Can You Get a Mortgage in Costa Rica?

Obtaining a mortgage in Costa Rica is possible for individuals considering property acquisition in the country. This guide outlines the process, requirements, and steps for prospective borrowers. Understanding the local lending environment and preparing thoroughly can streamline the experience.

Eligibility and Lending Landscape

Eligibility criteria for a mortgage in Costa Rica vary, often depending on residency status. Legal residents with a DIMEX card typically have access to broader financing options and more favorable terms. Non-residents can obtain mortgages, but the process is more complex with stricter requirements, as lenders view them as higher risk.

Several financial institutions and lenders operate in Costa Rica, with different offerings for foreign buyers. Local banks, including private institutions like BAC San José, Banco Lafise, and BCT, offer mortgages to non-residents, particularly from the United States and Canada. These banks require extensive documentation and may prefer borrowers with a significant financial presence in Costa Rica. Private lenders are a common alternative, offering more flexible terms and faster approvals. Seller and developer financing are also viable options, especially for new constructions or when sellers offer direct financing.

Qualifying criteria for a mortgage in Costa Rica include demonstrating stable income and a sound financial history. Lenders assess repayment ability, often looking for a debt-to-income ratio where mortgage payments do not exceed 30% of net income. While some international lenders may prefer credit scores above 700, local banks emphasize verifiable income and financial stability. Residency status plays a role, as obtaining temporary or permanent residency can enhance eligibility for bank financing.

Key Mortgage Terms and Conditions

Mortgage terms in Costa Rica include various financial specifics. Interest rates vary based on the lender and loan currency. For U.S. dollar loans from local banks, rates typically range from 7% to 10% annually. Loans in Costa Rican Colones can have higher rates, sometimes up to 20%. Private lenders offer rates between 12% and 18%, reflecting their flexibility and quicker approvals.

Loan-to-value (LTV) ratios determine the maximum amount a lender will finance relative to the property’s appraised value. For non-residents, traditional banks usually require higher down payments, with LTV ratios capped around 50% to 65%. This means foreign buyers often need a down payment of 30% to 50% of the purchase price. Private lenders might offer more flexible LTVs, sometimes up to 70%, depending on the property and borrower profile.

Loan durations from local banks often range from 15 to 25 years. Private financing, including seller or developer financing, usually involves shorter terms, typically 1 to 5 years or, in some cases, up to 15 years. Borrowers can choose between U.S. Dollars or Costa Rican Colones for their mortgage, influenced by their income source and currency risk tolerance. Many lenders offer loans in U.S. dollars, particularly for foreign borrowers.

Beyond principal and interest, several closing costs are associated with the mortgage. These include loan origination fees (typically 1% to 3% of the loan amount), appraisal fees ($500 to $1,000), and legal fees for registering the mortgage lien with the National Registry.

Preparing Your Mortgage Application

Preparing a mortgage application in Costa Rica requires gathering various documents. For personal identification, applicants need a valid passport. A valid visa or DIMEX card (for residents) is also required if applicable. Some lenders may request two forms of identification, such as a driver’s license alongside a passport.

Proof of income and financial stability is a central requirement. Salaried individuals need an employment letter from their employer, detailing position, tenure, and gross and net salary. Self-employed applicants must provide CPA-certified income statements, outlining business activity, income, and average gross and net earnings over the last fiscal period. For foreign income, banks require CPA-certified income statements, along with copies of the last three years of income tax returns from the home country, including W2 forms for U.S. citizens. Bank statements covering the last 6 to 12 months should support these income verifications to show consistent deposits.

Proof of assets and financial position is also important. Lenders request statements from investment, retirement, and other bank accounts for the past six months. This provides a view of the applicant’s financial reserves and capacity. For credit history, applicants must provide at least two credit reports from their home country’s major bureaus. These reports should be current, within 90 days of submission, to reflect an up-to-date credit standing.

Preliminary property documents are necessary for the lender’s initial assessment. This includes basic property details, preliminary title information, and often an initial professional appraisal report. The appraisal helps the lender understand the property’s market value and suitability as collateral. All foreign documents, including financial statements and tax returns, must be officially translated into Spanish by certified translators and often require notarization to meet local legal standards. Lenders provide specific application forms, which can be obtained from bank websites or representatives, and the gathered information must be accurately transferred.

The Mortgage Application and Approval Process

Once documents are prepared, the next step is submitting the mortgage application. Applicants can submit their package in various ways: in-person at a bank branch, through an online portal, or via a designated representative like a real estate agent or attorney. This submission initiates the lending process.

Following submission, the lender begins underwriting and due diligence. This involves thorough verifying all provided documents for accuracy. The property undergoes a formal appraisal to confirm its value and suitability as collateral. A legal review of the property title identifies any encumbrances, ensuring clear ownership. A comprehensive credit assessment reviews the applicant’s financial history and stability to determine eligibility and risk.

Upon completion of underwriting, the borrower is notified of approval or denial. If approved, the lender issues an approval letter or loan offer. This document outlines the final mortgage terms, including the approved loan amount, interest rate, repayment schedule, and any remaining conditions before closing.

The final stage is mortgage closing. This involves signing all loan documents before a public notary, a standard legal requirement in Costa Rica. After signing, the mortgage lien is registered with the National Registry, securing the lender’s interest in the property. Once legal formalities are completed, loan funds are disbursed, typically transferred to the seller or an escrow account, completing the property purchase.