Under the KIM Regulation: Changes to funding arrangements
The KIM Regulation expired at the end of June 2025. The strict lending rules are a thing of the past — but not all of them. What buyers need to know now.
For three years, the KIM Regulation has governed property financing in Austria: a minimum of 20 per cent own funds, a maximum of 40 per cent of household income for the mortgage repayment, and a maximum term of 35 years. It ceased to apply on 1 July 2025. For many buyers who have been unable to meet these limits in recent years, this is the most significant news since the turnaround in interest rates.
What is actually changing now, however, is less spectacular than the headlines suggest — and in some respects more so.
What the regulation was
The regulation came into force in August 2022, in the midst of the interest rate turnaround. The Financial Market Authority wanted to prevent households from taking out loans that they would no longer be able to service if interest rates rose — a lesson learnt from the financial crisis. The three limits were binding, with a small quota for exceptions allocated to each bank.
The effect was clear: lending for residential property plummeted, not only because of interest rates, but also because many households did not meet the criteria. Young buyers in particular – those with good incomes but few savings – found themselves shut out. Criticism from the property sector, the banks and politicians was correspondingly vocal.
Why it leaked
The regulation was time-limited from the outset, and the supervisory authority has not extended it. The reasoning: the risks associated with lending have fallen, the banks have internalised the criteria, and the economy does not need any further headwinds. The property market had changed over the course of three years anyway — less speculation, more fixed-rate mortgages, and more cautious buyers.
What matters is what replaces them: not a new law, but the regulator’s expectation that banks lend sustainably. The criteria remain a guideline — they are simply no longer set in stone.
What’s really changing
Banks are once again permitted to make exceptions where it makes sense to do so: for young buyers with a good income but little in savings; for families who offer their family home as security; and for buyers who are just within one of the limits. A mortgage repayment amounting to 42 per cent of income is no longer a reason for rejection if the rest of the figures add up. A loan term of 38 years is possible if the borrower’s age permits it.
Above all, this opens a door for first-time buyers that had been closed for three years. And it restores the banks to their actual role: assessing risk rather than simply ticking boxes.
What remains the same
Equity remains the most important factor. Anyone who covers the ancillary costs and part of the purchase price from their own funds will secure better terms, greater flexibility and fewer questions. And interest rates continue to determine what is affordable — the regulation has never dictated what a loan costs, only who is eligible for it.
Even without the regulation, the banks will not act recklessly. The budget assessment remains, the property valuation remains, and a loan that would no longer be affordable if interest rates rose by one per cent will not be granted now either. What is changing is the flexibility in individual cases, not the principle.
What buyers should do now
Firstly: work out your own figures honestly before the bank does — income, fixed costs, savings, and ancillary costs. Secondly: compare offers, as banks are now once again differing more significantly in what they are able to offer. Thirdly: obtain a confirmation of financing before your first viewing, as sellers tend to give preference to buyers who have this in place. And fourthly: weigh up fixed-rate and variable-rate mortgages objectively — in a market with falling interest rates, it’s worth looking into hybrid options.
Incidentally, the end of the regulation also has implications for sellers: the pool of buyers who can afford to buy is growing. Anyone who, in recent years, has been let down by prospective buyers whose banks turned them down now stands a better chance.
For many of our clients who fell short of the regulations’ requirements in 2023 and 2024, a window of opportunity is now opening up. We work with financial advisers who know the Viennese market — and will tell you what is realistic before your first viewing.
