How Malta's New Interest-Free Home Loans Could Save Young Buyers Over €100,000

My First Home Scheme: The Practical Guide for Malta's First-Time Buyers

Malta's government is launching a new interest-free loan scheme that could save qualifying first-time buyers between €65,000 and €75,000 in lifetime interest costs. If you're a young Maltese looking to buy your first home, here's what you need to know about eligibility, how it works, and what it could mean for your purchase.

Will You Qualify? The Essential Eligibility Checklist

Before exploring further, check whether you meet the basic requirements:

Income Limits:

• Single buyers: €40,000 annual income or less

• Couples: €60,000 combined annual income or less

Personal Requirements:

• Must be at least 23 years old

• Purchasing your first residential property

• Property must be your primary residence (not investment or second home)

Property Limits:

• Maximum property value: €300,000 for single buyers

• Maximum property value: €350,000 for couples

Important note: If you earn €41,000 (single) or €61,000+ (couples), you do not qualify for this scheme, regardless of other circumstances. The income thresholds are strict.

What You'll Actually Receive

If you qualify, the government will provide:

The Core Benefit:

• Single buyer: €75,000 interest-free loan (25% of property value)

• Couple: €87,500 interest-free loan (25% of property value)

How Much You Actually Save:

• Over a 30-year mortgage, this interest-free government advance could save you €65,000–€75,000 compared to borrowing the full amount from a bank

• Your bank mortgage covers the remaining 75% of the property value

Combined with Existing Programs:You may also access:

• €10,000 grant (€1,000 annually for ten years)

• Stamp duty exemption on the first €200,000 of purchase price

• Deposit assistance through the Housing Authority

• Combined potential benefit: Over €100,000 in government support

How the Scheme Actually Works

The Government's Role:The government provides 25% of your property purchase price directly—not as a traditional mortgage, but as a secured loan with no interest charges. This government advance is registered as a legal lien against your property.

Repayment Terms:

• You repay the government's 25% portion whenever you choose—there is no fixed repayment schedule

• Zero interest accrues on this amount, no matter how long you take to repay

• You must fully settle the loan by age 65

• Unlike a traditional mortgage, the amount never increases due to indexation or balloon payments—it remains frozen at the advance amount

Layering with Your Bank Mortgage:You obtain a conventional mortgage from your bank for the remaining 75% of the property value. This operates normally: you make monthly payments, pay interest, and eventually own the property outright. The government's 25% sits as a second charge—the bank's mortgage is first, the government's advance is second.

Key Practical Point: When you eventually repay the government portion, the government's lien is removed, and the property becomes fully yours.

Growing Families: New Support for Upgrading Households

If you're already a homeowner with two or more children and need to upgrade to a larger property, you now have new support previously unavailable:

• Stamp duty exemption on the first €200,000 of purchase price

• Urban Conservation Area (UCA) incentives: up to €25,700 in Malta, €47,700 in Gozo

This addresses a longstanding policy gap where only first-time buyers received support while growing families were left without assistance.

Critical Questions: What Happens When...

If you sell the property:The government's lien travels with the deed. Before you can complete a sale, you must repay the government's remaining advance. If your property has appreciated (say, you purchased at €300,000 and now sell at €350,000), you pocket the appreciation after settling the government's fixed amount.

If you inherit the property:Ownership questions and the mechanics of government lien transfer have not been publicly detailed. Clarification from the Housing Authority will be necessary before inheritance scenarios are finalized.

If you want to refinance:The government's 25% security interest must be coordinated with any bank refinancing. This requires notary involvement and coordination between the Housing Authority and your bank.

Where to Apply and Next Steps

Current Status:The scheme remains a government proposal with no published implementation timeline or legislative draft. Applications cannot yet be submitted.

What to Watch For:

• Announcement of application opening date (expected through Housing Authority channels)

• Published application forms and required documentation list

• Official guidance on how the scheme integrates with your bank mortgage

How to Stay Informed:

• Contact the Housing Authority (www.housing.gov.mt or local Housing Authority office)

• Follow official government announcements

• Consult your bank about how this advance will affect your mortgage approval

Documents You'll Likely Need:(Exact requirements pending official publication)

• Proof of income (tax returns, payslips)

• Identity documents

• Property valuation

• Bank pre-approval letter for your 75% mortgage

Families Above Income Limits or Outside Eligibility

If you earn above the income thresholds or do not qualify for the new scheme, existing programs may still assist:

• Equity Sharing Scheme: Government co-purchases up to 50% of property value, repayable interest-free over 20 years

• Deposit Assistance Scheme: Housing Authority covers interest on deposits up to €22,500

• Housing Benefit Scheme: Rental subsidies of €4,200–€6,000 annually if renting

What This Means for Malta's Housing Market

Economists note that this scheme increases buyer purchasing power in a market where housing supply remains limited. Property prices across Malta climbed 6.1% year-on-year in late 2025. Without corresponding increases in new home construction, additional buyer support may accelerate price growth, particularly benefiting property sellers.

The scheme's long-term success depends partly on whether the government simultaneously pursues supply-side reforms—zoning changes, accelerated permitting, public land release, and faster construction timelines. Demand-side subsidies alone have historically proven insufficient to resolve housing shortages.

Key Takeaway for Residents

If you're a first-time buyer earning below €40,000 (single) or €60,000 (combined, as a couple), this scheme could meaningfully reduce your purchase costs. The interest-free government advance could save you tens of thousands of euros over your ownership lifetime. However, the scheme is not yet operational, so monitor official Housing Authority communications for application details and timelines.

For those outside eligibility thresholds, existing programs—equity sharing, deposit assistance, and rental support—remain available as alternatives.