I’m often asked about the availability of bank loans or Costa Rica mortgages (hipoteca) or Costa Rica home loans for foreigners. Often times US or Canadian buyers make the assumption that they can obtain a mortgage anywhere, anytime because we’ve become comfortable with the idea that with good credit and sufficient income that mortgages are fairly easy to obtain. Unfortunately, this doesn’t apply to foreigners buying property in Costa Rica as easily, but there is at least one option that is available to most expats.
YES, Costa Rica mortgages and home loans are available from limited sources here in Costa Rica for foriegners
Some notes about loans compared to bank loans in the US/Canada:
- Higher interest rates than home – The rate is a moving target, but currently (as of June 2024) around 8-8.5%
- Loan initiation fees – Currently, fees are around 1.5-2.5%
- Down payment – Down payments are around 25%-30%
- Length of loan – I’ve seen mostly 10 or 20 year loans, and our current partner is offering up to 20 years
- Limited to specific foreigners – Typically they will lend to US and/or Canadians or Costa Rican citizens, but typically not to people from other countries.
- Property ownership – Property in Costa Rica is typically held by individuals OR within a corporation. All of the lenders I have seen will require some sort of arrangement where the property is held in (owned by) a trust although we are currently working with a lender that can put title in your name if you prefer.
- Requirements – The lender will want an appraisal which can be around $800-$1000 and could derail the purchase if you receive an unexpected value.
Current Costa Rica home loan rates and requirements for foreigners can be found here
Loan Term | Up to 20 Years, fully amortized |
Available to | US, Canadian & Costa Rican Residents |
Loan-to-Value | 75% (25% down) |
Interest rate year 1 & 2 | 7.5%-8% (fixed) |
Interest rate year 3 & 4 | 8%-8.5% (fixed) |
Interest rate variable year 5 to 20 | TRI Rate* + 4.50% (floor is 8.5%) |
Pre-payment penalty | 3% for early payment before year 5 |
Life insurance | Varies, paid monthly, must be CR insurance policy |
Loan initiation fee | 1.5%-2.5% of final loan amount |
Property appraisal | Price varies, but around $500-$1000 |
Documentation Salaried Employee | 2 mos paystubs, 3 mos bank statements, 3 years tax returns, 2 credit reports from home country |
Documentation Self Employed | 6 mos corporate & personal bank statements, 3 years tax returns and 2 credit reports from home country |
OTHER Options for buying/financing:
- Cash – This is the easiest and most straight forward while being the most common method.
- Home equity – If you have home equity in a property in your home country, you can borrow against THAT property and bring the cash to Costa Rica to pay for your purchase here (this or cash on hand are the most common methods for my clients).
- Sell investments – Investment in Costa Rican property can be financially rewarding, so you may decide this is a good investment vs your options at home.
- Owner financing – We do occasionally see seller financing as an option. Typical terms are something like 50% down, term of 3-5 years & interest rates around 5-7% over prime. I generally only recommend this for high-income generating properties or as “bridge loans” when you know you will have a chunk of money coming in later – for example from a home sale, inheritance, etc. Costs will generally be limited to the interest payments and around $2000-$3000 of legal fees. You can find homes with owner-financing offers here.
If you already have financing lined up or if you want to work with our Costa Rica home loan provider, let’s chat!
