Home Loans / Mortgages in Finland
Primary sources of information for this page: Finance Finland (FFI) and the Finnish Financial Supervisory Authority
This is a brief guide only, and does
not constitute legal advice
Home Loans: General Information
Finnish banks grant housing loans for buying a home (or occupancy rights to a home) and for building or renovating a home. As is the case worldwide, the primary criterion for obtaining a home loan in Finland is the borrower's capacity to repay the debt. Having a temporary job is theoretically not an obstacle to obtaining a home loan if prospects in the industry are good. However, banks are naturally cautious and if you are not a citizen of Finland you may face additional hurdles.
In the long run an owner-occupied home usually provides the most affordable way to live in Finland. Since Finland's accession to the euro zone, interest rates have settled at a level moderate enough to keep loan servicing costs under control. However, all borrowers should be prepared for interest rate fluctuations.
Interest Rates: The trend in interest rates on housing loans in Finland was a long steady decline from 2010-2022. This was followed by a surge in 2023, from under 1% to an average around 4.7%. By October 2024 the average rate had dropped again, to about 3.5%. Source: Bank of Finland
Loan cap: As of September 2025 the amount of a housing loan may amount to a maximum of 90% of the current value of the collateral posted at the time of loan approval (maximum loan-to-value ratio). The buyer must therefore have at least 10% in their own savings or other collateral. Loans for purchase of a first home are an exception, with a loan cap of 95%, and the buyer having at least 5% in their own savings or other collateral. Source: Financial Supervisory Authority
Tax Benefits: Part of the interest paid on a home loan can be deducted in taxation, and capital gains on a home are tax exempt after two years of living in the home. See Tax Advantages for more information.
Applications for Home Loans: Contact the banks directly to arrange interviews. You can make a formal loan application at an interview if you wish.
Some Tips:
- Make enquiries to as many banks as you can to see what they offer - the differences in interest rates and charges can be substantial
- The banks have specialists who will also explain tax issues - they will tell you which documents the tax authority requires
- Make sure ALL documents are translated into English, not just the ones the bank suggests are appropriate
Repayment Capacity
The crucial factor is that the loan applicant's income is regular and that loan repayments leave the applicant with enough money for other expenses and living. The applicant is required to disclose all income, expenses and debts. To avoid excessive indebtedness, it is necessary to include servicing costs on other loans in the expense calculation. Any guarantees or pledges obtained by the borrower are also taken into account, as they may lead to further indebtedness if the borrower becomes liable to pay under the commitments.
Repayment ability is estimated by calculating the following:
- Net disposable income per month
- less regularly recurring expenses
- less servicing costs for borrower's existing loans (from same bank and other banks, credit card facilities, hire-purchase agreements)
- less other spending reported by borrower (food, clothing, children's expenses, commuting, insurance premiums, health care, telephone, etc)
The remainder represents the customer's monthly resources to service the new loan. The bank will require a buffer to cover unexpected expenses.
Credit Check
Before accepting a loan application the bank always checks credit information on the customer. If the customer has a default record, the bank may reject the application. A default is recorded if established by court order or by measures undertaken by enforcement authorities. This may apply to payments which have remained unpaid for an average of 6 to 8 months and the person has received several recovery notices. Once recorded, a default remains on file for 2 to 4 years.
Collateral, Guarantees & Pledges
A home loan is usually secured by the property bought; the collateral value of a purchased home is usually 70% to 75% of the value of the property. If the need for finance exceeds this percentage, you can get a state guarantee for your home purchase. The loan may also be secured by other assets such as deposits, securities or any other personal assets that can be easily converted to cash. Where required, additional collateral may be provided in the form of a guarantee or pledge from, for example, the borrower's parents.
State Guarantee
A government guarantee is available for home loans and first-time home buyer’s loans (known as interest-subsidised ASP loans). The home must be bought to be used as the permanent residence of the buyer or the family. You can agree on the government guarantee with your bank when applying for a loan.
The government guarantee can be granted when the home loan represents at most 85% (or 90% for interest-subsidised ASP loans) of the purchase price of the home. It can cover at most 20% (or 25% for interest-subsidised ASP loans) of the loan, to a maximum of €60,000.
The government will charge a loan guarantee fee of 2.5% of the guaranteed amount with the exception of interest-subsidised ASP loans, which are not subject to this fee.
Other Guarantees and Pledges
If a person issues a guarantee to secure a loan, that person is usually responsible for the loan as though it were his or her own. The guarantee is often unconditional, which means that the bank is entitled to require payment direct from the guarantor without first requiring payment from the debtor. As a result, the state guarantee scheme was adopted to secure home loans partly to ensure that it would not be necessary to use personal guarantees for home loans. Pledging, instead, is an arrangement where the pledger is responsible for the loan only up to the amount of the property or assets they have pledged.
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