Can You Finance a House in Costa Rica?

Financing a home in a foreign country differs from domestic property acquisition. While securing a house in Costa Rica is possible for foreigners, it involves different procedures and requirements than those typically found in North America or Europe. Various avenues exist to facilitate such a purchase, each with distinct characteristics buyers should understand.

Overview of Financing Options in Costa Rica

Acquiring property in Costa Rica as a foreigner offers several distinct financing pathways. Local bank financing is a traditional option, though it often comes with more stringent requirements for non-residents, making it less accessible for many international buyers.

Seller financing, where the property owner directly provides the loan, is an increasingly common alternative offering greater flexibility. Private lenders and the strategic use of assets from one’s home country also serve as viable financing solutions. The availability and specific terms for each option vary, influencing the most suitable choice for a prospective buyer.

Securing Local Bank Financing

Obtaining a mortgage from a local Costa Rican bank is an option for foreigners, but it generally involves a more complex process than what residents experience. Banks typically prefer lending to individuals with legal residency or a substantial financial presence. However, some private Costa Rican banks (e.g., BAC San José, Banco Lafise, BCT) now include non-residents in their offerings.

To be eligible, foreign applicants need to demonstrate stable income, a good credit history, and provide extensive documentation from their home country. Required documents commonly include:

• A valid passport
• Proof of income (tax returns for the past two to three years)
• Bank statements (last six to twelve months)
• A credit report from the applicant’s home country
• An official property appraisal ($800-$1,000)

These documents often require translation into Spanish.

The application process can be lengthy, sometimes taking several months for approval. After submitting a complete loan package, the bank conducts an initial review, underwriting, and final approval. Banks may request follow-up questions or interviews.

Typical interest rates for U.S. dollar loans from traditional banks range from 7% to 10% for qualified borrowers as of late 2025; non-residents might face higher rates. Down payment requirements for foreign buyers are generally higher than for residents, often 30% to 50% of the purchase price, with some banks requiring up to 60% down. Loan terms typically span 15 to 25 years, though some extend to 30 years. While most local mortgages are in Costa Rican colones, some banks offer U.S. dollar loans, preferred by many foreign buyers to mitigate currency exchange risk.

Exploring Alternative Financing Methods

Beyond traditional bank mortgages, several alternative financing options exist for purchasing property in Costa Rica, offering different advantages and terms. These methods can be particularly beneficial for foreign buyers facing challenges with local bank requirements.

Seller financing, also known as owner financing, is a popular choice where the property seller acts as the lender. This direct arrangement often provides more flexible terms than a bank, with typical down payments ranging from 30% to 50% of the purchase price. Loan terms usually span three to five years, with interest rates generally between 6% and 8%, though some can range from 0% to 12%. The buyer makes regular payments directly to the seller. Ownership transfers once the balance is fully paid, often with the seller retaining a lien or legal trust against the property.

Private lenders, including hard money lenders and offshore banks, offer another financing avenue. These options often come with higher interest rates (9-18%) and may include additional administrative fees. Hard money loans are primarily secured by the property’s value rather than the borrower’s creditworthiness, making them accessible even with a less-than-perfect credit history. Loan terms are generally shorter (six months to five years), but they offer faster approval processes (seven to ten business days).

Leveraging assets from one’s home country, such as a home equity line of credit (HELOC) or refinancing an existing property, is another strategy. This allows buyers to access capital from their current assets to fund the Costa Rican purchase directly. This approach can bypass the complexities of foreign financing, providing straightforward access to funds without extensive local documentation or translation.

Important Factors for Financing Success

Several factors influence the success of a property purchase in Costa Rica. Understanding these aspects streamlines the process and mitigates potential complications for foreign buyers.

Demonstrating strong financial stability is important. Lenders and sellers seek verifiable financial histories and consistent income streams. Transparent banking records and a clear explanation of the source of funds are important, given Costa Rica’s AML and KYC regulations.

Thorough property valuation and legal due diligence are important. A professional appraisal assesses the property’s market value, which lenders rely on for loan-to-value calculations. Legal due diligence involves reviewing the property’s title at the National Registry to confirm legal ownership, identify liens, encumbrances, or pending lawsuits, and verify zoning compliance. A qualified Costa Rican real estate attorney is necessary to navigate local laws and regulations.

Understanding local legal and financial processes is key. Typical closing costs generally range from 4% to 6% of the purchase price and are often split between buyer and seller. These costs include transfer taxes (1.5%), registration fees (around 0.8%), and legal/notary fees (typically 1.25% to 2% of the sale price). A SUGEF-registered escrow agent is also important, holding funds securely until all transaction conditions are met and ensuring compliance with local financial regulations.

Finally, awareness of currency exchange rate risks is important, particularly if income is in a different currency than the loan or property value. Fluctuations between currencies, such as the U.S. dollar and the Costa Rican colón, can impact loan payments. Considering these financial dynamics helps in making informed decisions about loan currency.