Getting a mortgage in Italy as a foreigner
Are you a foreigner looking to get a mortgage for a property in Italy? Here’s all you need to know including conditions, requirements, and documentation.
Italy's real estate market
Italy– a country filled to the brim with art, history, fashion, music, food, and wine. The home of the world’s most famous artists, like Michelangelo and Leonardo Da Vinci, and one of the most widely loved cuisines. It has a Mediterranean climate and beautiful scenery including the Alps in the north, valleys, glacier lakes, and coastal plains. It’s no wonder that Italy is one of the top locations where Americans, among many others, are buying property abroad.
The advantages of buying a property in Italy don’t stop there. It can also be a preferable choice for many buyers and investors from an economic perspective. Compared to other nearby countries, like Spain or Portugal, Italian properties tend to be less expensive and have lower transaction costs.
When looking at location, there are many cities where people are buying property including Rome, Milan, Florence, Naples, Venice, Palermo, and Bologna. Venice and Milan generally have the most expensive property prices in Italy, while cities farther south, like Palermo and Naples, have less expensive prices. According to the Global Property Guide (GPG), rental yields for apartments in Italy are moderate to good, on average 4-8%. Rental income tax is 21% for residents and 26% for nonresidents. For investors looking to maximize rental yields, the best cities based on estimated rental yields are Palermo, Florence, Genoa, Catania, and Turin, all with rental yields greater than 6.5%.
It’s clear that there are many reasons to buy real estate in Italy, for both personal uses (as a residence or vacation home) and investment purposes. The next step for the majority of buyers is figuring out how to finance their real estate purchase, most likely through a mortgage loan. Continue reading to learn all about how you can get a mortgage in Italy as a foreigner, including lending conditions, requirements, and documentation.
Lending conditions
Luckily, there are no restrictions to getting a mortgage in Italy as a foreigner; however, there are some additional conditions you will need to meet to qualify for a mortgage loan. In general, banks in Italy are strict when it comes to their lending practices, for both citizens and foreigners, but the good news is that it’s still very possible to get a mortgage. Since not all lenders will offer loans to foreigners, the first step is to find an Italian bank or international mortgage broker that offers international mortgage loans. You’ll find that lenders typically offer more variable-rate mortgages in Italy, but you may still find the option to take out a fixed-rate mortgage as well (it will just have a significantly higher initial rate).
Each bank will have its own specific conditions when it comes to providing loans to foreign nationals, so we’ll cover some of the most common lending conditions. If you’re a citizen of the European Union (EU) or European Economic Area (EEA) then you will have no limits on purchasing a property. Likewise, if you’re a foreigner but are a resident and receive income in Italy, then the procedure will be the same as it is for citizens. In general, citizens and residents can be eligible for a loan that covers 70-80% of the purchase price of a property, depending on the borrower’s financial situation.
If you’re a non-resident foreigner, this is where unique lending conditions come into play.
Here are the main conditions for non-resident foreigners:
Your country of citizenship must have a treaty of reciprocity with Italy, allowing Italians to purchase property in your country of origin and vice versa. You can look for this treaty on the Ministry of Foreign Affairs website.
There is a treaty between the US and Italy, so there are no restrictions for Americans.
A down payment of 40-50%.
A loan-to-value (LTV) ratio of 50-60%.
A minimum mortgage amount of €100,000 (or as low as €50,000 for some banks).
A maximum debt-to-income (DTI) ratio of 35% (including loans, rents, mortgage loans, etc.).
A loan term of 20-25 is most common, but it can range from 5-30 years.
The loan must be fully paid back before the borrower is 75 years old, or a co-borrower must fit this requirement.
If the borrower is more than 70 years old, a younger applicant must sign to be jointly liable.
According to the European Mortgage Federation’s (EMF) 2023 country report for Italy, interest rates increased significantly during 2022. The 2022 average annual interest rate was 3%, up from the 1.4% average in 2021. Interest rates on both short-term loans and loans over 1 year more than doubled.
You’ll find that most mortgages are available for purchasing residential properties. Buy-to-let mortgages are not available in Italy, so you might need extra permissions or licenses to rent out an investment property after the mortgage process.
Unlike some other countries in Europe, there’s no real estate investment option available for Italy’s Golden Visa program. This means that if you’re looking for an investment property, the Golden Visa scheme is not an option by which you can obtain residency. However, you can still purchase a property in Italy and vacation at it for a maximum of 90 days in any 180-day period if you’re from a country that has negotiated visa-free access to Schengen states. Learn if you’re eligible for a visa-free stay based on your country of citizenship.
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Requirements
Before you can make an offer on a property and get approved for a mortgage, you need a codice fiscale and an Italian bank account. You must get a codice fiscale first before you can open a bank account. It’s best to apply for a codice fiscale and open a bank account as early in the process as possible in order to minimize delays once you find the property you want to make an offer on.
A codice fiscale is the national insurance number that’s necessary to make transactions and pay taxes in Italy. This official number is issued by the Italian Revenue Agency (Agenzia della Entrate). You can apply for a codice fiscale if you’re in Italy or abroad. If you’re outside of Italy the process might take a few days or weeks, but you can apply through the Italian consular authorities in your country of residence. Either way, to apply you just need to fill out the application and show your passport and visa (if required), or your Italian residence permit. There’s no fee to get a codice fiscale and if you apply for it in Italy, you’ll get it on the same day as your appointment.
Once you have a codice fiscale, you can then choose a lender and get pre-approved for a mortgage loan. The bank that offers you a loan will often open an Italian bank account for you at no charge once you sign the closing documentation. However, if you want to open an account sooner, you can open one on your own by showing your passport, proof of address, and codice fiscale.
After you have both a codice fiscale and pre-approval, you can then make an offer on a property. If the seller accepts, both parties must work to write up and agree upon a purchase proposal (proposta di acquisto). This is a legally binding commitment to buy the property that protects both parties. Once the purchase proposal is accepted, the initial sales contract can be drafted and signed. This preliminary contract details the payment of the deposit and other purchase conditions. Employing a trusted real estate agent in Italy will help immensely throughout the property buying process, especially when negotiating with the seller and writing the purchase proposal.
Documentation
In addition to the mortgage application that your lender will provide you with, you also need various other documents. Both general documents and financial documents are required, all of which should be translated into Italian and legally certified in Italy as necessary.
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General documents:
Copy of your passport or ID card (for EU citizens)
Initial sales contract
Proof of address (e.g. recent utility bill or residency certificate)
Codice fiscale and/or social security number (for Americans)
Document showing marital status
Financial documents:
Proof of income
Tax return from the last year
Bank statements from the last 12 months
Payslips from the last 3-6 months
Tax certificates from the last 3 months
If employed: Contract of employment
If self-employed: VAT registration number, Company Registration Report, or Professional Register Certificate (as applicable)
Credit report
Proof of savings and other documents regarding personal assets
Documents detailing any outstanding loans/debts
You may also need to provide other documents due to your citizenship and as required by the bank where you are applying for the loan.
To sum up
Now that you’ve learned about the mortgage process for foreigners in Italy, including lending conditions, requirements, and documentation, you can continue with knowledge and confidence on the path toward property ownership. If you’re curious about exploring other locations in Europe, check out our articles about getting a mortgage as a foreigner in Portugal and Spain, or learn about the top international luxury real estate brokers.
This article provides you with a great base of information to help the mortgage process go more smoothly, but you’ll likely find that you need additional guidance along the way due to the added complexity of buying property as a foreigner. Our experts at Kredium, an international mortgage broker company, can guide you throughout the entire process, provide you with personalized loan offers, and save you time and money. We specialize in international mortgages and cross-border mortgages, providing our services in 60 countries worldwide.
Start getting help today by registering on our website!
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