What You Need to Know About Mortgage Financing in Panama

Mortgage Financing in Panama is not very developed, despite the apparent construction boom in Panama City and elsewhere. Obtaining a mortgage in Panama is challenging and local banks do not offer low rates.

If you are willing to buy a house in Panama with a bank mortgage or have the cash to do so. We will guide you through the steps and requirements to get a mortgage in Panama, 

We will answer questions such as: 

  • How can you find a good mortgage broker who can help you compare and negotiate the best terms and rates? 
  • How can you choose a reliable real estate lawyer who can handle the legal aspects of your transaction and protect your interests? 
  • What are the best banks in Panama that offer mortgage financing for foreigners, and what are their conditions and criteria? 

By the end of this article, you will have a clear understanding of how to get a mortgage in Panama, and you will be ready to take the next step towards your dream property.

How to obtain a mortgage in Panama

If you are a foreigner who wants to buy a property in Panama, you may need to apply for a mortgage loan from a local bank or a private lender, unless you have enough cash to pay for the property upfront.

The process and requirements for obtaining a mortgage in Panama vary depending on the type of property, the amount of financing, and the lender’s criteria. 

However, there are some general steps and requirements that you should know before you start your application.

Find a property that suits your needs and budget. 

You can search online, visit real estate agencies, or hire a broker to help you find the best deal. Once you have chosen a property, you will need to sign a purchase contract with the seller and make a down payment, usually 10% of the sales price. 

The contract should include a clause that states that the sale is contingent on the approval of the mortgage loan.

Find a good mortgage broker if you don’t have enough time.

Finding a qualified mortgage broker can save you time and money when you are looking for a home loan. A mortgage broker is a professional who works with multiple lenders and helps you find the best mortgage for your needs. 

They can also assist you with the application process and guide you through the paperwork. But how do you find a good mortgage broker? You should: 

  • Look for a broker who understands your goals, preferences, and financial situation, and who can offer you a range of options that suit your needs.
  • Ask your broker which standard they follow, and how they get paid for their services.
  • Compare the fees of different brokers to see if you are getting a fair deal.
  • Choose a broker who you trust, who listens to you, and has a good reference.

Get a mortgage through a Panama bank.

There are many Panama banks that provide loans for different types of properties, such as residential, commercial, land, construction, second homes, and investment properties. 

You can compare the terms and conditions of each bank, such as the interest rate, the loan term, the percentage of financing, the fees, and the Factors to carefully consider when selecting a bank include:

Recommendations for the best banks in Panama

The interest rate: The average interest rate for a mortgage in Panama is between 4.5% and 7%, but you may find lower or higher rates depending on the market conditions and your credit profile.

The fees: The fees may vary depending on the bank and the loan amount, but they usually range from 1% to 3% of the loan amount. 

The customer service: You should look for a bank that has a friendly and professional staff, that responds to your inquiries promptly, and that offers you clear and accurate information.

The reputation. You should look for a bank that has a good track record of delivering on its promises, that has positive reviews and testimonials from its clients, and that has a strong presence and stability in the market. 

Submit your mortgage application and provide the required documents.

 The documents may vary depending on the lender, but they usually include:

  • Two photo IDs, such as your passport and driver’s license
  • A recent utility bill that shows your name and address
  • A credit report from your home country or an international agency
  • A resume that shows your education and work history
  • Two bank reference letters that attest to your financial stability
  • Tax returns for the last two years
  • Bank statements for the last six months
  • A proof of any down payment made
  • A copy of the purchase contract

Mortgage panama lenders

The lender will review your application and documents and conduct a credit analysis based on your income and repayment ability. The lender will also appraise the property and verify its legal status. 

The approval process may take from two weeks to two months, depending on the lender and the complexity of the case. If your application is approved, the lender will issue a loan term sheet that specifies the amount, the interest rate, the term, the fees, and the insurance requirements of the loan. 

You will need to sign the term sheet and return it to the lender, who will then issue an irrevocable promissory letter for the loan amount.

Close the deal and receive the funds with a real estate attorney.

You will need to hire a trustworthy real estate attorney who can handle the legal aspects of the transaction and protect your interests. 

Our Panamanian lawyer will prepare the deed of sale and the mortgage contract and register them at the Public Registry. We will also coordinate with the seller, the lender, and the notary to arrange the closing date and place. 

At the closing, you will pay the remaining balance of the sales price, the closing costs, and the fees to the seller and the lender. The lender will transfer the funds to the seller and place a mortgage lien on the property. 

You will receive the keys and the title of the property, and you will become the owner of your new home in Panama.

Types of mortgages available in Panama

There are different types of mortgages available in Panama for foreigners who want to buy a property. The most common ones are:

  • Conventional mortgages: These are loans offered by private banks that follow the standard market conditions. 
  • Owner financing: This is when the seller of the property agrees to finance the purchase. 
  • Government-backed mortgages: These are loans that are subsidized or guaranteed by the government. 

Some examples of government-backed mortgages in Panama are:

  • Preferential interest loans: These are loans that have a preferential interest rate of 4% for the first $120,000 of the loan amount.
  • Solidarity fund loans: These are loans that are subsidized by the government through a fund that covers part of the interest and the principal of the loan.
  • Mortgage guarantee fund loans: These are loans that are guaranteed by the government through a fund that covers up to 10% of the loan amount in case of default.

2 comentarios en «What You Need to Know About Mortgage Financing in Panama<span class="wtr-time-wrap after-title"><span class="wtr-time-number">6</span> min read</span>»

  1. Very interesting and comprehensive guide. As a brokerage platform specializing in mortgage loans in Panama, we’re dedicated to providing our clients with the best possible assistance. With our extensive network covering all major banks in Panama, we’re well-equipped to help you find the ideal deal. Please don’t hesitate to reach out if you have any questions or if there’s anything we can assist you with.

    • Thanks for sharing your comment on mortgage loans—it’s really helpful! At NDM Law Firm, we’re impressed and think our clients could benefit from your insights too.

      Would you be interested in linking to our website in your future posts? It could help your readers with legal aspects related to mortgages. warms regards!


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