International Real Estate

How to Finance Foreign Real Estate as an American

  • Author Written by The Nestmann Group
  • Reviewed by Brandon Roe
  • Calendar Updated: June 24, 2025
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Contents

Buying real estate overseas can be a smart way to diversify – not just your assets, but your lifestyle and legacy, too. But if you’re hoping to finance that purchase as an American, you’ll quickly learn the rules are different. Sometimes wildly so.

Some countries make it easy. Others, not so much. The regulatory headache known as the Foreign Account Tax Compliance Act (FATCA) makes Americans a compliance risk few institutions want to take on.

But if you know where to look – and how to structure things properly – you still have options.

That’s why, in this article, we’ll walk through how to finance foreign real estate as an American – with practical, real-world ways our clients are doing it today. We’ll cover everything from developer financing to cross-border collateral strategies and more.

Why Consider Foreign Real Estate?

An infographic describing the three main benefits of owning foreign real estate: a hard asset, income generation, and jurisdictional diversification.

But before we discuss the how, let’s first answer the why.

Foreign real estate is a great answer to the question of “What can I own that doesn’t depend on the US financial system?”

Why? It checks the fundamental boxes:

  • It’s a hard asset in a foreign jurisdiction, immune to US bank failures and court orders.

  • It can generate income – or simply preserve value – in currencies not tied to the US dollar (which has lost nearly 10% of its value since January 2025, according to the DXY – an index that measures the dollar’s performance against a basket of other currencies).

  • It often comes with additional benefits, including residency rights (sometimes).

And unlike gold or crypto, it’s something you can live in, rent out, or pass on to your heirs as part of a well-structured legacy plan.

Read more: Investing in Overseas Property for Americans Afraid of US Market Chaos

Why Finance Foreign Real Estate?

Generally speaking, Americans buying foreign real estate with cash tend to have the biggest advantage at the negotiation table. But that doesn’t mean you should always buy with cash – or that, if you can’t, foreign real estate won’t work for you.

Financing a foreign property can help you keep more capital working elsewhere – whether that’s in a business, other investments, or simply building liquidity. In some cases, it may offer tax planning advantages.

Benefits of financing instead of paying cash:

  • Preserves liquidity for other investments or personal needs.

  • May unlock local tax deductions or planning advantages.

  • Reduces upfront capital exposure to currency fluctuations.

The key is knowing which financing options are available to you and structuring the deal in a way that supports your bigger plan. Because done right, financing foreign property is not just about leverage – it’s about flexibility.

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Developer Financing vs. Open Market Lending

When it comes to financing foreign real estate, you’ll usually see two main paths:

  • Developer-backed financing, offered directly by the seller.

  • Open market lending, through local or international banks.

Each comes with trade-offs. Some obvious, others not so much.

Developer Financing: Convenient, but Watch the Terms

If you’re buying new construction or resort property, the developer might offer financing in-house. These deals often sound appealing: Low down payments. No income checks. No credit review. Fast approval.

Sometimes, all they ask for is a deposit check and a copy of your passport.

But there’s a reason it’s easy:

  • Interest rates are often higher than local banks.

  • Property values may be inflated to bake in financing “costs.”

  • Balloon payments or resale restrictions are common.

  • Some developers keep a lien that makes it hard to refinance later.

In most cases, developer financing isn’t a long-term solution – it’s a bridge.

Still, that doesn’t mean it’s always a bad idea. In countries where banks won’t lend to foreigners at all, developer financing may be your only practical path in. The key is knowing what you’re giving up in exchange for the convenience.

Concept art of a case study on financing

CASE STUDY:

A CLOSER LOOK AT DEVELOPER FINANCING

Background: A client asked us to help him structure his new property in Mexico. The purchase agreement included a pre-approved financing clause (minor details changed to preserve privacy and for clarity):

The Parties agree if the Buyer chooses to pay the Price through financing, that the financing may be up to 50% (fifty percent) of the Unit Price and will have a maximum duration of ten (10) years and an interest rate in the range of [chosen benchmark] plus six per cent (6%) up to plus seven-point five percent (7.5%) per year.

Problem: The financing clause tied the interest rate to a benchmark that was close to the current US Fed rate. While that might seem reasonable at first, the actual terms allowed the developer to charge 6% to 7.5% above that benchmark. For perspective, a more familiar and relevant benchmark for a 10-year loan is the 10-Year US Treasury Yield, which is around 4.25% (June 2025). That means the total interest rate could fall between 10.25% and 11.75% per year.

Rates that high are far above what most borrowers would expect to pay for similar loans. It suggests either the financing was meant to be a last resort — or the developer stood to profit heavily if the buyer used it. In either case, the cost of borrowing under these terms was extreme.

Solution: In this case, the client decided he wanted out of the deal and so we changed focus to helping him get out. But if he had decided to hold the property long term, we would have connected him with a private lender who could offer a more reasonable interest rate. 

Lesson: Developer financing is often written to benefit the seller, not the buyer. Just because terms appear “pre-approved” or tied to a market benchmark doesn’t mean they’re fair or competitive.

Always review the spread, compare it to standard lending benchmarks like the 10-Year US Treasury Yield, and run the numbers. (We can help.)

If the rate looks more like a credit card than a mortgage, you’re probably looking at a profit center for the seller — not a real financing offer. Secure outside financing if possible, and never assume developer-provided options are the best deal on the table.

Open Market Lending: Better Rates, More Hoops

If you’re aiming for better terms – and are willing to jump through a few hoops – open market lending may be worth it.

Banks usually offer:

  • Lower interest rates.

  • Longer terms.

  • Standard loan structures you’re familiar with.

But approvals are tougher. Banks in Costa Rica and Panama, for example, often require you to show:

  • Stable income and strong credit.

  • Substantial assets or large deposits with the bank.

  • A local company or legal entity.

  • Months of documentation – translated, notarized, and apostilled.

Example Countries and Terms

Here are a couple of jurisdictions where these bank lending patterns apply:

  • Costa Rica: Most US investors must establish a local Sociedad de Responsabilidad Limitada (SRL) – similar to a US LLC – to obtain property and qualify for financing. Mortgages for foreigners are possible but rare through mainstream banks.

  • Portugal: Portuguese banks do lend to US non-resident buyers purchasing real estate, especially in Lisbon, Porto, and the Algarve. But it’s all based on your perceived risk profile, so they typically require:

    • A 30 to 40% down payment.

    • Full income and asset documentation.

    • Tax residency registration (NIF number) and a local bank account.

    • All documents certified and translated into Portuguese.

    • Processing timelines of 60 –120 days.

Read more: Navigating Costa Rica Property Ownership Laws as a US Citizen

Common Foreign Real Estate Financing Structures for US Investors

Not all financing is created equal. Your strategy should match your long-term goal – whether that’s privacy, liquidity, or simply getting from purchase to cash flow as quickly as possible.

Here are four options we see clients use most often when financing foreign property:

#1. Direct Foreign Mortgage

This is the simplest path: You apply directly with a bank in the country where you’re buying. The mortgage is issued to you personally, secured by the property.

This approach works best in countries with foreign-friendly lending, like Portugal, Spain, or Panama. But there are trade-offs:

  • Your personal US assets may be exposed to foreign legal systems.

  • You’re fully subject to local banking regulations.

  • Loan terms can be strict – especially if you’re not a resident.

This is usually a good fit for investors buying a long-term hold in a well-developed market.

#2. Corporate Structure Financing

Wealthier clients often form a local or offshore company to buy the property. The company – not the individual – applies for the loan.

This structure:

  • Can provide stronger asset protection.

  • May simplify estate and tax planning.

  • Sometimes makes financing easier, especially in places like Panama, where corporate structures are common.

But it’s not for everyone.

  • Not all banks lend to newly formed entities.

  • The setup adds legal complexity and costs.

  • You’ll need corporate records, local tax numbers, and maybe even a local director.

Still, if the property is part of a larger plan – for asset protection or short-term rentals (where local rules may require income-producing properties to be owned and managed through a registered business) – it’s worth considering.

#3. US Bank Lending on Foreign Property

A few US-based banks and credit unions still offer mortgages secured by foreign real estate.

These are rare and usually limited to countries like Mexico or Canada – often with conditions.

The benefits?

  • Keeps your banking relationship in the US.

  • Offers familiar loan terms and easier communication.

The catch?

  • The programs that do offer this – like Citibank’s – are niche, selective, and usually geared toward existing private banking clients.

If you can qualify, this route minimizes foreign paperwork – but you’ll likely need strong financials and a preexisting relationship.

#4. Cross-Border Financing Using US Assets

This structure relies on borrowing against US assets in the US and then using those proceeds to invest in international property. In other words, you’re “borrowing from yourself.”

Some common examples:

  • Or a Home Equity Line of Credit (HELOC), used to buy real estate abroad.

  • Taking out a regular mortgage on your US property. 

  • We’ve seen people borrow against gold, crypto and securities too, although usually with a fairly low LTV ratio and at relatively high interest rates. Rarely is this the most cost-effective option.

This can be a faster, flexible option – especially when timing matters. And since the loan is US-based, you avoid the foreign red tape.

Although not always the best option, it might be worth a closer look.

Jurisdictions That Welcome Foreign Real Estate Investment

An infographic illustrating four countries that tend to be most welcome to American foreign real estate investors: Panama, Costa Rica, Portugal, and Mexico.

Not all countries treat foreign buyers the same. Some actively encourage outside investment. Others create hurdles – or block it outright.

If you’re planning to finance a purchase abroad, it pays to focus on countries where the rules are transparent and the banks are used to working with Americans.

Countries Where Americans Can Secure Relatively Straightforward Bank Financing

These jurisdictions offer workable paths for US citizens – especially those willing to meet documentation and down payment requirements.

  • Portugal: Foreigners can qualify for mortgages with loan-to-value ratios of 65–75%. You’ll need a larger down payment than locals, but the process is clear, and residency is not required.

  • Spain: Spanish banks offer non-resident mortgages at up to 70% of the property value, with 30% to 40% down. EU citizens may get slightly higher ratios. 

  • Panama: Panama uses the US dollar as legal tender and offers USD-denominated mortgages, eliminating currency risk for US investors. Foreigners may be able to finance up to 70% of a property’s value, though actual terms vary by lender and borrower profile.

    It’s important to note that, while some banks advertise 25-year amortization schedules, this does not mean a fixed 25-year loan term like in the US. Most loans are structured with short-term agreements (often 5–10 years) and amortized over 20–25 years, which means periodic renewals or refinancing. Balloon payments and interest rate resets are common at the end of each term.

  • Mexico: Foreigners must own coastal property through a fideicomiso – a bank-administered trust. Financing is available from both Mexican banks and US banks with Mexican branches. Residency is not required, but rates and terms may differ from what you’re used to.

While it’s true that US citizens can secure dollar-denominated mortgages through local banks in Panama, it’s rarely a good idea to hold property in your own name when you plan to:

  • Run a short-term rental business, and/or

  • Hold for the long-term.

In those cases, you’ll want to use a local company – whether a Sociedad Anónima (SA) or SRL – depends on your needs. Structured properly, you should still be able to qualify for a mortgage, though.

And, in Costa Rica, developer financing may seem easy – but it usually comes with hidden trade-offs, like inflated prices and balloon payments.

That’s why we always advise clients to vet not just the property, but the financing terms – and work only with developers or brokers who specialize in cross-border transactions.

If you need help, feel free to get in touch.

Read more: Moving to Panama from the US: Why I Chose Panama

Practical Steps to Securing Foreign Real Estate Financing

Buying real estate overseas does take some planning. Here’s how to get ahead of the process and avoid costly delays.

Step #1: Know the Rules Before You Shop

Before you fall in love with a property, make sure you understand the financing landscape:

  • Do local banks lend to foreigners?

  • Are there residency or visa requirements?

  • What documentation will they want?

The best approach: Work with a team of experienced professionals who understand the market you’re looking at – or contact lenders directly and ask about their requirements.

If possible, get a pre-qualification letter before making any offers.

Step #2: Get Your Paperwork in Order Early

Most banks require a detailed financial profile. Start gathering documents now:

  • Bank statements (3–6 months).

  • US tax returns (2–3 years).

  • Employment or business income verification.

  • Credit reports from all three US bureaus.

  • Asset statements and investment summaries.

  • Passport and proof of residency or visa status.

You’ll likely need these documents translated and apostilled – which can take weeks – and doesn’t come cheap.

Step #3: Get the Right Guidance

Foreign real estate touches multiple areas: law, taxes, finance, and estate planning. You need experts who understand how all the parts work together.

Cutting corners here is where people get burned. Good guidance more than pays for itself.

Step #4: Structure the Deal to Fit Your Plan

Should you buy as an individual? Through an SRL, LLC, or offshore company? The answer depends on your goals.

Each structure affects:

  • Financing options.
  • Tax exposure.
  • Asset protection.
  • Estate planning flexibility.

Structure should follow strategy – not the other way around. How you plan to use it (short-term rental vs long-term tenants vs personal use) changes the conversation.

Step #5: Plan for Currency Risk

Unless you’re buying in US dollars, exchange rates matter.

Your loan payments and asset value will rise and fall with currency swings. Options include:

  • Earning income in the same currency as the mortgage.

  • Using natural hedges (like renting to locals who pay in local currency).

  • Exploring hedging strategies with financial institutions for larger exposures.

Currency risk is part of global investing. It doesn’t need to scare you – but it does need to be planned for.

Red Flags to Look Out For

Foreign real estate can be a powerful tool for wealth protection and income generation – but only when you avoid the traps that catch less-prepared investors. 

Here are five warning signs to watch for:

#1. “No Money Down” or “Guaranteed Returns”

If it sounds too good to be true, it usually is.

Developers who promise guaranteed rental income or zero-down deals are often hiding inflated prices, weak cash flow projections, or unrealistic occupancy rates.

Always ask: What’s the catch?

#2. High-Pressure Sales Tactics

You should never feel rushed to wire money or sign paperwork – especially across borders.

Urgency is a tool used to avoid scrutiny. If someone insists “this deal won’t last” or pushes you to act before reviewing documents, walk away.

Sometimes there’s a legitimate reason. We find that hotspot destinations in certain areas do turnover quickly. But that’s usually measured in days or weeks, not hours as you’ll sometimes find in these sorts of cases.

#3. Unlicensed or Unverified Real Estate Agents

Real estate rules aren’t the same everywhere. Some countries require agents to be licensed. Others don’t. That’s why it’s important to know what to expect – and who to trust – before you buy.

Here are a few examples:

  • Portugal: Real estate agents must be licensed by the government and have an AMI (Agente de Mediação Imobiliária) number. You can check their credentials online via the IMPIC website.

  • Mexico: There’s no national license. Some states regulate the profession to some degree (19 out of 32), but many agents still operate without any official approval.

  • Costa Rica: There are no legal requirements for real estate agents. Anyone can sell property, with or without experience or oversight.

If you’re working in a country without strong regulation, look for agents with a proven track record and real references. Better yet, work with a firm that already knows the market and has trusted local partners. That’s how you avoid scams and costly mistakes.

#4. Financing You Don’t Fully Understand

If you can’t explain the loan terms to someone else, you’re not ready to sign.

Ask questions. Get everything translated. Understand the interest rate, the term, repayment structure, prepayment penalties, and what happens if you default. Clarity is protection.

#5. No Exit Strategy

Before you buy, know how – and when – you might want to sell.

Some properties are hard to resell, especially if they’re tied to complex financing, undeveloped areas, or well off the beaten path. Others carry penalties for early payoff or limits on transferring ownership.

The best investments are flexible. Always plan your exit before you enter.

Read more: 8 Pitfalls of International Real Estate

The Bottom Line

Financing foreign real estate takes planning, structure, and the right guidance.

When done right, it can offer real diversification, smart tax positioning, and stronger asset protection. Done wrong, it can be a real hassle.

Start with your goals. Then find financing that fits them.

If you’re ready to work with professionals who understand cross-border strategy from both sides of the deal, feel free to get in touch.

Sources:

About The Author

Since 1984, we've helped high net worth American investors, entrepreneurs, and families go offshore. Our formula is simple: full-service programs for global investing, tax reduction, and second residency or citizenship -- so you skip the hard parts and keep the benefits. To learn more about how we can help you, please get in touch.

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