Guatemalan Real Estate: How to Get Mortgage Financing for Foreigners

Buying Guatemalan real estate has generally always been a cash proposition, as most banks were concerned that they would have no legal recourse available should a foreigner default on their mortgage and leave the country. As more and more foreigners seek financing, brokers have managed to make arrangements with several of Guatemala’s larger banks to provide funding.

Documents required to receive financing

To counter concerns of default, the banks ask for a minimum down payment of 35% to 40% of the purchase value backed by an appraisal. In addition, there are several requirements that the home buyer must provide:

1. Documentation of the buyer's bank account showing a reasonable cash flow and balance for the previous 6 months, regardless of where the bank is located.
2. A certified verification of employment on company letterhead from an employer including the number of years employed.
3. A financial statement showing current assets and liabilities (short and long term).
4. A copy of a current passport.

A loan approval will take approximately 8 working days to either approve or reject. Approval is much faster when all of the documents are presented with the application.

Appraisals

The buyer is responsible for getting the home appraised by a professional. Appraisal will not be required until the loan has been approved according to the credit worthiness of the buyer.

Interest rates on loans in Guatemala

The interest rate is not fixed, and currently (in late 2006), the rate is 7.5% in US Dollars. The interest rate is pegged to the U.S. Dollar at the time of the loan.   

The lender will, with the written agreement of the buyer, undertake to obtain a credit bureau report from the purchaser's country of residence. Ultimately, foreigners wll find that getting financing for Guatemalan real estate is similar to getting financing in their home country.