Legislative changes have transformed the state-guaranteed Prima Casă program into Noua Casă, making mortgage loan offers more attractive. Given these changes, those looking to transition from renting to homeownership may wonder which option suits them best. Below, we explore the advantages and disadvantages of these types of loans and their key differences.
What Is a Mortgage Loan?
A mortgage loan is a type of credit in which the lender requires a real estate guarantee, such as a house or land. In some cases, the guarantee may be a property under construction. The applicant must provide all necessary documentation to prove their ability to complete the construction within a specified time frame. Obtaining a mortgage for a self-built property is generally more difficult.
Most mortgage loans cover approximately 75-85% of the property’s value. This type of loan is medium- to long-term, with repayment periods ranging from five to 30 years, depending on the lender. The funds are disbursed in a lump sum, and repayment is made in monthly installments. Loan amounts can be substantial, exceeding one million euros in some cases, with minimum amounts around 40,000 euros. The loan’s value is determined based on the borrower’s financial capacity, following legal debt-to-income ratio limits.
Before granting a mortgage, the bank conducts a property valuation at the applicant’s expense. Unlike other loans, mortgage loans do not impose restrictions on how the funds are used as long as the property guarantee is accepted by the bank. Interest rates can be fixed, mixed (fixed for the first 5-10 years, then variable), or entirely variable.
Additional costs include notary fees and supplementary insurance policies that must be covered by the borrower. For construction loans, all expenses related to obtaining building permits and land taxes fall solely on the applicant and must be included in the loan application.
A down payment is usually required, particularly for properties under construction, ranging from 15% to 40%, depending on the currency (lei or euros). A mortgaged property cannot be sold, rented, or leased without special approval from the bank, and the mortgage is registered in the Land Registry. During the loan term, the property technically remains under the bank’s ownership.
The lender may also impose additional conditions, such as life insurance for the borrower and age limits for both loan approval and repayment completion, given that mortgage loans can extend over 30 years or more.
What Is Noua Casă?
The Prima Casă program, launched in 2009, was revised and renamed Noua Casă, with increased credit limits. The government now guarantees 60% of the loan amount, and the maximum borrowing limit has doubled from 70,000 euros to 140,000 euros. However, homes purchased under this program must be less than five years old. Older properties exceeding 70,000 euros in market value do not qualify.
Applicants for new homes must meet specific debt-to-income ratio conditions. Those with incomes insufficient for loans exceeding 70,000 euros may only qualify for smaller loans.
For homes valued at up to 70,000 euros and older than five years, the state guarantees 50% of the loan, while interest payments remain the borrower’s responsibility. The minimum down payment remains at 5% of the purchase price, as previously required under the Prima Casă program.
An essential change in eligibility criteria was the removal of income limits. The previous Prima Casă program, later renamed “One Family, One Home” in 2025, restricted access to individuals earning a maximum of 4,500 lei per month (or 7,000 lei for families). The removal of these caps now makes Noua Casă available to higher-income applicants.
However, specific restrictions still apply. Applicants who already own property exceeding 50 square meters or who have previously obtained a Prima Casă loan are ineligible. Additionally, homes purchased through the program cannot be sold for five years. Government-backed loans cannot be refinanced, and applicants with existing mortgage loans are not eligible.
The required down payment varies between 5% and 15%, depending on the property’s value. One notable benefit is that borrowers can make early repayments without penalty.
Loan Conditions
Both mortgage loans and Noua Casă loans follow similar lending conditions, as regulated by national legislation and banking policies.
A primary factor in determining eligibility is the debt-to-income ratio. Since January 2020, the National Bank of Romania (BNR) set a maximum debt-to-income ratio of 40% for RON loans and 20% for foreign currency loans. Government-backed housing loans may allow debt-to-income ratios up to 45%.
Both loan types are available to applicants aged 18 or older, with a maximum age of 65 at loan maturity. Employment history of at least six months and proof of no outstanding tax debts are also required. Specific criteria may vary by lender.
Key Differences Between Mortgage Loans and Noua Casă
Differences between these loans include loan amount limits, accepted debt-to-income ratios, interest rate structures, and additional insurance requirements.
Mortgage Loan Features:
- Longest repayment period (up to 30 years)
- Flexible repayment terms tailored to borrower income
- Wide range of accepted income sources (including foreign earnings, dividends, rental income, and royalties)
- Possibility of joint applicants
- Grace periods of 3-12 months available
- Maximum debt-to-income ratio of 45%
- No penalties for early repayment
Mortgage Loan Disadvantages:
- High down payment (minimum 15% for RON loans, 40% for euro loans)
- Restrictions on selling or renting without bank approval
- High notary and additional construction-related fees
- Mandatory home and life insurance, chosen by the bank
Noua Casă Features:
- Lower down payment (as low as 5% for loans under 70,000 euros)
- Competitive interest rates (around 5% for 70,000-euro loans, though variable)
- Accessible for lower-income applicants
- Lower notary fees
- No penalties for early repayment
- Minimal mandatory home insurance
Noua Casă Disadvantages:
- Variable interest rates, which can increase
- Complex application process with high bureaucracy
- Lengthy approval time
- Homes purchased under Noua Casă are not covered by the “Darea în Plată” law, meaning borrowers cannot return the property to the bank if they default
- Risk of foreclosure after 60 days of non-payment
- Additional costs (initial interest payments covering three months)
- Five-year restriction on selling, leasing, or using the property as a business location
- Cannot be used for home construction
Choosing the Right Loan
There is no perfect loan, as each applicant’s financial situation differs. The best choice depends on factors such as interest rates, bank fees, total repayment amounts, grace periods, refinancing options, and loan types (fixed, mixed, or variable interest rates).
Ultimately, deciding between a mortgage loan and Noua Casă requires a careful evaluation of advantages and disadvantages, as well as consideration of long-term financial goals.
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