In Brazil, the Guarantee Fund for Length of Service (FGTS) represents an important financial support tool for workers, especially when it comes to acquiring their own home. This fund, created to protect workers dismissed without just cause, accumulates amounts deposited by employers into accounts linked to their employees. 

One of the main advantages of the FGTS (Brazilian Severance Indemnity Fund) is the possibility of using it to purchase real estate, facilitating access to housing and contributing to the realization of the dream of homeownership. In this article, we will detail the conditions and possibilities of using the FGTS to buy a house, clarifying the main doubts about the subject.

Understanding the FGTS (Brazilian Severance Indemnity Fund)

The FGTS (Severance Indemnity Fund) consists of monthly deposits made by employers, equivalent to 81% of each employee's salary. These funds are available to the worker in some specific situations, such as the purchase of real estate, retirement, in case of serious illness or public calamity, and in case of dismissal without just cause.

Conditions for Using FGTS (Brazilian Severance Indemnity Fund) to Purchase Real Estate

To use FGTS (Brazilian employee severance fund) to buy a house, the worker must meet certain requirements established by law:

  • Contribution Period: It is necessary to have at least three years of work under the FGTS (Brazilian Severance Indemnity Fund) system, consecutive or not, in the same company or in different companies.
  • Property Situation: The property to be acquired must be located in the municipality where the buyer carries out their professional activity, or in neighboring municipalities, or even in the municipality where the buyer has resided for more than one year.
  • Property Type: The use of FGTS (Brazilian employee severance fund) is permitted for the purchase of urban residential properties, with an appraised value within the limits established by the housing finance system.
  • Purpose: The property must be intended for the residence of the FGTS account holder.
  • Property and Buyer Regularity: The property must be free of any encumbrances, and the buyer cannot own or have an active mortgage on any other residential property in the municipality of interest, nor have used FGTS (Brazilian employee severance fund) to purchase residential property in the last two years.

Possible Uses

The FGTS (Brazilian Severance Indemnity Fund) can be used in various types of property acquisition, including:

  • Purchase and Construction: For the acquisition of new or used properties, as well as for the construction of one's own home.
  • Amortization or Settlement of Outstanding Balance: The FGTS balance can be used to reduce the amount of housing loans, decreasing the value of installments or the payment term.
  • Payment of Part of the Installments: It is possible to use the FGTS balance to pay up to 80% of the value of housing loan installments for a specified period.

How to Use FGTS to Buy a House

To use FGTS (Brazilian employee severance fund) to purchase a property, the worker must follow these steps:

  • Balance Verification: First, it's necessary to check the available balance in your FGTS account. This can be done through the FGTS app, the Caixa Econômica Federal website, or at Caixa branches.
  • Required Documentation: The buyer must gather the required documentation, which includes identity card, CPF (Brazilian tax identification number), proof of residence, updated FGTS (Brazilian employee severance fund) statement, declaration of non-ownership of property, and other documents that may vary depending on the situation.
  • Credit Approval: Before using FGTS (Brazilian employee severance fund), the buyer must seek credit approval from the financial institution, when applicable.
  • Release of Funds: With all conditions met and the documentation approved, the FGTS funds are released for the purchase transaction.

Using FGTS (Brazilian employee severance fund) to buy a home is an excellent opportunity for Brazilian workers to realize their dream of homeownership. However, it is essential to be aware of the established rules and conditions to ensure you can take advantage of this possibility. 

Planning, research, and seeking professional guidance can facilitate the purchasing process, ensuring that the worker makes the best possible use of their FGTS (Brazilian employee severance fund) resources.

See also: Can the FGTS be blocked by court order? Understand what happens

February 16, 2024