One of the first questions that comes up when a foreigner is looking to buy a property in Costa Rica has to do with financing options.

Let’s start by saying that buying real estate in Costa Rica can be considerably more affordable than purchasing a home in the United States, vacation homes are not an exception, a beautiful vacation home with a beach view in one of Costa Rica’s most popular areas such a Los Sueños, surrounded by nature will cost you only a fraction of what a similar house could cost you in the U.S.

This is of course, good news, considering many times you might not even need financing or you might need it only for reasonable amounts.

Finding a good realtor in Costa Rica and a good lawyer are the first two things you need to do, they can guide you in the right direction and answer any questions you may have and more importantly they will protect your interests.

As a foreigner looking to invest in Costa Rica you can own property in your own name, although an alternative reccomendation is doing it through a corporation.

Banks: Getting a loan approved as a foreigner from a Costa Rican bank is complicated and requires time and patience, it’s even hard for locals, it helps if you are a resident or you have lived in Costa Rica for a long time and already have a good client relationship with a local bank, but even if you don’t some banks like Scotiabank and Banco de Costa Rica will offer you loans based on your credit score in your country of origin. Consider that normally they will lend between 70-80% of the property’s appraised value. Shop around for the best interest rates and terms. Patience is key if you decide to go this route, banks will ask for documents and then more documents and then more documents, when you think you are done, they will need another document. This process can also take months to complete.

Owner/Developer Financing: Some owners and developers offer financing, this is actually fairly common when it comes to vacation homes since obviously many buyers are foreigners from the United States and Canada. The terms for owner financing usually involve a short term (2-5 years) and they will lend around a 50-60% tops (loan to value). When it comes to this type of financing you will find a wide variety of options throughout the country some very attractive Owner/Developer financing is a great way to buy a home or property in Costa Rica.

Private Lenders: Probably the easiest and fastest way to go, but private loans have high rates and short terms. Rates can go from 10-20% per annum and terms from 1-3 years at a time. Private Lenders will usually only lend 50% (Loan to Value) and all will require the property as security against the loan. The Good News is that loans can be funded within a week in some cases so the wait time is very short in comparison to banks. Most realtors in Costa Rica can recommend good private lender such as Fast Costa Rica Finance.

Whichever route you decide to take, make sure you read through all the fine print, get your lawyer and realtor to go over documentation with you and explain things very clearly.

Consider renting out your vacation home to help you make the payments, if you get involved with a good property manager the house may end up paying for itself through the rental income. Click here to read about how to turn your vacation rental in Costa Rica into a cash cow.