What You’ll Learn in This Article
- Can foreigners get mortgages in Costa Rica?
- Local banks offering loans to non-residents
- U.S. based lenders providing financing for Costa Rican property
- Mortgage terms, interest rates, and down payments
- Eligibility requirements for properties
- Overview of the loan approval and appraisal process
People from all over the world fall in love with Costa Rica and dream of owning a property, surrounded by the lush jungle, close to the white-sand beaches and wonderful surfing waves of Santa Teresa. Getting a mortgage however, has until recently been off the table!
Up until the last few years, it was very hard for non-resident foreigners to get a mortgage to buy a home here in Santa Teresa, Costa Rica. Traditionally, the local banks have been quite conservative in their lending policies - requiring borrowers at the very least to have residency, and offering terms with high interest rates and low loan to value ratios. As a result our market was for many years mainly a cash market as far as expats were concerned, or in a very few cases buyers were able to obtain short-term financing with the sellers.
Since 2020, however, things have changed and now there are four different options for obtaining a mortgage in our area. Two of the options are private local banks with offices in town and two are private lenders that are based in the US, but are providing mortgages against properties located in Costa Rica.
The Private Banks
The two private banks that have started offering residential mortgages to non-residents are Lafise (with an office located close to Pronto) and BAC (with an office located in the new Plaza Pochote). In our experience, both these banks offer excellent customer service and provide mortgages with not too dissimilar terms.
Both banks offer a term of up to 20 years to non-residents. The loan to value ratio offered ranges from 50% to 65%, depending on the amount of the financing. There is an option to fix the interest rate for the first four years, following which it is floating with a floor. Interest rates currently seem to be around 9% to 9.5%.
To understand the detailed terms and process of obtaining a loan, it is important to talk directly with the bank. Exact rates and terms will vary for each specific case. The information here is provided by way of general overview. If you are interested in learning more, we would be happy to make an introduction.
The Private Lenders
In the case of the two private lenders, currently they are only able to lend to US citizens.
Volo Loans - Volo offers 30 year mortgages, with the option for an initial fixed rate of either 5 or 7 years, or a fully fixed rate for the complete term of the loan. Interest rates start at 9.375%, loan to value ratio is 75% and there is no prepayment penalty.
Second Street - Second Street offers fixed rate loans with a term of between 15 and 30 years. They typically require 30% down payment, and there are no prepayment penalties. Their interest rates are similar to those of the other lenders in this space.
Process of Obtaining a Loan
As is the case for home purchases in any country, there is an approval process that a buyer will need to go through in order to get a mortgage. This will include a review and credit approval process for the individual making the application. You will need to provide information relating to your income and assets, etc.
Once under agreement on a property, the lender will start the property appraisal process. It is important to note that not all properties will be eligible for a mortgage in our area. Only those that have a legal water source, a legally registered access easement / or access via a public road, and have access to the municipal electric grid will be eligible.
Summing it Up!
In conclusion, yes foreigners can get a mortgage to buy a house here in Costa Rica. The terms and conditions will be slightly more conservative than those that you would expect to see in US or European markets. The process might be slightly more bureaucratic, but yes it is now possible to finance your home purchase in Costa Rica locally!
To get more detailed information on the terms and the process it is best to talk directly to the lenders. All of the lenders have bilingual reps, who can talk you through the process in detail. If you're interested in exploring mortgage options in Costa Rica, feel free to reach out, and we can assist in connecting you with the appropriate resources.
FAQs
Can foreigners get a mortgage in Costa Rica?
Yes, foreigners can now obtain mortgages in Costa Rica, either through private local banks or U.S.-based private lenders.
What are the requirements for a mortgage in Costa Rica?
Requirements include proof of income, assets, credit approval, and the property must meet legal standards like access to water, electricity, and a registered road.
Which banks offer mortgages to non-residents in Costa Rica?
Lafise and BAC are two private banks offering up to 20-year mortgages to non-residents in areas like Santa Teresa.
Are there mortgage options for U.S. citizens buying in Costa Rica?
Yes, U.S.-based lenders like Volo Loans and Second Street offer long-term mortgage options for U.S. citizens purchasing Costa Rican property.
What are the current interest rates for mortgages in Costa Rica?
Interest rates range from 9% to 9.5% with Costa Rican banks, and start around 9.375% with U.S.-based private lenders.
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