Are you dreaming of owning your own home but don’t know where to start? The truth is, getting a mortgage isn’t that difficult after all, once you understand what’s required and the correct processes.
In Puerto Vallarta and its surrounding areas, more and more people are making their dreams of homeownership a reality these days. This also includes foreigners who have discovered that the area is perfect for settling in!
To write this comprehensive guide, we interviewed Jenny Sánchez Vergara, Ms. Vergara. She has spent many years helping people obtain mortgages. By utilizing her specialized approach, we can better understand the various credit options available and the most efficient ways to arrange your financing.
The regional real estate market presents numerous opportunities. However, to take advantage of them, it’s essential that you understand mortgage financing in Mexico. You’ll find that there are several credit options available for different profiles and situations, ranging from workers based in Mexico to Mexicans living abroad.
Requirements to be creditworthy
Essentially, for a financial institution to grant you a mortgage, you must meet certain basic conditions.
The first and most important is having a good credit history. This means that the Credit Bureau’s performance must reflect financial responsibility and punctuality in your payments.
The second requirement is demonstrating that you have verifiable income. Banks need to be sure that you can meet your monthly payments, so they will want documentation that consistently supports your income.
If you are employed, you will need to provide pay stubs and employment certificates. If you are self-employed, you must have a tax certificate from the tax authority.
Your debt capacity is a critical factor that banks consider. They not only look at how much you earn, but also how much you spend.
If you have financial commitments that use a high percentage of your income, this can limit what they will approve for you. For example, if you receive 20,000 pesos a month and are already committed to paying 15,000, your ability to take on any new credit is considerably reduced.
Credits available for foreigners in Puerto Vallarta
If you are a foreigner looking to purchase property in Puerto Vallarta, there are several options available to you.
The first option is for foreigners currently living in Mexico with income from the country.
In this case, as long as you meet the residency requirements for foreigners like yourself and can show your own credit history in Mexico, along with proof of income or assets located here (not just any US or Canadian bank account balance), any Mexican bank will be able to extend financing for the property purchase.
For purchases in restricted areas, such as along the coast, you will need to establish a trust, but this does not mean that the bank issuing the loan must also manage the trust. In fact, some banks, for reasons related to conflicts of interest, would prefer that they not be affiliated institutions.
Financing is also available for foreigners living abroad but wishing to invest in Mexico.
Experience shows that there are Mexican institutions that provide loans to Canadians living in Canada with income from Canada and/or possibly to Americans in similar circumstances. This type of product has greatly expanded the range of possible investments for non-residents.
For example, special cases may include Mexicans living in the United States or Canada. There is an exclusive financial product for this market of approximately 24 million people, which allows them to obtain loans from Mexican banks, with terms in pesos, fixed rates, and the possibility of early repayment without penalties.
Financial products available to suit your case
The Mexican mortgage market offers a wide range of products tailored to different needs.
Probably the most common are home purchase loans, whether for new or existing properties, provided they have fully constructed envelopes and legal documentation in order. Of course, if you already own the land, construction loans are available, as well as combined loans for land and construction.
These products are especially attractive for people looking to finance the process of making their home a reality from the moment they purchase it. Renovation loans are also available for those who already own a property and want to improve it. Liquidity loans, which may be less well-known but are very convenient, are freely available against the property as collateral free of charge to provide money for any purpose.
Although they have higher rates than purchase loans and attract VAT on each payment, they can be an invaluable tool for those needing capital for investments or major expenses.
Application procedures: schedules and submission documentation
It typically takes about a week to receive a mortgage once all your documents have been prepared. In almost all cases, gathering documents is what takes the longest. Many people delay submitting paperwork one by one, rather than simply gathering everything from the beginning.
Basic documentation includes passports or other official identification; proof of address, such as bank or utility bills for the last 3 months; salary statements (pay stubs) or tax returns for the last 3 years; bank statements; and, of course, property documents. If you are self-employed, you need to have been registered with the tax authority for at least a year before most banks will lend you anything.
During the process, some banks will want to visit your home and others your office. These visits are part of the customer due diligence process, and you don’t need to have anything to hide.
In fact, banks are more trustworthy and can expedite loan approval.
Current market situation in Nayarit
It’s worth mentioning that there is currently a particular situation in Nayarit that is causing many banks to suspend mortgage lending in this region.
For several months now, several commercial banks have rejected loans on properties in Nayarit, thus complicating real estate transactions in areas such as Bahía de Banderas. However, this situation does not affect Jalisco, where Puerto Vallarta continues to offer a full range of mortgage products.
If you are considering purchasing properties in the region, it is advisable to purchase properties on the Jalisco side to have full financing available. Some alternatives for Nayarit include INFONAVIT and FOVISSSTE loans, or financing through developers who have agreements with private banks.
Liquidity loans are also available; however, these are more expensive and are not always the best option.
Frequently Asked Questions About Mortgages
Is it possible to get a mortgage loan if my credit history shows I’m less capable with money?
When the debtor assumes sole responsibility for their debts in the event of default, a mortgage is the best way to reach an agreement with banks or credit institutions. Beneficiaries are selected under these conditions, without any prior credit history.
Can you borrow from a commercial bank with bad credit?
Only INFONAVIT can do this when you have a bad credit history. However, the amount may be lower. Banks require a good credit history.
But minor lapses aren’t always an absolute barrier. For example, a late payment or a periodic car break-in leads the bank to conclude that you’re untrustworthy.
Is there no definitive reason why mortgage terms can be even more favorable through a broker?
No, whether you go directly to the bank or a broker, the conditions are the same. The difference lies in the service and support you receive along the way.
Can I use the pre-approved loan to pay off the mortgage when I buy a house?
Yes, once a loan has been approved, you can use it to purchase anywhere in Mexico as long as the property meets the bank’s requirements.
If interest rates increase while I’m buying a home, what should I do?
For a small fee, some banks will allow you to lock in current interest rates for disbursements at a future date, thus protecting you from any increases during the construction or closing process.
Conclusion: Owning your own home is closer than you think
It is entirely feasible to buy your own home with a mortgage in Puerto Vallarta if you understand the process and meet certain minimum requirements.
The essential thing is to have a good credit history, verifiable income, and be able to present documentation from the outset. There are financial products designed for every possible situation, whether you are Mexican, a resident foreigner, or even a nonresident foreigner.
The Mexican mortgage market has evolved and now offers flexible options to suit different profiles and needs.
The process doesn’t have to be difficult if you trust professionals who know the market and can guide you every step of the way. With the right documentation and a good profile, your loan can be approved in a week, and you’ll be signing the deeds a few weeks later.
That dream of owning your own home in one of the most beautiful parts of Mexico is closer than you think.
You just have to take that first step and begin the process with the right information to make it a reality.