You did the maths, the number worked, and the bank still said no. You are not alone, and there is a concrete explanation. Since 1 August 2026, the rules that decide how much you can borrow have changed, and the calculation the bank makes is no longer the one you made.
This article explains, with official data, what changed, how much capital that takes away from you (or gives you), and how to find out your real number before falling in love with a house.
What changed on 1 August 2026
In July 2026, the Bank of Portugal approved Macroprudential Recommendation no. 1/2026, replacing the rules in force since 2018. The new rules apply to every contract whose creditworthiness assessment is made from 1 August 2026 onwards. Three changes affect you directly:
1. The maximum debt-to-income ratio fell from 50% to 45%. This is the heart of the change. The ratio, technically called DSTI (debt service-to-income) by the Bank of Portugal, measures the weight of all your loan instalments in your monthly net income. The bank now recommends that the sum of instalments does not exceed 45% of your net earnings, instead of the previous 50%.
2. The margin for exceptions shrank. Banks could previously grant up to 15% of each half-year of lending above the ratio limit, now that margin is down to 10%, and every decision above the limit must be justified. In plain terms: there is far less room for the bank to "make an exception" for your case.
3. Terms were simplified and extended for younger borrowers. There used to be three age brackets (40, 37 and 35 years). Now there are only two: up to age 35 you can ask for up to 40 years; above 35, the maximum is 35 years. In practice, anyone between 30 and 35 gained three years of term compared with the old rules, which lowers the monthly instalment.
Why your calculation and the bank’s do not match
Here is the detail that catches almost everyone off guard: the ratio you calculate is not the one the bank calculates.
You divide the instalment by your income and see a number, but before doing that division the bank applies two stress adjustments set out in the recommendation.
The first is an interest rate shock. The bank does not calculate the instalment with the rate it will offer, it calculates it with a higher rate, to test whether you could withstand an increase. Since almost every mortgage runs beyond 10 years, the adjustment applied is 1.5 percentage points on top of the rate. This applies to variable rate loans and to the variable phase of mixed rate loans.
The second is an income reduction after age 70. If your contract ends after you turn 70, the bank must assume your income will be lower in that phase, with a drop of at least 20%, proportional to the weight of the years above 70 in the total term. This does not apply if you are already retired when you apply, but it can seriously tighten the numbers for anyone borrowing after 40.
It is because of these two shocks that many people with "correct maths" get a no. The number that matters is not yours, it is the bank’s, after the adjustments.
How much does this cost you, in euros?
Five percentage points look small on paper, but they are not. A simple, official example: a household with 2,000€ of monthly net income could, under the 50% rule, support a 1,000€ instalment. Under the new 45% rule, that limit drops to 900€. That is 100€ a month less instalment that the bank accepts and, across a typical mortgage, it translates into almost 19,000€ less capital you can borrow on the same salary. In other words: the house you could finance in July may have moved out of reach in August, without your salary changing a cent. This is exactly the kind of surprise worth discovering before you start viewing properties.
The other side: a longer term can partly compensate
Not everything got tighter. For those up to 35, extending the maximum term to 40 years is real relief, because spreading the loan over more years lowers the monthly instalment, and it is precisely the instalment that counts towards the ratio.
But watch two points: first, the age that counts is your age on the date of the bank’s creditworthiness assessment, not on the date of the deed. Anyone turning 36 between the analysis and the deed keeps the 40 years. Second, longer terms mean a lower instalment today, but much more interest paid in total. A longer term solves access to credit, not the cost of credit.
There is also a limit that is not in the recommendation and that many people forget: the maximum age at the end of the contract, set by each bank. Most require that you do not pass 75 in the final month of the contract, some accept 80. For anyone borrowing after 40, it is often this limit, not the law, that decides the possible term.
Context: why this is happening now
These rules did not come out of nowhere. The Bank of Portugal justified the review with the strong growth of household lending, the rise in the average loan amount and the worsening of risk indicators. Portugal remains among the European countries with the longest terms: the average maturity of new operations stays above 30 years, while in most of Europe it sits between 20 and 25.
And there is a cyclical factor on top: Euribor has risen again and is approaching 3%, which makes instalments more expensive and pushes up the ratio for anyone signing or reviewing a loan. Tighter rules plus higher interest equals a narrower margin to buy a home on both sides at once. That is why knowing your exact number is no longer a detail, it is the first step of any purchase.
What should you do before looking for a house?
The most expensive mistake in today’s market is starting with the house and only then thinking about financing. With the new rules, the right order is the reverse.
Calculate your real debt-to-income ratio, including the 1.5 point rate shock and every loan you already have (car, personal, credit cards).
Find out your capital limit with your current income, before committing emotionally to a property.
Check your maximum term based on your age at the assessment and your bank’s end-of-contract age limit.
Only then set the price range of the homes worth visiting.
Doing this analysis early avoids the frustration of losing a house to a predictable "no" and puts you in a much stronger position to negotiate, because you know exactly how far you can go.
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