FAQ for First-Time Buyers

A first purchase means you have never been a registered owner of residential property, in whole or in part, whether by purchase, inheritance or gift. You can then borrow up to 90% instead of 80%, pay half the stamp duty (0.4% instead of 0.8%) and use private pension savings tax-free toward the down payment. Séreign and HMS shared-equity loans can in some cases also be used by people who haven't owned a home in the last five years.

Loan-to-value is the loan as a share of the property's price. If you buy a property for 60 million and borrow 54 million, the loan-to-value is 90%. The Central Bank's rules allow up to 90% for a first purchase and 80% otherwise. Lenders set their own limits too: some lend less, or lend the top slice at a higher rate.

The debt-service ratio is your payments on all housing loans as a share of your disposable income, i.e. income after tax and charges. The cap is 40% for a first purchase and 35% otherwise. The payment is worked out the Central Bank's way, whatever the actual term: as an equal-payment loan over 25 years for indexed loans (at least 3% interest) and over 40 years for non-indexed loans (at least 5.5%). With a disposable income of 600,000 ISK, the calculated payment can be up to 240,000 ISK.

No law sets how long a purchase takes; it depends on the offer and the purchase agreement. Commonly, the purchase agreement is signed 4–6 weeks after an offer is accepted, and the price is fully paid and the deed issued about 3–4 months after that. It's a good idea to get a credit assessment (greiðslumat) from a lender before you make an offer.

Stamp duty (stimpilgjald) is a fee paid when the purchase is registered (þinglýsing), calculated from the property's official valuation (fasteignamat). The standard rate is 0.8%, but first-time buyers get a 50% discount and pay 0.4%. On a property valued at 55 m.kr., a first-time buyer pays about 220,000 kr. It's wise to budget for this in your total buying costs.

The official valuation (fasteignamat) is set each year by HMS (Húsnæðis-, mannvirkja- og skipulagsstofnun) based on sales data and the property's characteristics. The purchase price, by contrast, is what you and the seller agree on, and it's often higher than the valuation. The distinction matters because stamp duty and property taxes are based on the valuation, not the purchase price.

Lenders assess married couples and registered cohabiting partners together and combine their incomes in the credit assessment. To register cohabitation (sambúð) in the national registry you need the same legal address, and it counts from the day it is registered. If friends or siblings buy together, a joint loan isn't a given: some lenders don't lend jointly to them at all, so ask the lender before you make an offer. If only one of you is buying for the first time, the loan-to-value and debt-service caps are prorated and end up below 90% and 40%, and the stamp duty discount only applies to that person's share. Each of you applies for séreign separately.

Private pension savings is additional retirement savings that you and your employer contribute beyond the mandatory pension fund contribution. You can withdraw this savings tax-free when purchasing your first property.

You can use up to 500,000 ISK a year for up to 10 years, or 5 million ISK in total. The cap is based on a 4% contribution from you (up to 333,000 ISK) and 2% from your employer (up to 167,000 ISK). If you buy together and both qualify, you can both apply and use up to 1 million a year, or 10 million in total. From 2027 the cap follows the consumer price index.

Apply to Skatturinn (the tax authority) as soon as the purchase agreement is registered, because the registered agreement must come with the application. Processing usually takes 4–8 weeks, sometimes longer. The deadline is 12 months from signing the purchase agreement.

To receive your pension savings, you need to be the registered owner of at least 30% of the property. If you buy with a spouse and each own 50%, you meet this requirement.

No, only contributions (yours and your employer's) can be withdrawn, not the investment returns. The returns stay yours but are locked until you turn 60. If returns have been negative, the amount you can withdraw is reduced accordingly.

Yes, but not toward the down payment. From 1 October 2026, anyone who owns at least 30% of the home where they have their legal residence can pay séreign tax-free into the principal of their mortgage: up to 500,000 ISK a year per person, for 10 years in total (Act no. 71/2026). Years already used count toward the total. Applications received before 1 December 2026 apply back to 1 January 2026.

An indexed loan has lower rates (about 3.5–5.5%) but the principal rises with inflation. A non-indexed loan has higher rates (about 8.5–10.5%), but the principal isn't indexed and goes down with each payment. Which suits you better depends on the inflation outlook and your situation.

Interest rates change regularly. Indexed loans typically have lower rates than non-indexed. Pension funds often offer better terms than banks. See the latest rates in our calculator or check directly with lenders.

The policy rate is set by the Central Bank of Iceland and affects all interest rates in the economy. It's updated regularly and shown in our calculator. Non-indexed loans with variable rates are often policy rate + 2-3% margin.

Non-indexed loans are available for up to 40 years. The longest term for indexed loans varies by lender, from 20 years up to 40 years at some pension funds. A longer term means lower monthly payments but more interest in total.

Pension funds often offer lower rates than banks, especially on indexed loans. However, their maximum loan-to-value is usually lower (often 65–85%) and you need to be a fund member. It's best to compare offers from both.

A shared-equity loan is an interest-free loan from HMS, with no instalments, for up to 25% of the price (up to 35% for lower incomes). You put in at least 5%, HMS up to 25% and a bank 70%. The repayment follows the home's value and is due when you sell or at the end of the loan term.

People buying for the first time, or who haven't owned a home in the last 5 years, with income under the limits (total income over the last 12 months). For a loan of up to 25%: single up to 10,000,000 ISK, married or cohabiting couple up to 15,000,000 ISK. For up to 35%: single up to 6,793,000 ISK, married or cohabiting couple up to 10,620,000 ISK. Add 2,254,000 ISK for each child under 20. The home must be a new build approved by HMS, within price limits that depend on the area and size.

The shared-equity loan carries no interest and no instalments. It is repaid when you sell, or at the latest after 10 years; the term can be extended 5 years at a time, up to 25 years in total, after counselling from HMS. You repay the same share of the sale price or valuation as the loan was of the purchase price: if the home has gone up in value you repay more than you borrowed, and if it has gone down you repay less.

The offer binds you as soon as the seller receives it, until the acceptance deadline, and once the seller accepts it there is a binding contract. The process then begins of finalizing the purchase agreement, the payments and the financing. It's important to have conditions in your offer for financing and inspection.

A purchase agreement is a formal document both parties sign. It sets out the property, the price, the payment terms and the handover date. The signatures must be attested before it can be registered, which the estate agent usually does; with electronic signing, electronic ID replaces witnesses.

The deed (afsal) is the document the seller issues once the price has been paid in full; when it is registered, you are the registered owner. The purchase agreement, on the other hand, is registered right after signing, and that is when you pay the stamp duty. No law says when the deed must be issued; the purchase agreement decides. Stamp duty falls due two months after the purchase agreement is signed, and after that a surcharge of 1% a day is added, up to 10%.

On top of the price you pay stamp duty, 0.4% of the official valuation for a first purchase and 0.8% otherwise, and a registration fee of 3,800 ISK per document. The loan fee is a fixed amount, about 55–68 thousand ISK, but the big banks waive it for a first purchase. The estate agency may charge a handling fee, often 55–120 thousand ISK, if that was agreed. A condition inspection with a report costs about 100–160 thousand ISK and is highly recommended.

A condition inspection isn't required but is highly recommended, because you can't claim defects you should have noticed when viewing. An inspection with a report costs about 100–160 thousand ISK but can save you a lot later.

Main items are: roof, exterior walls, windows, moisture/mold, heating and electrical systems, plumbing, and ventilation. For apartments, also check the housing association's finances and planned maintenance. Use our checklist!

Housing fees are monthly charges that apartment residents pay for shared costs: heating of common areas, cleaning, maintenance, insurance, etc. The amount can be 10-50 thousand ISK per month depending on building size and age.

An eignaskiptayfirlýsing is a registered document that sets out the private units and shared parts of a multi-unit building and each unit's share, which decides how shared costs are split and how votes are weighted at residents' meetings. The sale of an apartment in a multi-unit building can't be registered without one. Rules on day-to-day use are in the house rules.