Obtaining a mortgage loan using a property in Mexico as collateral can be challenging through American or Canadian banks. Most do not offer this option directly; however, some highly specialized departments—often with representation in Mexico—may provide solutions.

Fortunately, mortgage loans are available through Mexican banks that accept foreign borrowers. While the costs and interest rates are typically higher than those offered in the U.S. or Canada, these loans remain a viable option for many investors.

Key Considerations

• Down Payments: Typically range from 10% to 30%. The higher requirement is due to the property being either an investment or a vacation home—both considered higher-risk by lenders.

• Loan Types:

• Mexican Peso Loans: Slightly more complex but offer competitive effective interest rates.
  USD Loans: Feature higher interest rates, but work well as bridge loans—ideal if you’re planning to sell another property soon or waiting to access retirement funds penalty-free.

• Eligible Properties: Financing is available for condominiums, houses, land, and even construction projects. Some lenders also offer cash-out refinancing options for foreign buyers.

Strategic Advantage

While a home equity line of credit from your U.S. or Canadian property may still offer better rates, securing financing directly tied to the property in Mexico can be beneficial. This approach preserves borrowing capacity in your home country for personal emergencies or future investments.

A Common Mistake to Avoid

Many foreign buyers initially approach their personal banks, regardless of whether those institutions offer competitive terms or even loans for Mexican properties. This often results in:

• Higher closing costs

• Increased monthly payments

• Loan denial due to foreign property restrictions