FGTS (Severance Indemnity Fund) for Home Purchase

The Severance Indemnity Fund for Employees (Fundo de Garantia do Tempo de Serviço, or FGTS) can be used to purchase, build, or pay down financing for an urban residential property, within the rules of the National Housing Finance System (SFH). Its use is governed by Law 8.036/1990 and by the regulations of the FGTS Governing Council, and requires the worker to meet specific requirements.

• Ways it can be used:
  • Purchase or construction: using the balance as part of the payment for a property, or toward SFH financing.
  • Partial or full payoff: reducing the outstanding balance of an existing mortgage loan at any bank, partially or in full.
  • Lowering payments: using it to clear overdue installments or reduce the amount of the payments.
• Main requirements: three years of employment under the FGTS system (continuous or not, combining periods across different employers); not owning another residential property in the same municipality, or in any municipality of the metropolitan region where the worker lives or works; no active SFH financing anywhere in the country; the property must be located in the municipality where the worker is employed, has resided for at least one year, or where the employer is based.
• Maximum property value: the ceiling for using FGTS under the SFH is R$1,500,000 (updated by resolution of the Governing Council), regardless of region. Properties above this value do not qualify for FGTS use.
• Type of property: must be residential and urban, with its own title record at the CRI, free of tax or legal encumbrances.
• Birthday withdrawal (FGTS aniversário): workers who opted into the birthday-withdrawal system cannot use FGTS to pay down or pay off a mortgage while enrolled in that option.

In Florianópolis, the R$1.5 million ceiling limits FGTS use to the mid-range segment. In the high-end market, most properties sold through Regente exceed this value, making FGTS irrelevant for the majority of transactions. For first-time buyers in neighborhoods like Coqueiros or Estreito, with price tags between R$500,000 and R$1 million, FGTS can provide a meaningful down payment.