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Home Financing In Costa Rica: What You Need To Know First

By Casey | Buying Real Estate In Costa Rica
Can I get home financing in Costa Rica?

When it comes to buying real estate in Costa Rica, this is one of the most common questions we receive—especially now that more people than ever can work from home, from anywhere in the world.

You’ve decided you’re ready to move to Costa Rica, you’ve found your dream home—now what are your options for home financing in Costa Rica?

First off, it’s essential to know that securing financing in Costa Rica is difficult for foreigners. Interest rates are much higher than in the U.S. or Canada, and terms of length are much shorter. Because of that, the vast majority of our Costa Rica real estate clients choose to invest in property with cash.

Purchasing your Costa Rica real estate with cash is by far the easiest option and will give you the best negotiating power. Furthermore, if you’re considering your Costa Rica property purchase for an investment purpose, high-interest loans from private lenders might not make financial sense.

That said, if cash is simply not an option, don’t give up on your dreams of owning real estate in Costa Rica just yet!

There are a few Costa Rica home financing options available. Here’s a look at what you need to know to make an educated decision that’s right for your needs:

Home Financing In Costa Rica: What You Need To Know First

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Can I Get A Mortgage With A Bank In Costa Rica?

There are two categories of banks in Costa Rica: Government-Owned and Private.
It’s nearly impossible for a foreigner to get a loan or mortgage with a government-owned Costa Rican bank. Credit requirements are stringent in Costa Rica, and as a foreigner, the local banks do not have a way to legally confirm your work history, credit, financial history, etc.
Some private banks do offer loans to foreigners, but these remain challenging. Unfortunately, if you’re over the age of 65, you are likely to be declined due to age. Down payments are around 30-50%. Interest rates vary but are typically in the double digits (about 12-16%.)

Because of the high-interest rates and challenging application process, we typically do not recommend bank financing to our Tropical Investments clients.

Is Private Financing In Costa Rica Available?

Since most foreigners cannot receive a mortgage when buying Costa Rica real estate, there are a few private lender options. Each private lender has its list of requirements, but interest rates are high, and loan repayment times are short.

If you’ve found your dream home in Costa Rica, but it will take a little bit of time to liquidate your assets to make a cash purchase, then private financing could potentially be a short-term solution.
Again, we typically don’t recommend private lender financing in Costa Rica because of the high-interest rates. However, we are happy to discuss your situation in more detail to see if this is an option that makes sense for you.

Seller Financing In Costa Rica: A Smart Middle Ground

Suppose home financing is your only option for purchasing real estate in Costa Rica. In that case, we can sometimes procure real estate opportunities that offer Seller Financing (also called Owner Financing.)
For a variety of reasons, some sellers are willing to consider Seller Financing. Typically, terms include a 50% down payment, 3-5 years mortgage period, and an interest rate between 5-10%.
The terms for seller financing in Costa Rica vary depending on the seller’s conditions and needs. Interest payments could be paid out monthly, quarterly, bi-annually, or annually. Capital payments could be paid throughout the loan period and/or as balloon payments.
Should you default on the repayment conditions, the property typically returns directly to the ownership of the seller, or it goes to auction. It’s essential to clearly understand Seller Financing’s terms before making any Costa Rica real estate decision. This is something in which we are happy to assist.

When it comes to the mortgage costs associated with receiving financing in Costa Rica, the buyer is typically responsible for paying. These fees include:

-Registration Fees: .25% of the value of the mortgage
-Documentation Stamps: .53% of the mortgage
-Notary Fee For Drafting Mortgage: .5% – 1.25% of the total mortgage amount

Seller financing is not standard in Costa Rica, but these opportunities do exist, and we are happy to match you with a property for sale that makes sense for both parties’ financial needs.

Are there any other options for home financing in Costa Rica?

As previously mentioned, we always recommend our clients to purchase their Costa Rica real estate with cash, if at all possible. One such way to do this while still procuring financing is by getting a credit line in your home country. This could be a line of credit on your home equity (a HELOC.) Some buyers also choose to take advantage of refinancing their homes, pulling out the equity, and using that cash to purchase their Costa Rica real estate
We strongly recommend consulting with your financial advisor to see if any of these options to obtain a line of credit in your home country make sense for you. While we can explore different options with you for financing in Costa Rica, it is up to you to make the right decision for your financial and investment portfolio. Like we always say—an educated buyer is a happy buyer!

We hope these options helped to clarify the conditions for home financing in Costa Rica.

We were born out of a passion for helping people enhance their quality of life by achieving their real estate dreams in Costa Rica.

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