Mortgage Funding in the Dominican Republic
Mortgage Funding in the Dominican Republic
(*note: these figures were accurate at the time of this material being prepared – please ensure you have current rates and requirements available when proceeding*).
For buyers seeking mortgage financing, there are two available choices:
- REFINANCE IN YOUR HOME COUNTRY
Alternatively, you can obtain a home equity line of credit on an existing property in your home country to cover the cost of your purchase in the Dominican Republic:
– This is often a more advantageous choice due to better interest rates.
– You’ll have access to a wider range of mortgage products.
– It typically requires less time to process.
– In many countries, the interest paid is now eligible for tax deductions, particularly if the Dominican Republic property is used at least part-time as a rental.
- DOMINICAN REPUBLIC MORTGAGE FINANCING
You can secure a new US dollar-denominated first mortgage on the property you intend to purchase in the Dominican Republic.
Interest rates range from 7.25% to 8.00%, with amortizations available for up to 25 years. A down payment of 20-40% is required. The approval process is similar to that in North America, with lenders requesting similar documentation. Self-employed individuals can also apply for mortgage financing in the Dominican Republic.
Historically, securing financing in the Dominican Republic has been challenging with limited success. However, the process has improved over the years, largely due to Scotiabank’s efforts. This program is designed for “non-residents,” referring to foreign buyers without permanent residency or citizenship in the DR.
While not flawless, this program presents a viable option for buyers looking to leverage their investments without tying up capital or properties in their home countries. Be prepared for a more extended process than you might be accustomed to, involving substantial paperwork and information gathering. At DR Properties, we offer assistance to our buying clients in obtaining financing, though we are not a mortgage brokerage.
– All mortgage loans are denominated in US dollars.
– Available to citizens of Canada, the United States, the United Kingdom, and various Latin American countries where Scotiabank operates, including Uruguay, Chile, Brazil, Peru, Colombia, and Mexico.
– Approval is based on the financial situation of applicants from their respective countries of origin.
– Property values eligible for financing go up to USD 2.5 million.
– Financing is only available for completed homes; no funding for new construction is offered (new construction requires interim financing from the vendor/developer).
– No pre-approval of the project is necessary; it’s valid for any resale or pre-construction project.
– Each individual or couple can only receive one mortgage from Scotiabank, irrespective of other potential loans from other Dominican Republic banks.
– Multiple property purchases (e.g., condos) by the same buyer are not allowed; only one property/title is permitted for foreigners.
– Properties bought through a holding corporation are acceptable, with the corporation holding only the purchased property. However, the mortgage remains in personal names, with identical requirements to purchasing in personal names.
Requirements & Qualifications:
Who Can Qualify?
– Individual applicants or married couples.
– Relatives, such as parents or children, are accepted.
– Non-related individuals are also accepted and evaluated individually.
– Scotiabank has a list of approved appraisers.
– Buyers are responsible for contacting, paying, and arranging the appraisal.
– The appraisal company will assess the property’s value, excluding furniture. If furniture value is not specified in the offer, Scotiabank will request parties to specify the prices of furniture and structure separately in a formal letter.
– Minimum monthly income of USD $5,000.
– Salaried individuals need a minimum of 1-year employment.
– Self-employed individuals need a minimum of 2 years in business.
– Minimum Credit Score (Trans Union):
– Canadians: 680
– Americans: 660
– Debt Ratio:
– Salaried employees: 40%
– Self-employed: 35%
Down Payments Discussed:
**Source of Down Payment:**
To be included in financial statements, it is necessary to demonstrate the origin of the down payment. The bank requires proof that the funds have been available in the client’s account for at least the previous 90 days, and they should not be borrowed. In some cases, “gifted” money from a relative may be accepted as an exception.
For condominium units, the property title must explicitly mention the existence of at least one parking spot. Properties with environmental risks are not eligible for acceptance.
The bank mandates that buyers have 5% of the purchase price set aside for estimated taxes, legal fees, and administrative expenses.
Scotiabank will not report the loan to any foreign credit bureau, ensuring it does not appear on the client’s credit history in their home country.
**Approval Process: Important!**
Pre-approval remains valid indefinitely (previously, it was only valid for 90 days). A final approval is necessary once the sale contract and appraisal are ready, and buyer documentation needs to be updated to confirm that pre-approval conditions haven’t changed.
– 7.25% Fixed for 1 year
– 7.95% Fixed for 3 years
– 8.00% Fixed for 5 years
After the initial period, rates will change annually as determined by Scotiabank. The maximum property amount is USD 2.5 million.
**Loan to Value (LTV):**
– 70% of the property value for properties up to USD 1.5 million
– 65% of the property value for properties from USD 1.5 million to 2.5 million
– Up to 25 years for properties valued up to USD 1.5 million
– Up to 20 years for properties valued from USD 1.5 million to 2.5 million
Note: The property value is the lower of the appraisal and purchase price. Foreigners with proven income in the Dominican Republic may qualify for a higher LTV.
**Documentation Requirements: Buying in Your Personal Name(s)**
Mortgage application requires:
– Client consent to release tax data (from the bank)
– Form W9-E for US citizens
– Authorization to obtain a credit report (from the bank)
– Passports and driver’s licenses
– Social Security or Social Insurance Number
– Letter of Employment from the employer (not older than 30 days – obtain pre-approval first)
– Last six months of paystubs for salaried applicants
– W-2 for US applicants (last two years)
– T-4 slips for Canadian applicants (last two years)
– Form P60 tax summary for UK residents
– Letter of reference from your two primary banks (in your home country)
– Last six months of bank statements
– Proof of ownership of assets listed on your mortgage applications (e.g., title, tax assessment, mortgage assessment, insurance, registration of vehicles, investment statements)
– Last three months of credit card statements
– Proof of the down payment source for anti-money laundering purposes.
Documentation Requirements for Purchasing in a Corporation:
**For the Company:**
- Articles of Incorporation.
- Minutes of the Constitutive General Assembly.
- Up-to-date List of Share Subscribers and Payment List.
- Stamped and signed Minutes of the Ordinary General Assembly that appointed the current Board of Directors.
- A dated, stamped, and signed letter or certification from the president, confirming the authenticity of provided documents.
- Current Commercial Registry.
- National Taxpayer Registry Card (RNC).
- Copy of the company’s representative’s ID.
- Promotional materials for the project, including brochures, website, and blueprints.
- Authorization to access credit history through credit bureaus for both the company and its President.
**Personal Information Required:**
- Copy of the ID of the company’s representative.
- Promotional materials for the project (brochures, website, etc.).
- Authorization to access personal credit history through credit bureaus.
- 2 Personal references.
- Personal information, including phone numbers and address.
Before proceeding, make sure to check your credit rating to see if it meets the qualifications:
– For the United States: Your credit score must be greater than 660, as determined by TransUnion US.
– For Canada: Your credit score must be greater than 680, as determined by TransUnion Canada.
You can download the Scotiabank mortgage application to get started with your journey in the Dominican Republic, where you can explore the best projects and the real estate opportunities it offers.
CONTACT US – HERE TO HELP
Whether a home for retirement, vacation, or investment, we are here to help with service, knowledge, experience & friendship.
We sell only the best properties: in respected developments with services that cater to North American buyers.
**Please be aware that we are not a mortgage brokerage. We provide assistance to our buying clients with local banks, but buyers must apply independently. If you choose, our team can assist you in the process but there is consulting fee that would be associated with the service ranging from 1 to 1.5% Professional Services Fee if you get approved. Please note: A fixed fee due in advance of starting of $500 will be nonrefundable. Our team would create your package and submit it on your behalf working diligently on facilitating your loan approval. Loan approvals are not guaranteed. Clients are encouraged to go about this process on their own but we understand it is very time consuming and rigorous so we have a dedicated team prepared to assist. **
I HAVE OTHER QUESTIONS I WOULD LIKE TO ASK–WHO CAN I SPEAK WITH BEFORE ARRIVAL?
The Ministry of Tourism has over 30 offices and representations abroad, including in the United States, Canada, Puerto Rico, South America, Europe, and Asia. Feel free to contact them directly with your additional questions.
You can also contact the Travel Resource Center, a platform that allows visitors to find out about industry updates from trusted sources and provides live assistance via chat Monday through Friday from 9:00 a.m. to 6:00 p.m. (DR time, GMT-4) to answer any questions.
ARE THERE CLOSED FISHING SEASONS IN THE DR?
Yes, the Dominican Republic imposes several closed fishing seasons. By law, it is prohibited for anyone to fish, consume, or possess the following marine species during these designated time periods:
Lobster: March 1- June 30
Crab: March 1 – June 30
Conch: July 1- Oct 31
This also means that these species should not be available for sale nor served at food establishments, markets, or other commercial locations during closed fishing months.
Fishing for parrotfish and sharks is strictly prohibited at all times, year round. Violating these laws will result in hefty fines and imprisonment.
I’D LIKE TO BRING MY DRONE ON THE TRIP – DO I NEED ANY PERMITS, AND WHAT ARE THE DRONE-FLYING RESTRICTIONS IN DR?
Drone flying is regulated by the Dominican Civil Aviation Institute (Instituto Dominicano de Aviación Civil or IDAC). As of April 2018, if your drone weighs less than 4.4 pounds (two kilograms), you are not required to have a permit. However, we strongly suggest that you still request permission from IDAC (http://www.idac.gob.do) before entering the country because the customs department at the airport tends to hold this kind of item in order to charge duties taxes. Having a letter of permission ahead of arrival will make it easier for you upon entering the DR.
In addition, you must always comply with the following:
- The drone must be made of flexible materials, in case of possible impact towards any object or person, for minimum danger to the person or object struck.
- The drone must be manually operated, allowing you or the operator to maintain direct visual contact at all times and not exceeding 400 feet (122 meters) of distance from you or the operator;
- You must not fly the drone inside a five-mile radius (8 kms) of any airport.
- You must operate the drone in conditions of weather flight vision—not at night—and it must be permanently in your sight and control or that of the operator; and
- You must be sure, prior to commencing flying your drone, that the aircraft and its control system are in safe operating conditions.
- Obtain verbal permission from the resort or any private property over which you intend to fly your drone, and to operate when the area is not crowded so as not to invade anyone’s privacy, particularly over busy beaches.
- If your drone is over the above 4.4 pounds (two kilograms) weight limit, you will need a permit issued from IDAC. Contact them directly at DTAC@idac.gov.do to receive an application and start the process at least a month before your trip.
If your drone weighs over 4.4 pounds (two kilograms), you are required by law to submit a permission request to IDAC (http://www.idac.gob.do). In this request, you must specify the date, time, and place of use, and the nature of usage (commercial or personal).
Be sure to check regularly on any changes in IDAC drone regulations.
IS IT WORTH VISITING THE CAPITAL CITY OF SANTO DOMINGO?
Absolutely! Santo Domingo is the first city of the Americas, and was designated the American Capital of Culture for 2010. Its Colonial City is a UNESCO World Heritage Site, filled with museums, arts, culture, and the city’s most popular restaurants. The good news is that you can get to Santo Domingo easily and affordably, for less than US$10, from various parts of the country– including from Punta Cana, Samaná, La Romana, and Puerto Plata, among others– comfortable air conditioned coach buses: Expreso Bávaro, Caribe Tours, or Metro Tours. Staying overnight is your best bet. If you are only day tripping, keep the travel distances in mind.
WHAT ARE THE TYPICAL FOODS THAT I SHOULD TRY?
Dominican food is very diverse. In the morning, sample mangú (green plantains, boiled and mashed) with eggs, fried cheese, and fried salami–the traditional Dominican breakfast. At midday, la bandera dominicana (Dominican flag) is the typical lunch plate with rice, red kidney beans, a meat stew, and tostones–mashed and double-fried green plantains. Also popular are chicharrón or pork rinds, locrio de pollo or fried rice with chicken, mofongo–plantain mound with deep fried pork or shrimp, and garlic, fish in coconut sauce, stewed crab and conch, roasted or stewed goat with boiled cassava, and sancocho (a seven-meat stew) accompanied by avocado for dinner. And of course, don’t forget to try cassava bread, and queso de hoja–an artisanal cow’s milk cheese.
Dominican desserts are popular as well–sample grated coconut in cream, sweet beans, sour milk desserts, orange sweets, milk sweets, papaya and pineapple desserts, and guava and cashew paste soaked in syrup. Tropical fruit juices abound, often made into fruit milkshakes or batidas: passion fruit, guava, pineapple, orange, strawberry, mango, mandarin, and papaya.
Don’t miss out on tasting fresh sugar cane juice from one of the fields located throughout the country. You should also sample Dominican coconut water from one of the hundreds of coconut groves and forest–you will love the Dominican coconut’s delicious, thick pulp.
WHAT IS THE CURRENT EXCHANGE RATE?
Foreign currencies fluctuate from day to day, according to the market. You can check the exchange rates directly with commercial banks and exchange offices.
HOW MUCH IS THE SALES TAX?
The ITBIS (Impuesto sobre Transferencia de Bienes Industrializados y Servicios or the value-added tax for transferring industrial goods and services) is 18% and is applied to most purchases. In restaurants, bars, and hotels, a further 10% is automatically added as a service charge.
WILL BUSINESSES ACCEPT AMERICAN DOLLARS OR EUROS?
Businesses in tourist destinations, including restaurants, bars, department stores, souvenir shops, and supermarkets tend to accept dollars, though you will receive a less favorable rate than at the banks. That said, most prices in the Dominican Republic are in Dominican pesos. If you plan to make a big purchase in small shops and markets, negotiate first with the seller who may be interested in receiving the payment in American dollars or euros. Prices are fixed, however, in supermarkets and shopping mall stores. Your best bet is to use an ATM to withdraw local currency at the best daily exchange rate.
CAN I USE MY CELL PHONE THERE?
If your cell phone is on the GSM network, you can use it. However, your roaming costs will be high. Your best option is to bring an unlocked phone, and purchase a SIM card here to have a local number–you can obtain one with your passport ID, and activate it at any of the telecommunications companies here, including Claro and Altice. The SIM card costs less than US$5, and you will need to purchase additional phone credit for calls, at your discretion.
SHOULD I RENT A CAR?
The Dominican Republic has the most modern road infrastructure in the Caribbean, with excellent highways leading to and linking major tourist destinations. That being said, driving in the DR is known to be nerve-wracking; you must drive defensively and keep an eye out constantly for other drivers, motorbikes, pedestrians, cows, and other potential road companions and intruders. Driving out to the countryside is less stressful than in the big cities, though once you are in the villages, you should look out for potential road obstacles. You should be experienced, with preferable prior experience driving in big cities like New York, or driving in the Caribbean.
Avoid speeding, and don’t drive at night at all costs–lighting is often poor and nonexistent, which brings opportunities for car accidents and crime.
There are tourist destinations where having your own car is easier because there is so much to see. For example, if you are traveling the north coast from Montecristi to Puerto Plata or to Cabrera, or to the beaches of Samaná, renting a car will allow you to stop and see the sights along the way. On the east coast, having a car allows for more affordable exploration of the popular tourist areas of La Romana, Bávaro, Punta Cana, and Cap Cana. The southwest of the Dominican Republic–from Barahona to Pedernales–is one of the most beautiful and untouched regions in the country, where public transportation is limited. Having a car will help you save time and money, particularly to well-known, distant sights such as Bahía de Las Águilas. The beaches and attractions surrounding the major destinations will be more accessible and affordable to you with a rental car.
For Santo Domingo, Santiago, and Puerto Plata cities, however, it is best to rely on the vast network of taxis, including UBER. You can get a taxi by calling a 24-hr dispatch taxi company. Most offer a fixed rate of approximately US$5 one-way for most in-city destinations.
IS MY DRIVER’S LICENSE VALID IN THE DOMINICAN REPUBLIC?
Yes it is valid, but only for the duration of your legal stay–i.e. your 30-day tourist card or visa term.
IS IT THE CUSTOM TO ADDRESS PEOPLE WITH THE POLITE OR THE FAMILIAR FORM OF “YOU”?
Even though times are changing and becoming more informal, it is best to err on the side of formal rather than informal. Use the formal form of “you” (usted) when you don’t know the person well. Gentlemen can be referred to as Don or Señor (Mr.) and ladies as Doña or Señora (Mrs.).
At the same time, informality is common and acceptable because Dominicans are very open and sociable people. The term amigo (friend) and hermano (brother) are frequently used. Don’t be surprised if you are referred to as mi amor (my love) or cariño (dear) in the street or in local businesses–that’s just how Dominicans communicate.
HOW SAFE IS IT?
The Dominican Republic continues to be one of the countries with the lowest crime rates in the region. Common sense rules, however, and it’s best to take precautions just as you would when visiting any new country or large city in the world. Don’t flash your valuables, such as smartphones and cameras–use them discreetly when you are away from tourist areas. Leave the jewelry at home, dress simply, and don’t wander down isolated streets during the day or night.
WHAT CLOTHES SHOULD I BRING
The Dominican Republic has warm sunny weather all-year-round. But it does get chilly in the morning and evenings from November to March, whether in the city or in the mountains, so packing in layers is key. You should bring light cotton or linen clothing for warm weather, aside from swimwear, a light cardigan, pants, and a light jacket. Even if staying at a resort, make sure you pack a dressy outfit for special occasions, or to dine in upscale restaurants. If you are staying in Santo Domingo, bring your regular city clothes, as well as a couple of dressy options. If you go to a National Theater performance, for instance, you will need a jacket, and no jeans are allowed. In addition, if you are visiting churches or certain national monuments and museums, you may not be able to enter if you are in shorts or mini skirts. Some government offices will not admit you with a sleeveless shirt or without closed footwear.
I HARDLY SPEAK ANY SPANISH. WILL THIS BE A PROBLEM?
You won’t have any problems communicating in the DR. Dominicans are very friendly and even if they do not speak your language, they will help you find someone who can or find a way to communicate. In the big cities, as well as in most tourist destinations, staff in hotels, restaurants, and tourist areas, as well as tour guides understand and speak English, in addition to other languages. Fluency is less common in the villages and countryside, but they will still make out the basics and help you find your way.
HOW DOES THE DOMINICAN REPUBLIC COMPARE IN SIZE WITH PUERTO RICO OR JAMAICA?
Located in the Caribbean, the Dominican Republic has a surface area of over 48,442 km² (18,704 square miles), which means that Puerto Rico could fit into the country five times, and Jamaica four times. Due to its size and the variety of its terrain, the Dominican Republic offers visitors an incredible diversity in landscapes, including beaches, mountains, pre-historic caves, deserts, lakes, islands, rivers, and numerous waterfalls. That’s why we say the Dominican Republic “Has it all.”
WHAT IS THE TELEPHONE AREA CODE FOR THE DOMINICAN REPUBLIC?
The country code is +1. There are three area codes: 809, 829, and 849.
WHAT IS THE COST OF THE DEPARTURE TAX?
The departure tax is US$20. It is already included in your airline ticket fare.
WHAT HAPPENS IF I DECIDE TO STAY IN THE COUNTRY FOR MORE THAN 30 DAYS?
If staying beyond 30 days, expect an additional fee upon departure–determined on a sliding scale according to the total length of your stay. See the applicable fees and upload required documents here, to be paid online before departure or at the airport’s immigration section–after check-in and past security–upon departure.
WHAT DOCUMENTS DO I NEED TO GO TO THE DOMINICAN REPUBLIC?
Most visitors arriving to the Dominican Republic–including those from the United States, Canada, United Kingdom, the European Union, Russia, Ukraine, Kazakhstan, Mexico, many South American countries, Central America, Japan, Israel (see the full list of countries here)–only need a valid passport to enter the country. The cost of the 30-day tourist card previously paid separately, is now included in the airline ticket.
The new electronic form replaces the Traveler’s Health Affidavit, Customs Declaration and International Embarkation/Disembarkation forms. Passengers will need to fill out a form for arrival and another one for departure and the system will generate two QR codes. The e-ticket can be filled out before the trip or before going through Immigration at the Dominican airport. We recommend filling out the forms 72 hours before the trip, printing or making a screenshot of the QR code and keeping it on hand during arrival for the Customs authorities to scan it. The QR code will not be scanned during departure, but it is a confirmation that the form was completed correctly. If you need to make a change to the form, you must fill it out again. To access the form: https://eticket.migracion.gob.do/ For more information: https://viajerodigital.mitur.gob.do/en/home-en/
The Dominican Republic issues tourist, business, work, student, and residency visas. Tourist visas can be issued for one or several entries and can be extended to 60 days. Any person, regardless of their nationality, can visit Dominican Republic if they are a legal resident of or, if they have one of the following valid visas in their passport: United States, Canada, United Kingdom or Schengen. Travelers who do not have a passport or visa from countries listed above or from other authorized countries will need to apply for a visa. To issue a visa the passport needs to have a validity of at least six (6) months. More information here.
WHO IS EXEMPT FROM NEEDING A TOURIST CARD OR VISA?
- DR residents and Dominican nationals.
- Foreigners arriving from Argentina, Chile, South Korea, Ecuador, Israel, Japan, Peru, and Uruguay.
- Diplomatic and Consular staff with assigned missions in the country, while they remain on duty.
- Passengers using private, noncommercial aviation as long as the aircraft fulfills the following requirements: the trip must be for sport, leisure, tourism and business purposes, and the aircraft must not weigh more than thirty thousand (30,000) pounds and have a maximum capacity of 12 passengers.
HOW CAN I GET TO THE DOMINICAN REPUBLIC?
The Dominican Republic has eight international airports, five cruise destinations and a variety of marinas for boats and yachts of all sizes, as well as smaller airports for private planes. Because this is such a large and diverse island, it is important to choose your arrival airport to coincide with the final destination of your stay.
WHEN IS THE HURRICANE SEASON?
The Atlantic hurricane season begins on June 1 and extends to November 30. In the Dominican Republic, these are the summer and early fall seasons when the weather is sunny and humid, with some cloudiness and occasional rain showers in the late afternoon or at night. Historically, most hurricanes have occurred in the month of September. But chances of one hitting are slim, and if it does occur, resort staff is trained in handling these situations, and resort buildings today are equipped to withstand hurricane force. You should also take note that the Dominican Republic is a large country–this means that while one coast may be affected, another may be completely unscathed by a storm.
Do I Need an Agent to Sell My Property?
The truth is that everyone from a cab driver to a guy who works in beachfront bar will try to present himself/herself as the right person for the job. The one knows somebody who owns that lot or that house that is super affordable. However, it is very important to choose a well-established real estate agency when buying a property in the Dominican Republic.
In one sentence, working with professionals will get you more security, less headaches, more insights, more options and in the end a better price.
In general the legal fees are around 1% of the amount of the transaction. This is the fee for the service provided by the legal office you’ve chosen, it includes the due diligence, meetings, drafting of contracts. Basically, all the steps to transfer the “Certificate of ownership” in the name(s) of the new owner(s).
Don’t forget transfer tax!
The property transfer tax is the tax buyers will pay to the government to transfer the property.
In the Dominican Republic, the property transfer tax is equal to 3% of the assessed value of that property. That value is not the purchase price, but by the value registered at the Internal Revenue Office. Usually, it is lower than the actual market value of the property.
What are the taxes and fees to buying?
Taxes & fees:
- Around 2 to 3% fee for transferring the ownership of the purchased property.
- Around 1% for the legal fees.
Can I purchase a home in the Dominican Republic as a foreigner?
Foreigners who wish to purchase real estate property in the Dominican Republic have no restrictions whatsoever. All of us have the exact same obligations and rights when buying a property as the citizens of the Dominican Republic. The only thing that a potential foreign buyer needs to have is a valid passport.