When we start looking for a home, it’s very easy to make a mistake: thinking that our purchase budget equals the maximum price we can pay for the property.
If we have €250,000, that doesn’t necessarily mean we can buy a home for €250,000.
On top of the purchase price, you’ll need to add taxes and other costs associated with the transaction. And if you need financing, you’ll also need to consider how much money you’ll have to contribute from your own funds.
That’s why, before you start touring homes on the Costa Blanca, it’s worth doing the math.
1. The price of the home is just the starting point
Let’s say you’ve found a home listed for €250,000.
The first question shouldn’t just be:
“Can I afford €250,000?”
The right question would be:
“What will the approximate total cost of buying this home be?”
The answer will depend, among other things, on whether it’s a resale home or a new construction, whether you need financing, and certain personal circumstances that may qualify you for reduced tax rates.
Let’s take a look.
2. If You’re Buying a Resale Home
On the Costa Blanca, a large portion of real estate transactions involve resale homes.
In this case, the main tax the buyer must consider is the Property Transfer Tax (ITP).
As of June 1, 2026, the general rate applicable to the purchase of real estate in the Valencian Community is 9%. For properties valued at over one million euros, the regulations generally establish a rate of 11%. There are also reduced rates for certain cases, so each transaction must be analyzed individually. BOE
For a home priced at €250,000, using the general rate of 9% as a reference, we would be looking at:
€250,000 × 9% = €22,500 in ITP.
With this tax alone, a home priced at 250,000 € already amounts to a total cost of 272,500 €, before considering other expenses.
This is precisely one of the reasons why we recommend setting your total budget before you start your search.
3. What if the home is a new construction?
The tax rules change.
When purchasing a new home from a developer, a 10% VAT generally applies. In addition, the deed of sale subject to VAT may also be subject to Stamp Tax (AJD). The General Council of Notaries confirms the standard 10% VAT rate for the purchase of new homes. Notariado
In the Valencian Community, as of June 1, 2026, the general AJD rate for ordinary transactions is 1.4%, although there are specific rates and tax benefits for certain transactions. BOE
Therefore, a new home priced at €250,000 may have a significantly different initial tax burden than a used home of the same price.
This also demonstrates why we should not compare only the listed price of two homes.
4. Notary, Property Registry, and Other Expenses
In addition to taxes, there may be other costs associated with the transaction.
These include costs related to the deed, its registration with the Property Registry, and—when contracted—administrative or advisory services.
Notary and registry fees are regulated, and their amount will depend on the specific details of the transaction. The Notary Association itself notes that a real estate sale may involve notary fees, registry fees, administrative fees, and taxes. Notariado
That is why we prefer not to use a fixed amount such as “notary fees cost X euros,” because not all transactions are the same.
The best approach is to get a personalized estimate of the costs involved in the sale.
5. If you need a mortgage, there’s another important calculation
When we need financing, a second question arises:
How much will the bank finance, and how much money will we have to contribute ourselves?
We shouldn’t assume that the financial institution will lend 100% of the purchase price.
The percentage ultimately financed will depend on the bank, the buyer’s financial profile, the property’s appraisal, whether it is a primary residence or a second home, and other circumstances.
This is particularly important on the Costa Blanca, where there is a considerable number of international buyers.
If you need a mortgage, therefore, you must have sufficient funds to cover:
- The portion of the price not financed by the bank.
- The taxes associated with the purchase.
- The remaining transaction costs.
And it’s best to explore financing options before finding the perfect home, not after.
6. Who pays the mortgage costs?
Here we must distinguish between the costs of the purchase and those related to the formalization of the mortgage loan.
Currently, the financial institution covers certain costs related to setting up the mortgage, including notary fees, registry fees, administrative fees, and the stamp tax (AJD) associated with the loan.
The buyer, for their part, must cover the cost of the property appraisal when applicable, although some lenders may decide to cover it as a goodwill gesture. This is explained by the General Council of Notaries when detailing the allocation of mortgage expenses. Notariado
This does not mean that buying with a mortgage eliminates the costs associated with the purchase itself. These are different transactions, and it’s important not to confuse them.
7. Let’s look at a simple example
Let’s imagine a pre-owned home priced at €250,000 on the Costa Blanca, to which the standard ITP rate applies.
The initial calculation would be:
Purchase price: €250,000
ITP (9%): €22,500
Subtotal: €272,500
To that amount, you’ll need to add any other expenses associated with the transaction.
Therefore, if your maximum available budget were exactly €250,000, that home would actually be over your total budget.
And this is something you should figure out before falling in love with a property.
8. So, what additional percentage should I set aside?
It’s common to use rough guidelines to make an initial calculation, but we prefer not to suggest a single percentage as if it applied to all buyers.
New and resale homes are taxed differently.
Nor will the situation be the same for someone paying in cash as for someone who needs financing.
In addition, there may be reduced tax rates or tax benefits depending on the buyer’s circumstances and the specifics of the transaction.
That’s why it’s much more useful to work with a total purchase budget.
If, for example, you have €300,000, we should first estimate taxes and expenses and, from there, determine the maximum reasonable price for the homes we should look for.
9. Be Mindful of Post-Purchase Expenses, Too
Your budget shouldn’t end on the day you sign the contract.
A home generates expenses after you purchase it.
Depending on the property, you’ll need to consider issues such as:
- Property tax (IBI).
- Homeowners’ association fees.
- Insurance.
- Utilities.
- Maintenance.
- Possible special assessments by the homeowners’ association.
- Maintenance of the pool, yard, or lot for homes that have them.
Before buying, it’s also advisable to check whether there are any outstanding homeowners’ association dues or approved special assessments. The Notary Public’s Office expressly includes these checks among the matters that must be reviewed before finalizing the purchase. Notary Public’s Office
A home may fit perfectly within your purchase budget, yet still have annual expenses that exceed what you’re willing to pay.
10. First, the total budget; then, the home
Buying a home should be an exciting experience, but it’s best to make important decisions based on real numbers.
Before you start your search, we recommend answering three questions:
How much money do I have available?
Do I need financing, and how much could I borrow?
What will be the approximate total cost of the transaction, including taxes and fees?
Once we have those answers, we can determine our actual maximum purchase price.
And only then does it make sense to start looking.
Because it’s not about visiting as many homes as possible, but about finding the ones that truly fit our needs and our budget.
Are you thinking about buying a home on the Costa Blanca?
At Habinara · Real Estate · Costa Blanca, we can help you narrow down your search from the very beginning.
Before showing you properties, we want to understand what you need, which areas suit you best, and what your actual purchase budget is.
That way, we can focus on homes that truly make sense for you and guide you through the entire buying process.
Tell us what you’re looking for, and we’ll start by crunching the numbers right.