What Is a Mortgage and How to Get One in Armenia

Let’s break down how mortgage loans work, what to consider when choosing one, and the steps to successfully apply for a mortgage from an Armenian bank.

What Is a Mortgage in Simple Terms?

A mortgage is a loan secured by real estate. Most often, it's used to buy an apartment or house: you borrow money from a bank, and the purchased property serves as collateral. If you stop making payments, the bank has the right to sell the property to recover its funds.

However, mortgages in Armenia aren’t limited to just buying a home. You can also take out a mortgage to:

1. Build a house
2. Renovate real estate
3. Use your existing apartment as collateral to buy another property
4. Participate in government-supported mortgage programs (more on this below)

What You Need to Know Before Applying for a Mortgage in Armenia

Since a mortgage is a long-term financial commitment, it’s important to approach the process thoughtfully. Here are five key factors to calculate in advance:

1. How Much You Can Pay Upfront

Banks in Armenia require a down payment—usually 10% to 30% of the property’s value.

For example, if an apartment costs AMD 30 million, you’ll need at least AMD 3–9 million of your own funds.

Also, factor in additional expenses such as:

1. Property registration with the Cadastre Committee
2. Appraisal service fees
3. Home insurance
4. Optional life insurance (often helps reduce your interest rate)

2. What Loan Amount You Can Afford

Your monthly mortgage payment should not exceed 40–45% of your monthly income.

To estimate your loan capacity, you can use the mortgage calculator on the AFM platform. Just enter the loan amount, term, and interest rate to get an approximate monthly payment.

Example calculation:

1. Property price: AMD 30 million
2. Down payment: AMD 10 million (30%)
3. Loan amount: AMD 20 million
4. Loan term: 15 years, interest rate: 9% per annum
5. Estimated monthly payment: ~AMD 202,000

3. What Type of Payment Schedule to Choose

When taking out a mortgage in Armenia, you typically choose between two types of repayment schedules:

1. Annuity payments – You pay the same amount every month. This makes budgeting easier, but the total overpayment is higher.
2. Differentiated payments – Payments are higher at the beginning, then gradually decrease. Total overpayment is lower, but the financial burden is heavier in the early years.

The right choice depends on your income level and financial priorities.

How Do Payment Type and Interest Rate Work Together?

Before signing a mortgage contract, it’s essential to understand not just your payment schedule, but also the type of interest rate — whether it’s fixed or floating. This has a direct impact on your monthly payments and long-term financial stability.

Here are the most common combinations:

Why Is a Differentiated Schedule Better with a Floating Interest Rate?

With a floating interest rate, a differentiated payment schedule is often the safer choice. Here’s why:

1. Interest is calculated on the remaining loan balance, so if the rate increases, your payment won’t spike dramatically.
2. There’s less risk of your monthly payment becoming unaffordable.
3. The repayment schedule is easier to adjust, which is convenient for both the bank and the borrower.

What About Annuity + Floating Rate?

This option is possible, but riskier:

If the rate rises, the entire payment schedule is recalculated, and your monthly payment may jump sharply. This option might only be suitable if:

1. You plan to pay off the loan early
2. You have a high and stable income
3. The initial interest rate is significantly lower than fixed-rate alternatives

Summary

1. If you value predictability and stability, go for an annuity schedule with a fixed rate.
2. If you're open to small fluctuations and want to save on interest, consider a differentiated schedule with a floating rate.

4. What Currency Should You Choose for a Mortgage?

If you earn in Armenian drams, take out your mortgage in drams.

This protects you from currency fluctuations and unexpected overpayments.

In Armenia, almost all mortgages are issued in the national currency (AMD).

Mortgages in USD or EUR are legally allowed only for non-residents.

5. What Risks Should You Be Aware Of?

1. Loss of income – Set up an emergency fund to cover 3–6 months of payments.
2. Property damage or loss – Home insurance can help mitigate this risk.
3. Rising interest rates – Relevant for loans with a floating rate.
4. Make sure to check your contract: how often can the bank adjust the rate?

How to Get a Mortgage in Armenia: Step-by-Step Guide

Step 1: Compare Banks and Mortgage Programs

Visit the AFM platform to compare offers from different banks — interest rates, loan terms, requirements, and government-supported programs.

Pay attention to:

1. Interest rate
2. Maximum loan amount
3. Minimum down payment
4. Commissions and extra service fees
5. Early repayment terms

Tip:

Check whether the bank participates in any government mortgage support programs — this can reduce your interest rate to as low as 4–7%. You can find a full overview of all current government support programs on our platform.

Step 2: Find a Suitable Property

You can purchase:

1. A newly built apartment (new construction)
2. A home on the secondary market
3. A house or a land plot for construction

To be eligible for a mortgage, the property must be:

1. Registered with the Cadastre Committee
2. Free of legal restrictions or encumbrances

Step 3: Prepare Your Documents

Here’s a typical list of required documents:

1. Passport and social security card (or ID card, if available)
2. Proof of income (e.g., from the tax office or your employer)
3. Preliminary sale and purchase agreement
4. Property appraisal report
5. Cadastre (real estate registry) documents
6. Mortgage application form
7. Documents for co-borrowers (if any)

The bank may request additional documents.

Application review usually takes 3 to 10 business days.

Step 4: Sign the Agreement

If the bank approves your mortgage, you will need to sign:

1. The sale and purchase agreement
2. The mortgage agreement with the bank
3. A pledge (collateral) agreement
4. An insurance policy
5. If required — a letter of credit or an escrow account agreement

Once the documents are signed and processed, the funds are transferred to the seller, and you become the legal owner of the property under a mortgage.

Frequently Asked Questions (FAQ)

Can I get a mortgage without a down payment?

In some cases — yes, especially if you're eligible for a government support program. For example, military personnel and families living in border regions may qualify for subsidies and more flexible terms.

Some banks also offer zero-down-payment mortgages even without state support.

You can learn more about these options in our detailed article.

Is property insurance mandatory when taking a mortgage in Armenia?

Yes. By law, collateralized property must be insured, usually against fire, flooding, or natural disasters.

If you don’t purchase insurance, the bank has the right to demand early loan repayment.

What if I’m facing financial difficulties and can’t make payments?

You have several options:

1. Apply for a mortgage payment holiday (up to 6 months)
2. Restructure your loan (extend the term, reduce the monthly payment)
3. Refinance your loan with another bank (if you have no overdue payments)
4. As a last resort — consider filing for bankruptcy (available in Armenia, though with specific procedures)

Can I repay my mortgage early?

Yes — at any time. Most banks in Armenia do not charge early repayment fees.

Just check your contract to see how to notify the bank — usually 10 to 30 days in advance.

Can I rent out the mortgaged property?

Generally, yes — borrowers are allowed to rent out their property, except in certain government-subsidized programs that may restrict this.

However, selling, gifting, or transferring the property without the bank’s consent is prohibited.

Conclusion

Taking out a mortgage is a serious commitment that requires preparation.

The better you plan your budget, choose the right bank, and understand the risks, the smoother the process will be.

To make the most of your mortgage:

1. Calculate the loan amount and monthly payments in advance
2. Choose a convenient repayment schedule — annuity or differentiated
3. Decide whether a fixed or floating rate suits you best
4. Prepare your documents and compare offers from different banks
5. Account for risks and protect yourself with insurance
6. Explore any government support programs you may qualify for

Tip: Don’t focus only on the lowest interest rate.

Consider the total cost of the loan, fees, and flexibility — like the ability to repay early or apply for a payment holiday.

Find the Best Mortgage with AFM!

Compare bank offers, calculate your monthly payment, and get personalized recommendations on government support programs — all in one place with AFM.

Если нужен экспорт перевода или оформление в статье — тоже могу помочь!