How to Take Out a Mortgage in Armenia Without Getting Trapped in Debt: A Guide for Borrowers

A loan can be a useful financial tool — if used wisely. In Armenia, there are many available programs, both standard and government-supported, including subsidized interest rates and assistance for specific categories of citizens.

But to avoid falling into a debt trap, it’s essential to choose the right mortgage, assess the risks, and clearly understand all loan terms.

In this guide, we break down the most common borrower mistakes and explain how to avoid overpaying or running into problems.

To choose the best mortgage, you need reliable tools. One of the most effective is the AFM platform.

With AFM, you can:

1. Compare all loan offers from banks in Armenia by key parameters:
2. interest rate, down payment, loan term, commissions, and availability of state support
3. Use a mortgage calculator to estimate your monthly payments and total overpayment, accounting for all costs
4. Access up-to-date information from banks, including:
5. Tax refund guidance
6. Tips on early repayment
7. Step-by-step instructions for mortgage processing

AFM is your central hub for everything mortgage-related — helping you make informed decisions and avoid unnecessary expenses.

Bookmark it — you’ll likely need it again for future financial decisions.

How to Accurately Calculate Your Mortgage Payment?

Before selecting a loan amount, it’s crucial to understand what monthly payment is manageable for you or your family.

Start by creating a personal budget: list all sources of income and essential expenses — rent, utilities, groceries, transport, childcare, and other regular costs.

A financially safe mortgage payment is one that does not exceed 30–35% of your net income.

It’s also smart to set aside 10–15% for emergencies.

This approach helps protect you from financial stress if your circumstances change.

1. Be Realistic About Your Financial Capacity

Before applying, analyze your income, expenses, and emergency reserves.

Even if a loan seems affordable today, job loss, illness, or other unexpected events can turn manageable payments into a heavy financial burden.

This is especially true for large, long-term loans like mortgages.

That’s why insurance is highly recommended — in Armenia, many mortgage programs already include it.

2. Don’t Take a Loan from the First Bank You See

Choosing a bank is not about who has the closest branch or the most attractive advertising.

Different banks in Armenia offer different terms: interest rates, fees, loan durations, and borrower requirements.

Some banks participate in state-supported programs that genuinely help you save.

Others may add mandatory insurance, which increases the actual (effective) interest rate — even if the advertised rate looks appealing.

That’s why it’s critical to:

1. Compare multiple offers
2. Check the total loan cost (effective interest rate), not just the headline rate

What Documents Do You Need to Apply for a Mortgage in Armenia?

Before applying, you’ll need to prepare a basic set of documents. Typically, banks require:

1. Passport or ID card
2. Income statement (for the last 6 months)
3. Proof of employment or tax filings (if self-employed)
4. Registered address
5. Property documents (if the property is already selected)
6. Credit history (requested directly by the bank)

If you’re applying under a state support program, you may also need:

1. Marriage certificate
2. Family composition certificate
3. Military ID
4. Proof of registration in a specific region

3. Use Government Programs — They’re Worth It

If you qualify, consider applying under one of Armenia’s government-backed mortgage programs.

As of 2025, there are at least five active programs designed for:

1. Young families
2. Military personnel
3. Displaced families from Karabakh
4. Residents of border regions
5. Homebuyers eligible for income tax refunds

With these programs, you can access effective rates as low as 0–5.5% and reduce overpayment by millions of AMD.

Some programs don’t even require a down payment.

Overview of Government Mortgage Programs in Armenia (2025)

If you're only interested in buying an apartment in Yerevan, you can explore all the details on our platform.

Can Government Programs Be Combined?

Yes — in some cases, government support programs can be combined.

For example, you may be eligible for both a preferential interest rate (under the young family or border region programs) and the income tax refund program.

This combination helps to further reduce your effective rate or partially reimburse the interest paid.

Before applying, check with your bank or on AFM to see which combinations are available in your case.

You can explore all government support programs in detail on our platform.

A full list of programs and participating banks is available in the “Mortgage” section on AFM.

4. Don’t Sign a Contract If You Don’t Fully Understand It

Before signing a mortgage agreement, make sure you clearly understand every term:

1. Interest rate
2. Fees and penalties
3. Early repayment rules
4. Payment schedule
5. Insurance requirements

The first page of the contract must show the effective interest rate — i.e., the true cost of the loan, expressed in both percentage and dram terms.

If any part of the contract is unclear, ask the bank representative or seek independent advice.

It’s better to spend 30 minutes asking questions than to spend years overpaying due to unclear terms.

The effective interest rate includes not just the interest, but all fees, insurance premiums, and hidden charges.

It reflects the actual amount you’ll pay over the life of the loan — and is the best way to compare offers from different banks.

5. Follow the Payment Schedule — Don’t Delay Payments

Even a one-day delay can trigger penalties and damage your credit history.

To avoid this, always:

1. Leave a buffer of 5–7 business days for payment processing
2. Use reminders or auto-payment options

If you receive any extra income, consider making a partial early repayment.

This can either:

1. Shorten your loan term
2. Or reduce your monthly payment

Both options will significantly lower your total interest overpayment.

Example: Mortgage Overpayment Calculation

Let’s take a sample mortgage:

1. Loan amount: 20 million AMD
2. Term: 15 years
3. Interest rate: 9% annually

Monthly payment: approximately 203,000 AMD

Total overpayment over the full term: over 16 million AMD

Now, if you start making partial early repayments from the beginning, you could:

1. Save 2–4 million AMD
2. Depending on the amount and frequency of those repayments

This strategy helps reduce the financial burden over time.

6. Know Your Rights and What to Do in Difficult Situations

If your financial situation worsens, Armenian borrowers have several legal options:

1. Request loan restructuring
2. Apply for mortgage payment holidays (available under government programs for up to 6 months)
3. Claim a mortgage income tax refund, if eligible (for example, if your right to it was established before 2025 or if construction began before 2022)

The most important thing is not to ignore the bank — initiate a dialogue and discuss your options.

All licensed banks in Armenia operate under the supervision of the Central Bank of Armenia and are required to respect borrowers’ rights.

7. Don’t Forget to Officially Close the Loan

After you've fully repaid your mortgage, make sure to:

1. Request an official certificate from the bank confirming the loan is closed
2. Check your credit report 2–3 weeks later (you can do this for free twice a year)
3. Ensure that the bank has correctly updated your credit status

Doing this helps avoid unexpected issues if you plan to apply for a new loan or mortgage in the future.

Hidden Tips: How to Avoid Mistakes and Save Money

To avoid overpaying and prevent complications after taking out a mortgage, it's important to consider not only general rules, but also practical details that are often overlooked. These insights may not seem obvious at first, but they can help you retain benefits, save money, and avoid legal or financial missteps.

Below is a list of field-tested tips that complement the main recommendations in this guide.

Take a Screenshot of the Effective Interest Rate and Loan Terms When Applying Online

After your loan is approved, the bank may alter some terms — such as adding a fee or changing insurance requirements.

A screenshot of the total cost of credit (effective rate) at the time of application can protect your rights in case of disputes.

This is especially important when applying online.

Apply to Several Banks Within a 5–7 Day Window

Comparing offers is essential — but be careful not to harm your credit history.

In Armenia, ACRA treats multiple inquiries made within a short time frame as a single request, so you can safely compare rates and terms without lowering your credit score.

Ask Your HR Department If a Corporate Mortgage Program Is Available

Some employers partner with banks to offer:

1. Reduced interest rates
2. Help with down payments
3. Faster loan approval

Even if you don’t qualify under standard terms, this can make a mortgage more accessible.

Check If VAT Is Included in the Price of a New Build

20% VAT is often included in the price of a newly built home — especially from corporate developers.

This increases the total cost and the loan amount required.

In some cases, VAT can be excluded or refunded — always clarify this in advance to avoid paying more than necessary.

Verify Whether Rental Is Allowed Under the Mortgage Terms

Some state-supported mortgage programs prohibit renting out the property during the first few years.

Violating this rule can result in cancellation of subsidies and a requirement to repay the support received.

This is particularly important if you’re planning to use the property as an investment.

Final Thoughts: What to Keep in Mind Before Taking Out a Mortgage in Armenia

Getting a mortgage without falling into debt is absolutely possible — the key is to approach it mindfully.

Before applying, take an honest look at your financial capacity and potential risks.

Remember:

A high loan amount or long term isn’t always bad — what matters most is whether the monthly payment remains affordable, even in case of financial stress.

Don’t focus only on the interest rate.

Always check the effective cost of the loan, including:

1. All commissions
2. Additional charges
3. Bank-specific conditions

Never hesitate to ask questions — and never sign a contract unless you fully understand it.

Armenia offers unique government-supported programs that can help you:

1. Reduce your interest rate significantly
2. Avoid a down payment altogether (in certain cases)

If you’re a young family, a servicemember, or a displaced person, these options can save you millions of AMD.

Such benefits are rare in other countries — and worth taking advantage of.

Lastly, on-time payments and monitoring your credit history are essential to your long-term financial health.

A responsible approach to borrowing can help you not only reach big goals — but also build a strong credit reputation, making it easier to access financial products in the future.

What to Do Next

1. Use the AFM calculator to find your comfortable monthly payment
2. Compare bank offers, especially those participating in government programs
3. Prepare your documents and clarify all terms before applying
4. Review the effective loan cost, not just the advertised interest rate
5. Share this guide — it could help someone close to you avoid major mistakes when applying for a mortgage

AFM makes it simple, free, and risk-free to find the right solution for your home financing needs.