Panama Financing and Loans

In regard to residential home mortgage financing in Panama, the government has targeted nationals from three particular countries for specialized lending programs.  Residents of Canada, the United Kingdom and the United States receive preferential home mortgage financing options from lending institutions in Panama at this point in time.  

Financing for Panama Properties

Nationals from these three countries can receive financing under these preferential protocols for the purchase of different types of residential properties in Panama:

    * Villas
    * Single family residences
    * Condominiums
    * Townhomes
    * Condotels (or condominium/hotels) 

Moreover, these can be residences that are occupied by the foreign national in question either the year around or during only a part of the year as a holiday or vacation property.

Some of the more interesting and beneficial features of the residential lending program that has been established for certain foreign nationals include:

    * Generally speaking, a foreign national seeking to purchase residential real estate in Panama will enjoy loan approval within 72 hours.
    * In the vast majority of cases, closings on residential real estate involving foreign nationals can be completed within a thirty day time frame.
    * For the U.S. national who is purchasing Panamanian residential property, all loan processing and related underwriting actually is done in the United States itself which makes it extremely secure and efficient.
    * A foreign national can obtain upwards to 80% financing with a 20% down payment.
    * The loans carry competitive interest rates that are based on an analysis of the country risk – which for a U.S. borrower results in very favorable terms overall. 

Unlike the lending practices involving foreign nationals in many countries, there is no additional encumbrance of collateral beyond the real estate that is the subject of the Panamanian real estate sales and purchase transaction itself.  There is no requirement for the pledge of additional assets.  Additionally, as a rule the borrower is not expected to obtain life insurance with the lender as the beneficiary.

A foreign national – depending on his or her credit history – can obtain mortgage loans upwards to $4 million per borrower.

When it comes to loans for foreign nationals seeking to purchase a Panamanian residence, a borrower can obtain financing for both completed residences in the form of end-loan financing as well as construction-to-permanent mortgage loans for residences that a borrower intends to have constructed.

In most cases, the loan in question will have a thirty year amortization with no balloon payments.  Moreover, the typical loan as a fixed rate for fives years and then an adjustable rate (ARM) after that juncture.  With the strength of the Panamanian economy in recent times, the ARM portion of the loan tends to be favorable to the foreign borrower.

There are some features of residential mortgage loans that are “foreign” to citizens of the U.S.  For example, the term of a residential mortgage loan will be tied directly to the age of the borrower.  Lenders have extremely stringent income documentation requirements, particularly for self employed men and women, that is well beyond what one expects in the United States.  Finally, a borrower in Panama will require references from the borrower which is, indeed, a foreign concept in the U.S. home mortgage industry.