Finland cuts first-home buyers’ ASP savings requirement

Finland’s government will make it easier for first-time buyers to obtain ASP loans, cutting the required personal savings share from 10% to 5% and extending the maximum repayment period from 25 to 40 years, Yle reports. The changes will take effect at the beginning of 2027.

The government says the reforms are intended to revive the housing market. They will also allow first-time buyers to take out larger loans, although the changes will increase the risks to the state to some extent.

For Turku residents Taru and Ossi Kronlöf, the reform could bring them closer to their dream of building a home on a waterfront plot in Parainen, in the Turku archipelago. The plot was originally intended to remain a holiday-home site, but the couple now wants to build their permanent home there.

Taru Kronlöf is an architect and plans to design the house herself. She wants to use the slope and differences in elevation to shape the building, with two-storey windows facing the sea and the house providing privacy in the backyard.

The plans are also expensive. The couple has been saving for an ASP loan and intends to take out an additional loan. Ossi Kronlöf said the change would significantly reduce the amount they need to save.

“If the budget were, hypothetically, 500,000 euros, whether you need to save 50,000 or 25,000 euros makes a big difference,” he said.

The couple has not yet decided on the final loan amount, but believes they could currently obtain around 500,000 euros from a bank. A larger loan could require them to consider repaying their student loans first, while repayments would also become substantial.

The Kronlöfs began saving through the ASP scheme just over a year ago, after moving back to Finland from the Netherlands. They intend to save for at least a couple of years. The reform will affect their savings timetable and allow them to save in funds in addition to their ASP account.

Some first-time buyers remain cautious

The reforms have not convinced everyone. Alexandr Vorobjov from Nurmijärvi said he had been saving in an ASP account since upper secondary school.

His first reaction to the changes was enthusiasm because a smaller amount of capital would be needed to buy a first home. He later became more hesitant, citing Finland’s rising average age and the weak-looking development of house prices.

“It perhaps also made me wonder whether there is any hurry. Should I wait three to five years and look at the housing market again?” Vorobjov said.

Longer loans increase risks

ASP loans are government-supported bank loans for first-time buyers. To qualify, applicants must first save the required amount in an ASP account.

In addition to the usual risks associated with borrowing, ASP loans can create risks for the state because they include a free state guarantee. If a borrower runs into payment difficulties and the home has to be sold, the state may have to compensate the bank for part of its credit losses.

Although the state also guarantees other home loans, ASP loans account for most of the state’s guarantees.

Tommi Laanti, a housing counsellor at the Ministry of the Environment, said the changes would certainly increase the state’s risks to some extent. He did not provide a more detailed assessment of the size of those risks.