Costa Rica Mortgages for Expats: What U.S. & Canadian Buyers Need to Know

For many years, one of the biggest differences between buying real estate in Costa Rica and buying a home in the United States or Canada was financing.

Historically, most foreign buyers purchased property with cash.

Conventional mortgages were difficult to obtain, seller financing was often the only realistic option, and many buyers simply assumed they would need to liquidate investments or sell a home before making the move.

That is beginning to change.

Today, financing has become a legitimate option for many expats purchasing property in Costa Rica. Lenders such as LAFISE and Second Street are now offering financing programs designed for qualified U.S. and Canadian buyers.

While obtaining financing here isn’t identical to getting a mortgage back home, it has become much more accessible than it was even a few years ago.

How Does Financing Work?

Rather than relying solely on Costa Rican banking history, these programs evaluate borrowers using their financial profile in their home country.

Depending on the lender, applicants may be asked to authorize access to their U.S. credit history and provide tax returns, bank statements, proof of income, identification, and other financial documentation.

In other words, if you’ve maintained good credit and stable income in the United States or Canada, that financial history may now help you qualify for financing in Costa Rica.

What Does a Typical Loan Look Like?

Every lender has its own underwriting standards, but current financing options are considerably more competitive than many buyers expect.

For example, LAFISE currently offers programs that may include:

• Financing up to 70% loan-to-value for qualifying primary residences
• Terms of up to 20 years
• Adjustable interest rates beginning around 8.5%, subject to the TRI benchmark rate
• Financing for primary residences, second homes, investment properties, and equity loans
• A 1.5% financing commission
• A prepayment penalty during the first five years, with no penalty thereafter

Naturally, lending programs evolve over time, so buyers should always confirm current rates and terms directly with the lender before making purchasing decisions.

It’s Not Exactly Like Getting a Mortgage Back Home

One misconception I’d like to avoid creating is that obtaining financing in Costa Rica works exactly like walking into your neighborhood bank in the United States.

It doesn’t.

The process generally involves more documentation, additional underwriting, property appraisals, insurance requirements, and more coordination between the lender, attorneys, and the parties involved in the transaction.

Because of that, financed purchases typically require more time.

While an all-cash purchase might close in approximately 60 days, a conventionally financed transaction often requires closer to 90 days to allow sufficient time for underwriting, appraisal, legal documentation, and final loan approval.

If you’re writing an offer on a property, that longer timeline should be factored into your negotiations with the seller from the very beginning.

One Important Difference: The Trust Structure

One aspect of Costa Rican financing surprises many North American buyers.

According to a recent seminar presented to our brokerage by one of Costa Rica’s leading real estate law firms, many banks utilize a guaranteed trust, or fideicomiso de garantía, rather than recording a traditional mortgage lien against the property.

Under this structure, legal title is generally held in trust while the loan remains outstanding. Once the loan has been fully repaid, ownership is transferred from the trust to the borrower.

Although this differs from the mortgage system most Americans and Canadians are familiar with, it is a well-established financing mechanism in Costa Rica.

Because of this structure, the closing attorney will typically represent the bank. Buyers often choose to retain their own attorney to represent their interests, while the seller may have separate legal representation as well.

As a result, financed transactions can involve somewhat higher legal fees than a straightforward cash purchase.

Large Acreage Properties Can Present Additional Challenges

This is one issue that buyers of rural properties often don’t anticipate.

If you’re purchasing a condominium, a home in a gated community, or a typical residential lot, the appraisal process is generally fairly straightforward.

However, many of the properties I represent are mountain homes situated on 5, 10, 20, or even 100 acres.

In those situations, buyers should understand that the bank’s appraisal may not necessarily assign lending value to all of the acreage included in the purchase.

For example, imagine purchasing a beautiful home situated on 20 acres.

Depending on the lender and the property’s characteristics, the appraisal may primarily value the residence and the portion of land considered directly associated with the home, rather than the entire 20-acre parcel.

If that occurs, the loan amount may be substantially less than the agreed purchase price, requiring the buyer to contribute additional cash or explore alternative financing for the remaining value.

This doesn’t mean large-acreage properties cannot be financed. It simply means buyers should discuss the specific property with their lender early in the process so there are no surprises after the appraisal is completed.

Don’t Forget About Seller Financing

Conventional financing isn’t the only option.

Costa Rica continues to be one of the few markets where seller financing is still relatively common, particularly in a slower market.

Depending on the seller, financing terms may include:

• Flexible down payments
• Negotiable interest rates
• Customized repayment schedules
• Faster closings
• Less paperwork than traditional bank financing

Unlike bank loans, every seller-financed transaction is unique because the terms are negotiated directly between buyer and seller.

For many buyers, it can still be an excellent alternative.

Cash vs. Conventional Financing: Which Gives You More Negotiating Power?

One important distinction is that a conventionally financed purchase is still essentially an all-cash closing from the seller’s perspective.

If the loan is approved, the seller receives the full purchase price at closing.

The difference isn’t how the seller gets paid.

The difference is certainty and timing.

A buyer paying entirely from personal funds can usually close more quickly, with fewer contingencies and fewer moving parts. That simplicity often gives the buyer greater negotiating leverage, particularly if the seller is motivated.

A buyer using conventional financing may still submit an excellent offer, but introducing a lender into the transaction generally means additional underwriting, appraisals, legal documentation, and a longer closing period.

Because of that added complexity, some sellers may be less willing to negotiate aggressively on price than they would with a buyer who can close quickly using entirely personal funds.

That doesn’t mean financed offers are weak—far from it.

It simply means financing becomes one of several factors a seller weighs when evaluating competing offers.

Final Thoughts

One of the biggest changes I’ve seen in Costa Rica real estate over the past several years is that financing has become a realistic option for qualified foreign buyers.

No, Costa Rica hasn’t suddenly become identical to the U.S. mortgage market.

The process is still more involved.

It still requires additional planning.

And there are situations—particularly with larger rural properties—where financing can become more complicated.

But for many buyers who once believed they had to arrive with a suitcase full of cash, that’s no longer the case.

The best approach is to explore your financing options before you begin shopping for property. Understanding what’s possible early in the process helps establish a realistic budget, strengthens your negotiating strategy, and helps avoid surprises once you’re under contract.