Financing in Costa Rica

Residents vs. Non-residents

The availability of financing may depend on your residency status.  Obviously a person who has taken the time and has the wherewithal to establish residency is a lesser risk (in the eyes of the mortgage holder) than a person who is not a full time resident and does not have the residency permit.

However, the new trend is to offer financing to non-residents with good credit ratings in the U.S.  The route to mortgage financing for both residents and non-residents is much more arduous than in the U.S. and Europe.  While it is not fun for those seeking credit, Costa Ricans can feel fortunate that the bank failures plaguing other countries have not surfaced here.  While credit is tight as of January 2009 due to the global crisis, we have solid reason to believe that Costa Rica credit will loosen as soon as the worldwide financial system is more confident.

Financing for Non-Residents

Until recently financing for non-residents was hard to come by, usually buyers ended up making arrangements with the owner, or using equity to get a loan on their property back home, which they then applied to the purchase of property in Costa Rica.

However, this is now changing. Many banks are now offering loans based on your U.S. credit, and there are some private financial entities servicing this market as well. For the latest information, visit our Non-Resident Financing Options page

Owner financing is still an easy option, if possible. You can make a sizable down payment (50% to 70%) and get 2 or 3 years on the remainder. In the meantime you begin the process of getting residency and then pay off the owner's loan with the mortgage you get as a resident.

Another common way is to purchase the home in Costa Rica with cash. The most common reason people can do this is that they have sold property back home and have the cash available to invest in a new home in Costa Rica.

Some people get a second or first mortage on property in the US that they then use to buy property here. You can also use your IRA to buy property anywhere, including Costa Rica. Article on buying foreign real estate with your IRA.

A good option is to try Scotiabank or Stewart Title. Stewart Title is a US-owned title company that advertises mortgage broker style services, but their web site provides absolutely no information. You might try calling them in the US at 800-729-1906 or in Costa Rica at 2258-5600.

Scotiabank at this time is the only bank that loans money to foreigners who aren't legal residents, the application approval is based on your credit history in the U.S. and U.S income. They will loan 70% of the appraised value on the home.

Your American-European broker will help you determine the best route for financing according to conditions in the market and your personal situation.

Financing for Residents

If you are a legal resident, you may get a home loan from a local bank, either a private bank or one of the state banks. Visit our page Applying for a Home Loan in Costa Rica (click here) to find out more about the process and requirements for this loan.

Currently, mortgage rates in Costa Rica are fairly competitive with U.S. rates, but most buyers find the closing costs significantly higher here. This is somewhat of a misperception, as there there are some "hidden" closing costs that banks here don't add into the loan amount. An example of this is title insurance, which is mandatory in the U.S. and not required by banks here.

Visit the American-European Real Estate Group website for the original article