval; under 36 for the 2 % ITP; under 30 for the 0 % ITP)
• I have been resident in the Balearic Islands for at least 5 years (cumulative)
• My gross annual salary is below 60.666,65 € (single person) or 68.250 € (as a couple)
• I do not own any other property in Spain (or I qualify under an exemption)
• The purchase price including parking space is at or below 382.744,84 €
• The property is located in the Balearic Islands and is to become my permanent primary residence
• I have at least approx. 8.000–12.000 € in liquid funds available for ancillary costs (ITP, notary, land registry, fees)
• I have submitted my IRPF tax returns for the past years in full to the AEAT
• I have contacted one of the partner banks (CaixaBank, Colonya, Cajamar)
• I have checked my eligibility for the direct subsidy (up to 10.800 €)

Conclusion

The Nova Hipoteca Jove from IBAVI is one of the most concrete and best-equipped home purchase programmes for young people in Spain. The increased purchase price ceiling of now up to 382.744,84 € makes the programme accessible to a considerably larger segment of the Mallorca market than before the 2025 reform. Combined with the ITP exemption for under-30s and the potential direct subsidy of up to 10.800 €, this creates a package that delivers real purchasing power — but only if all the components are applied for correctly and coordinated with one another.

The biggest pitfall is not the qualification itself, but the coordination: anyone who approaches the subsidy application, tax exemption, IBAVI aval, and bank financing without professional support risks losing individual benefits. Before you sign a reservation agreement, have the entire cost structure calculated for you in writing.

Official Sources

• IBAVI – Nova Hipoteca Jove (programme description and requirements): https://www.caib.es/sites/nova_hipoteca_jove/es/
• IBAVI – Requisitos: https://www.caib.es/sites/nova_hipoteca_jove/es/requisitos
• IBAVI main portal: https://ibavi.caib.es
• ATIB – Agència Tributària de les Illes Balears (ITP administration): https://www.atib.es
• ICO – Instituto de Crédito Oficial (Aval ICO): https://www.ico.es
• BOE / BOIB – Official Gazettes for statutory bases: https://www.boe.es / https://www.caib.es/boib
• Govern de les Illes Balears – Conselleria de Mobilitat i Habitatge: https://www.caib.es