Down Payments in Costa Rica and What They Mean for Lenders

Ask about down payments in Costa Rica and you will get an answer about buying a house. For a lender the same idea shows up under a different name, and it is the single most important number in any file: how much of the property the borrower already owns.

Down payment, equity, loan to value — three ways of describing the same cushion. This is what it means when you are the one putting up the money.

Why buyers here put so much down

Cash purchases are far more common in Costa Rica than most newcomers expect, and it is not because everyone is wealthy. It is because bank financing is largely unavailable to them. A foreigner living here generally cannot borrow from a Costa Rican bank until they hold permanent residency — a minimum of four years off for a recent arrival — and without it there is no account of the kind the lending system runs on and no local credit record.

So people arrive, buy outright, and end up asset-rich and cash-poor. That sequence is exactly what produces the borrowers a private lender sees. They own the house free and clear, they have assets back home, and they cannot raise a colón against any of it through a bank.

The lender version of the same number

When a borrower comes to you having paid cash for a $600,000 house and asks to borrow $200,000, what you are being offered is a loan against a property where the owner has four hundred thousand dollars of their own money standing in front of yours.

That is the cushion. It absorbs a soft market, the costs of enforcement and the time it takes to sell. It is also why a borrower with a large stake behaves differently from one with a thin one — nobody walks away from a house they have most of their savings in.

How much gets advanced

Less than the property is worth, by a real margin. The exact figure moves with three things:

Location and marketability. A titled home in an established area with a queue of potential buyers supports more than a remote parcel with a handful.

Condition and documentation. Clean registered title, no surprises, permits in order.

The exit. A borrower who can say in one sentence how the loan gets repaid is presenting a stronger file than one who cannot.

And a borrower is frequently offered less than they asked for once the property has been studied. That is not obstruction — it is the cushion being set where it needs to be for the person funding it.

Where this shows up in the rate

Terms run 9% to 16%, six months to three years, from $50,000 with no maximum — and the loan to value is the biggest single influence on where a file lands in that band. A conservative advance on a well-located property tends to price low; a thin cushion prices higher because the lender is being asked to carry more.

Which is worth restating for anyone new to this: the cheapest-looking files are usually the strongest ones. What interest rate a private lender should expect works through how a file is priced.

What we check before you see any of it

Title pulled and read, liens searched, the property valued against what it would genuinely fetch, and the loan to value set against that valuation rather than an asking price. All of that happens on our side, right up to the closing; afterwards we remain reachable and the borrower pays you directly. See how lending works in Costa Rica.

Questions

Is a bigger borrower stake always better?

As a rule, yes — it means more of their money is at risk before any of yours is. It does not replace the other checks, but it is the number to look at first.

What if the property was bought years ago and has appreciated?

What matters is what it would sell for now, not what was paid. Valuation is done against present-day reality.

Do you lend on properties still being paid off?

It depends what is already registered against the title and where a new loan would sit in priority. That gets established before anything else.

Do I need residency or to be in Costa Rica to lend?

No to both. Lenders fund files from Canada, the United States and Europe without ever visiting.

See the numbers on a real file

Loan to value is easier to judge with an actual property in front of you. Look at the current lending opportunities or contact GAP Investments. Every file is yours to accept or decline, and no outcome is promised.

This article is for general information only and is not investment, legal, or tax advice. All lending and investment decisions should be made based on independent due diligence and with qualified professional guidance.

Article by Glenn Tellier (Founder of CRIE and Grupo Gap)