Q: Can I get a bank loan to buy a property in Puerto Vallarta, Mexico?

A: If you can meet basic underwriting guidelines, financing here is readily available. With the turmoil currently being experienced in the US Real Estate market, this is great news! Although rates and fees are slightly higher than in the US, you can now take out a loan against your Puerto Vallarta property, rather than tie up valuable home equity in the US.

Mortgage financing in Mexico extends the possibility of a second home in paradise to many who could not otherwise afford it. There have been some major changes to the global economy, and we have definitely felt the effects in Vallarta.

Although there has been some tightening in the lending industry in Mexico, there are still many options available, both in pesos or dollars. I have been told from many realtor friends that they noticed an impressive increase in the amount of buyers who ask if financing is available.

Savvy investors understand the benefits of leverage (using the "other guy's" money instead of their own) which decreases the necessary cash investment and increases the yield on their invested cash. Here are some basic guidelines to consider when applying of a mortgage on your property in Puerto Vallarta.

Q: Who can apply for loans?
A: Currently, there are programs for Canadians, US Citizens, Mexican Nationals and foreigners who earn income in Mexico.

Q: What types of loans are available?
A: There are purchase, permanent loans for pre-sale condos at time of transfer of title, cash-out refinance, lot loans (in gated communities only) and construction loans for single family residences. There are also ARMS, Balloons and fixed rates available.

Q: What is the amortization period?
A: Up to 30 years.

Q: What are the current interest rates?
A: 7.5% - 9.5% How much is the minimum down payment required? 20% - 35% depending on borrow qualification.

Q: What are the loan terms?
A: 15-30 years.

Q; What are the qualifications?
A: The borrower must be in the same line of work for a minimum of 2 years and provide 2 years of tax returns, the last 2 years W-2's and last 2 months pay stubs and bank statements. The borrower must not have foreclosures or bankruptcies in the past 5 years.

Q: What is the minimum FICO credit score?
A: 650 or above.

Q: What is the maximum debt-to-income (DTI)?
A: The borrower cannot spend more than 40% of their monthly income on mortgages, credit cards, car payments + the proposed mortgage.

Q: What is the average closing time?
A: 60-90 days. There is NO FEE for pre-qualification unless a credit report is pulled with your permission. There are several well-established loan brokers in the Puerto Vallarta market; ask your local AMPI Realtor to recommend someone.

Do you have a question about Real Estate in Puerto Vallarta? Just ask!