Whether we like it or not, we all have to sort out our housing in some way. The most common question is whether to rent or buy a property. However, the current economic situation and several years of high inflation have shaken rental prices as well as the availability of mortgages. Today we will look together at the housing allowance and mortgages, what situations each applies to, and the differences between them.
Housing allowance
We will start with the housing allowance. The housing allowance is a state welfare benefit paid by the state. It is managed by the Ministry of Labour and Social Affairs (Ministry of Labour and Social Affairs, MPSV) as the relevant authority. Other benefits include, for example, parental allowance (rodičovský příspěvek) or child benefit. Benefits can be understood as state contributions to overcome a difficult life situation, a loss of income, and the like.
Specifically, the housing allowance is a benefit that contributes to the housing costs incurred by an individual or family, subject to certain conditions.
Who is entitled to the housing allowance?
The housing allowance can be claimed by the property owner, a person using the flat on the basis of a servitude (an easement (věcné břemeno), such as lifetime use), the tenant or subtenant of the flat, and finally also the owner of a building used for individual or family recreation. To qualify for the housing allowance, the applicant must meet several conditions. These conditions are:
- housing costs exceed 30% of the family’s net income, and at the same time
- this 30% of the family’s net income is not higher than the normative housing costs amount.
In 2024, the normative housing costs amount is 14,197 CZK (about 650 USD).
Housing costs do not include only rent, but also costs for gas, electricity, and services provided in connection with the use of the flat. These are costs for heating supply, centralized hot water supply, tap water supply, wastewater discharge, lift operation, and other costs associated with housing.
Therefore, more people qualify for the housing allowance than if only the net rent amount were assessed.
You can find much more information and the option to apply for this allowance directly on the MPSV website.
How the housing allowance in the Czech Republic works in practice
Both conditions apply at the same time. Imagine your household’s net income is 2,000 USD a month. Thirty percent of that is 600 USD. If your rent, energy and service charges add up to 750 USD, your costs are above the 30% threshold, so you meet the first condition. Because 600 USD is also below the normative amount mentioned above, you meet the second condition too.
Common mistakes to avoid:
- Counting only the rent and forgetting energy and service charges.
- Assuming a decent income rules you out. What matters is how your income compares with your housing costs.
- Thinking only tenants can apply. Owners and people with a right of use can also qualify.
Mortgage
On the other hand, a mortgage loan (mortgage) is something completely different from a housing allowance. It is a loan secured by a lien on real estate. It is a loan that banks provide for purchasing real estate. However, people also often use mortgages to finance renovations or, for example, house extensions. It is therefore not help in a difficult life situation, but essentially a debt that the applicant takes on.
The applicant repays the mortgage in monthly instalments. Since it is usually a large borrowed amount, repaying the loan over a period of 20 or 30 years is not an exception. Mortgages are provided by banks, which also need to make money, so they lend money for a mortgage with a certain interest rate. Currently, these interest rates range roughly from 4.5% to 6.2% per year. This means that each year you pay the mortgage principal, which is the borrowed amount, and then around 6% in interest. Over a 30-year period, you might end up paying the bank double the borrowed amount. Unfortunately, a mortgage remains the only option for very many families to secure their own housing, so they have no choice but to pay these costs.
In the first years of the mortgage, you also pay interest rather than principal, but gradually your instalments chip away more and more of the principal itself.
Who can apply for a mortgage?
A mortgage applicant can be an adult Czech citizen or a foreigner with permanent or temporary residence in the Czech Republic. The bank assesses the applicant’s ability to repay the loan in particular, checking the source and level of income as well as the applicant’s payment history. Unpaid loans or possible enforcement (exekuce) usually lead to the rejection of applications. However, the bank can also reject the application for another reason, such as non-compliance with the bank’s internal regulations, and the like.
Will the bank lend me 100% of the property price?
Unfortunately, no. Banks lend a maximum of 80% of the property price, or 90% of the purchase price for applicants under 36 years of age. However, the applicant must obtain the remaining 10% or 20% in another way, whether through personal savings, gifts from family, or an inheritance. An option used by many people is building savings (stavební spoření), which you can read more about in this article of ours.
If you want to try and check whether you would qualify for a mortgage or how much the bank could lend you, take a look at, for example, this calculator by Česká spořitelna. However, every bank has its own calculator, its own interest rate and its own conditions. Therefore, the first offer you come across might not be the right one for you.
In conclusion, although the housing allowance and a mortgage address the same area of life, which is housing, they apply to completely different situations. The housing allowance helps overcome a difficult life situation and ease the family budget in the short term. Conversely, a mortgage is a loan used to acquire one’s own housing and is a new financial commitment that the applicant takes on.
Even though many people feel ashamed to apply for a housing allowance, there is no reason for it. It is impossible to say when any of us might find ourselves in a difficult life situation for whatever reason. There is therefore no reason not to take advantage of any help that is offered.
Housing allowance with a mortgage
Owning your home does not on its own rule you out, because property owners are among the people who can claim the allowance. However, the two work very differently. The allowance helps with ongoing housing costs, while the mortgage is a debt you have chosen to take on. The list of housing costs above does not mention loan instalments, so do not assume your mortgage payment will be counted. Check the details on the MPSV website before you rely on the allowance in your budget.
Frequently asked questions about the housing allowance in the Czech Republic
Who can get housing allowance?
You can claim it if you own the property, use it on the basis of a servitude, rent or sublet the flat, or own a building used for recreation. You must also meet both income conditions. Your housing costs must exceed 30% of your family’s net income, and that 30% must not be higher than the normative housing costs amount.
Can I get housing allowance with a mortgage?
Having a mortgage does not automatically exclude you, as owners can also apply. The allowance is assessed on your housing costs and income, not on the fact that you have a loan. Do not assume your mortgage instalment counts as a housing cost, and check the conditions on the MPSV website.
Is the housing allowance a loan?
No. It is a state welfare benefit meant to help you through a difficult situation. Unlike a mortgage, it is not a debt you take on and repay in instalments with interest.
USD amounts are approximate, converted at the Czech National Bank rate of 21.83 CZK per USD on 27 October 2026.