Buyers looking at the western Algarve often ask how much cash they need in hand before the keys change over. The headline price is only part of the story, and it tends to be the deposit and the one-off costs that catch people out. What follows is a working guide to the numbers we see in Lagos and along the coast towards Sagres in 2026. Figures move with the market and with each lender, so treat this as a rough map rather than a formal quote.
The deposit on the promissory contract
Most purchases in Portugal run through a promissory contract, the contrato promessa de compra e venda, signed some weeks before completion. At that point the buyer normally pays a deposit to the seller. In our experience this sits around 10 percent of the price, though it can climb to 20 or 30 percent on a competitive sale or a new build bought off plan. This deposit is separate from any mortgage deposit and it carries real weight. If the buyer walks away the money is usually lost, and if the seller walks away the sum is typically returned doubled.
Because the promissory deposit is committed early, it pays to know your full budget before you sign anything. That is the moment when the difference between the asking price and the all in figure becomes very real.
If you are borrowing to buy
Overseas buyers who need finance will find that Portuguese lending is available but conservative. Non-resident applicants are generally offered around 60 to 70 percent of the value, which means a deposit of 30 to 40 percent from your own funds. Rates have eased a little from their peak, and by the middle of 2026 the picture is broadly as set out below. Our sister company Inspired Mortgages, based in Lagos, works with the local banks and can sight-check what a specific case might look like.
- A loan to value ceiling around 60 to 70 percent for most non-resident applicants
- Fixed rates broadly in the 4.0 to 5.2 percent range and variable rates a little lower in mid 2026
- Spreads that tend to sit roughly 0.8 to 2.0 percentage points above the Euribor reference, which has been fixing in the low threes
- Proof of income, recent tax returns and a Portuguese tax number before any offer is issued
Transfer tax and stamp duty
The largest one-off tax is IMT, the property transfer tax, and the rules changed in 2026. Since a housing reform that came into force in late May, a buyer who is not tax resident in Portugal at the point of purchase pays a single IMT rate of 7.5 percent on the whole price of a home, whatever the value and whatever their nationality. That catches most overseas buyers who are taking a second home here rather than moving over full time. There are exceptions, since a buyer who becomes Portuguese tax resident within two years, or who lets the property at a moderate rent for at least thirty-six months, can reclaim the difference, but for a straightforward holiday home the flat rate is the figure to plan around.
A resident buyer, or one who falls inside those exceptions, follows the older progressive schedule instead. On that schedule the marginal bands run through 1, 2, 5, 7 and 8 percent on lower slices of value, then a flat 6 percent on the bracket up to just over 1.1 million Euros, and 7.5 percent on the whole value above that. So a resident buying a 1 million Euro home sits in the 6 percent band, while a non-resident buying the same home now pays 7.5 percent across the board.
On top of IMT there is Imposto do Selo, the stamp duty, at 0.8 percent of the purchase price. Where a mortgage is registered, a further stamp duty of 0.6 percent applies to the loan amount. Set against current asking values, and idealista reporting put the Algarve regional median at around 3,139 Euros per square metre for 2025 data published in 2026, these percentages add up quickly.
Notary, registration and legal costs
The remaining upfront costs are smaller but real. Notary and land registry charges land at around 700 Euros where a mortgage is being registered, and rather less on a straight cash purchase. Independent legal representation is money well spent for a buyer who does not read Portuguese, and fees for that are usually modest against the price of the home.
- Notary and land registry costs of around 700 Euros where a mortgage is registered
- Legal fees that often run near 1 to 2 percent of the price for independent representation
- Bank arrangement and valuation fees where borrowing is involved
- A total acquisition cost that broadly lands between 8 and 10 percent of the purchase price on top of the deposit
A rough worked budget
Take a 500,000 Euro apartment near Lagos bought with a mortgage. A buyer might put down 40 percent, so 200,000 Euros, then meet IMT and stamp duty and the various fees on completion. The transaction taxes and costs on a home at that levelfor a non-resident buyer now commonly come to somewhere between 50,000 and 56,000 Euros once everything is counted, with the flat 7.5 percent transfer tax the largest single piece. Lagos itself runs above the regional average, and our reading of local asking prices puts prime coastal stock closer to 4,500 Euros per square metre. If you are weighing up algarve property for sale, it is worth pricing the all in cost of a specific home rather than the headline figure alone.
Costs that continue after completion
Once you own the home the annual charges begin. The main one is IMI municipal property tax, levied by the council on the rateable value at roughly 0.3 to 0.45 percent for urban property, with instalments falling in May, August and November. Apartments also carry condominium fees, and standalone villas bring their own maintenance. None of these is large in isolation, but they belong in the budget from the start.
Summary
The purchase price is the number people remember, yet the deposit and the upfront costs are what determine whether a purchase is comfortable. Plan for a promissory deposit of around 10 percent, a mortgage deposit of 30 to 40 percent if you are borrowing, and transaction costs of roughly 8 to 10 percent on top. Get those figures straight early and the rest of the process tends to run calmly. If you would like to test your budget against real homes on the coast between Alvor and Sagres, our team can walk you through the numbers on a property that actually interests you.
