How to Finance a Home in Costa Rica

Financing a home in Costa Rica as a non-resident involves distinct procedures and financial considerations. This guide clarifies available financing options and details the steps involved for those looking to invest in Costa Rican real estate.

Financing Options for Non-Residents

Non-residents in Costa Rica have several avenues for financing a home purchase. Local bank loans are available, though they present more challenges for foreign buyers than for residents. Costa Rican banks, such as BAC San José, Banco Nacional, Banco de Costa Rica (BCR), and Scotiabank, offer mortgages to non-residents, but approval can be complex. These loans often require a down payment of 30% to 50% of the property’s value, with interest rates typically between 7% and 9.5% in 2025. Loan terms usually span 15 to 25 years. Banks often require extensive documentation, including proof of income and credit history, and may sometimes seek a local co-signer.

Seller financing presents a common alternative, offering greater flexibility than traditional bank loans. In this arrangement, the property seller directly provides financing to the buyer. Seller financing deals commonly involve a down payment of 30% to 50%, with loan terms typically shorter, often ranging from 3 to 5 years, and interest rates usually falling between 6% and 8%. Payments are made directly to the seller, and ownership is transferred once the full balance is paid. This option can offer easier qualification processes and faster transactions through direct negotiations.

A cash purchase simplifies the transaction by eliminating the need for a mortgage. While legal due diligence and property transfer processes remain necessary, this method removes financial complexities associated with obtaining a loan. Developer financing is another option, particularly for new constructions, often requiring a down payment of 20% to 40% and offering financing periods of 5 to 15 years with interest rates from 6% to 12%.

Required Documentation and Financial Preparation

Before pursuing any financing option, non-residents must gather documents to demonstrate financial stability. Personal identification requires a valid passport and potentially a second form of identification, such as a driver’s license.

Proof of income and financial stability is crucial for lenders to assess borrowing capacity. This includes bank statements (typically for the last 6 to 12 months) and tax returns (for the past 2 to 3 years). Employment verification letters and recent pay stubs are commonly required for salaried individuals. Self-employed applicants may need audited financial statements or certified income statements from a Certified Public Accountant (CPA) in their home country.

Credit history from the applicant’s home country is a significant component. While some Costa Rican banks accept US and Canadian credit score systems, the focus remains on stable income and financial history. Any credit reports, income statements, or other financial documents must be translated into Spanish by an official translator and potentially apostilled or legalized for use in Costa Rica.

Asset verification documents, such as deeds or certificates of title for other owned properties, can strengthen an application. Establishing a local financial presence by opening a bank account in Costa Rica can be beneficial, though not always a prerequisite. This step can demonstrate commitment and facilitate transactions during the purchase process.

The Loan Application and Closing Process

The process of applying for and securing a home loan in Costa Rica, followed by property closing, involves several steps. After preparing all necessary documentation, the buyer identifies suitable local lenders. Once chosen, the application package is submitted.

The lender conducts a review, assessing the applicant’s financial profile, commissioning a property appraisal, and performing a title search. Legal due diligence involves a local attorney verifying the property’s title and survey at the National Registry (Registro Nacional) to confirm clear ownership and absence of encumbrances.

Upon successful review, the loan is approved, leading to the signing of loan agreements and promissory notes between the buyer and the lender. The final stage involves property transfer and registration, where a notary public acts as the closing agent. In Costa Rica, only licensed attorneys can serve as notaries. The notary drafts and oversees the signing of the transfer deed (Escritura Pública), which legally transfers ownership. This deed is then registered at the National Registry, officially placing the property in the buyer’s name.

Additional Costs of Home Purchase

Beyond the purchase price and loan interest, several additional costs are associated with buying property in Costa Rica. Buyers should anticipate these expenses to budget accurately.

A property transfer tax, Impuesto de Traspaso, is 1.5% of the property’s recorded purchase price or fiscal value, whichever is higher. Legal and notary fees for handling the closing process generally range from 1% to 2% of the property’s value. These fees compensate the attorney-notary for drafting the transfer deed and managing legal aspects.

Registration fees and various stamps are incurred during property registration at the National Registry. These include National Registry Stamps (0.5%), Agrarian Fees (0.15%), and other municipal and fiscal stamps, collectively adding approximately 0.8% to the total cost.

Annually, property taxes (Impuesto sobre Bienes Inmuebles) are levied at 0.25% of the property’s assessed value. For high-value properties exceeding approximately $230,000 USD, an additional “Solidarity Tax” or “Luxury Home Tax” applies, with rates ranging from 0.25% to 0.55% of the property’s value.

Home insurance is a recommended, and often mandatory, expense, particularly if financing through a local bank. Annual premiums typically range from 0.25% to 0.35% of the property’s value. For properties within gated communities or condominiums, Homeowners Association (HOA) fees are common, covering maintenance of shared spaces, security, and amenities. These fees can vary widely, from around $50 to over $1000 per month, depending on the community’s type and amenities offered.