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
– 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. **