Home purchase loan: what it is, advantages and how to apply

The dream of owning your own home can become a challenge with the constant price variations in the real estate market, but with the home purchase loan It’s simpler to buy with special conditions.

This is because this type of credit offers special payment conditions, making it ideal for purchasing long-term goods.

In today’s content we will understand how this financing proposal works, focusing on its advantages and request possibilities. Check it out!

Main topics:

• Definition and characteristics of the loan for the purchase of housing
• Advantages of real estate financing
• Application process and required documentation
• Eligibility criteria for housing credit
• Interest rates and payment terms
• Tips for negotiating better loan terms

What is a home purchase loan?

Housing credit is a loan for purchasing property, which offers special conditions, such as an extended term and specific interest rates. 

Definition and main characteristics

Various types of credit can be used to purchase property, as long as you have a sufficient limit.

However, the loan for purchasing housing has more advantageous conditions, which makes it the best alternative for those who want to buy properties in installments. Look:

• Long payment terms
• Generally lower interest rates
• Amount financed based on the chosen property
• Requirement for entry or minimum value of own resources

Differences between loan and real estate financing

Although they seem the same, loans and real estate financing have differences. See the table below to understand better.

Eligible property types

There are several types of properties eligible for financing, such as:

• Apartments
• Houses
• Townhouses
• Properties in the plant
• Land (in some specific cases)

So, before applying for the loan, vCheck the specific conditions with the financial institution, which may change according to the credit release policy.

Advantages of a home purchase loan

Housing credit makes purchasing property much easier, as its main advantage is lower interest rates.

Payment terms are also flexible, lasting up to decades, which helps adjust installments to the family budget. This makes it easier to plan your financial future.

Furthermore, it is possible to finance up to 90% of the value of the property, which reduces the need for a large down payment. 

“Home purchase loan are a fundamental tool for democratizing access to home ownership in Brazil.”

Finally, theThe benefits of housing credit go beyond the purchase, as many institutions offer insurance to protect the property.

• Competitive interest rates
• Extended payment deadlines
• High percentage of financing
• Additional insurance and protections

With these advantages, a home loan is a great option to make the dream of owning your own home more accessible and secure.

Home purchase loan process

The process for applying for a housing loan has several steps, and it is essential to understand each step to have a better chance of approval.

Required documentation

To get started, you will need several documents:

• Proof of income
• Personal documents (RG, CPF)
• Proof of residence
• Civil status certificate
• Income Tax Declaration

Approval process steps

The real estate credit approval process follows a few steps:

1. Pre-approval
2. Credit analysis
3. Property valuation
4. Final approval
5. Contract signing

Average analysis and release deadlines

Deadlines vary depending on the financial institution and the case. In general, the process takes 30 to 60 days. 

This is because the initial credit analysis is quick, but the property evaluation and final approval can take weeks.

“Real estate loan approval time largely depends on the customer’s agility in providing complete and correct documentation.”

In this way, cEach step is crucial for the security of the transaction and to assess whether you can pay. 

So, be ready to provide more information if necessary during the process.

++Loan denied: why does it happen and what to do? – Analytic New.

Loan eligibility criteria

To obtain a housing loan, it is essential to know the requirements, as financial institutions examine each application carefully, as they want to ensure that the borrower can pay the installments.

Therefore, the Credit analysis is detailed, and considers several important factors. The main ones are:

• Proven monthly income
• Credit history
• Payment capacity
• Property value
• Age of the applicant

An important point is the relationship between income and installments, as banks generally do not want this relationship to exceed 30% of monthly income.

Here is a comparison of the main requirements between different institutions:

Finally, it is clear that each bank has its own rules. Therefore, it is better to deal with the matter directly. This makes it easier to understand the specific requirements for financing.

Interest rates and payment terms

When you want a loan to buy a house, it is important to know about the interest and payment terms. 

This is because these aspects affect the total value of the credit, and whether there is a possibility that the customer will be able to pay for the contract throughout the entire period.

Comparison between fixed and variable rates

There are two types of interest: fixed and variable. Fixed interest does not change during the contract, as the variables can change with the market. 

That said, see the main differences between the types of interest:

Available payment terms

The terms to repay the loan can reach 35 years, so longer terms result in smaller installments. 

However, this makes the total cost of the loan increase due to interest.

Amortization Options

There are several repayment systems for your loan:

• SAC: Constant amortizations, decreasing installments
• PRICE: Fixed installments, increasing amortization
• SAM: Mixed between SAC and PRICE

Therefore, before choosing your real estate financing, think carefully about the interest rates and payment terms, as this helps you make a financial decision that truly meets your needs.

Guarantees and insurance associated with the housing loan

When you apply for a loan to buy a home, it’s crucial to understand collateral and insurance, as these safeguards protect both you and the financial institution.

Housing insurance 

Home insurance protects the home from damage and guarantees repayment of the loan if the owner dies or becomes permanently ill.

• Physical damage to the property
• Death or permanent disability of the borrower
• Owner’s civil liability

Other guarantees required by banks

Banks also ask for extra guarantees in addition to housing insurance, which help reduce risks and ensure that the contract is fulfilled.

Therefore, it is essential to carefully analyze the guarantees before signing the contract, as this avoids surprises and guarantees a safe transaction for everyone.

Tips for negotiating better loan terms

When looking for a loan to buy a home, it is important to be prepared to negotiate, as this helps to obtain more favorable conditions.

First pResearch and compare offers from different banks, as this gives you a solid basis for negotiating lower rates. 

Therefore, do not be afraid to show proposals from other banks during negotiation.

Furthermore, mImprove your credit score before applying for a loan, as having a good financial history helps a lot in negotiation and increases the chances of getting better terms.

• Make a larger down payment if possible. The higher the down payment, the lower the interest and the better the conditions.
• Negotiate the reduction of administrative fees and other financing costs.
• Consider a shorter loan term. This generally brings lower interest rates.

Finally, lRemember, negotiation is a process, so be ready to make counteroffers and don’t accept the first offer. 

With patience and persistence, it is possible to obtain better conditions on your housing loan.

“A successful negotiation results in an agreement where both parties feel satisfied.”

Risks and precautions when taking out a home loan

When you seek real estate financing, it is essential to know the risks, as the process requires attention and planning to avoid financial problems in the future.

Assessment of payment capacity

Before signing the contract, carefully evaluate your financial situation, and don’t just think about your current income, also think about possible financial changes in the future. 

This is because a home loan is a long-term commitment, and your repayment capacity must be able to support it for years.

Careful reading of the contract

One of the biggest risks is in the contract clauses, so read each part carefully and understand all obligations and penalties. 

If necessary, ask for help from a specialized lawyer to understand better.

Long-term financial planning

Make a financial plan that includes the loan installments, and don’t forget to include expenses such as taxes, condominium fees and maintenance. Additionally, set aside money for emergencies, as this planning helps to avoid problems and brings peace of mind throughout the financing.

“A well-planned loan today means a worry-free home tomorrow.”

Finally, remember, taking good care of purchasing a property is as important as choosing the property, and with care and planning, you can reduce risks and enjoy owning your own home.

Conclusion

A home equity loan is a great choice to make your dream of owning a home a reality, as it offers low interest rates and flexible payment terms.

Before asking for a loan, it is essential to know if you can pay, so it is worth comparing offers and reading the contract carefully.

Finally, cWith good planning, you will find the perfect loan, and thus, you will be closer to having your own home, with security and peace.I

++How to secure financing for small business? – Analytic New.

Roberta 24 de January de 2025