Financing Property in Mexico

If you’re an American trying to buy a house in Mexico, you are probably wondering if you can get a loan to build or buy a home in Mexico. Luckily the answer is yes. You have plenty of options when looking for home financing. In this, I will discuss what options are available to you. I will also discuss the drawbacks of each so you can decide which of these options works best for you and your family. Later I will also give you a few extra things you need to know when buying a home in Mexico.

Developer Financing 

Developer Financing means that the developer covers the remainder of the cost after your down payment. Usually, to qualify for developer financing, you must put down 50% of the down payment pre-construction.

Some developers do not have good enough credit and are unable to offer this type of financing, and if that is the case, we would recommend using another developer or looking into the developer’s situation. It is possible that it could be a scam if they do not, so keep an eye out.

Cross Border Lending

This is securing a lender from a country outside of Mexico. Most likely, this will be an American bank or lender. For Financing like this, it is typical that you will put 30% down, but the interest rates are usually 7-10%, and you can easily secure a fixed rate for 15-30 years.

Seller financing

This is one of the least common forms of financing as it only accounts for less than 5% of the total market. Seller financing is when you set up a mortgage with the seller of the property you are buying. With this sort of setup, it is unlikely you can talk the seller down from their price.

Mexican Bank Lending

This may seem like the best way to secure financing in Mexico, but it has many drawbacks. As an American, you do not have a credit score that is valid in Mexico. This means if a bank is willing to finance your loan, the interest rates will be in the double digits and as high as 30%. The only good thing about this is that you can put less money down for your down payment.

Private Financing

This one will be kind of tricky to secure. By private financing, we mean setting up a go fund me. It is very hard to set up, and financing a property with something like this is very risky. That being said, with someone with poor credit, this could be one of your only options.

Home Equity Line of Credit

If you own a home in the United States, you can take out a line of credit on your home’s equity. This is one of the best options for Americans who already own a home and are looking to finance a second home or are looking to lease their new or old property. Obviously, if you do not, then this will not be an option for you.

To find out what sort of financing International Land Alliance offers, please visit us at our website.

Restrictions on Foreign Buyers

Foreign buyers are currently allowed to own property in Mexico, but with a few caveats. That may be enough to dissuade you from even attempting to buy property in Mexico, but it shouldn’t. There are plenty of agencies that will help you navigate the legal hurdles you’ll face but if you’re looking to go it on your own, here are a few things you’ll need to know.

Fideicomiso

Fideicomiso is essentially a bank trust. In the Mexican constitution, it is illegal for foreigners to own land in Mexico, but in the 1970s, Mexican lawmakers were looking to entice American investment, so they set up the fideicomiso system to circumvent the constitution.  

If a foreigner is looking to buy property in the restricted zone (more on that later), then you will need to file for a fideicomiso, and this will give legal ownership of the land to a Mexican citizen. Now, don’t be alarmed. The bank or person cedes all rights of the deed to you, the owner. So any renovations, selling, or leasing is still up to you. This is only applicable within the restricted zone.

Restricted Zone

This is the area of land you will need a notary to sign your bank trust. The zone is defined as any land within 100 km of any land border and 50 km from any ocean. Seeing as all of International Land Alliance’s real estate developments are in the restricted zone, you will need to deal with a fideicomiso. Luckily we are set up in a way that we can help you clear any hurdle you may face.

If you are looking to buy and own property outside this zone, you will not need Mexican banks holding a fideicomiso. Outside this zone, you will own the escritura or deed.

Escritura

This is the most common form of a deed. For Mexican nationals, this is the type of deed most sign. In cities within the restricted zone, only Mexican citizens can own an escritura. It is the most complete form of ownership, and for foreigners, you can own it with an escritura outside the restricted zone. If you have any questions about this process, please visit us at our website.

How do visas work?

If you are an American and are looking to invest in or buy property in Mexico, or anywhere else for that matter, you will have to get a visa and have a few other documents ready as well.

You may obtain a temporary resident visa in Mexico if you own property with a value exceeding MXN 2,804,000 or $147,579. This type of visa allows you to stay in the country for 180 days, so if you are looking to make this purchase your second home, this will be the only visa you need.

You will also need a public deed signed by the Commissioner of Oaths to certify that you are the holder of this property, your passport, a bank statement, and title deeds or proof of Registration of Real Estate. Visa investor relations are our top priority, so we will help you every step of the way.

If you are trying to make this house your permanent home, you will have to apply for Mexican citizenship. This does not mean you have to renounce your current citizenship status. For more information about this process, please visit this site.