Newspapers are filled with ads like: “Buy the house that you deserve, financing available in dollars or colones. But, how many Costa Rican families really can make true the dream of an own house?

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* It is important to note that the information in this article will apply to Costa Rican citizens and legal residents only. However, it will give you a very good idea of the local housing market and what local banks are offering…

High interest rates and the high salary demands are the main hurdles for the middle-class.

The government recognizes that it has no assistance program for this section of the public who does not qualify for a state housing-bonus and are forced to live in rented properties.

The offers for financing a house are varied, but the chances are greatly reduced with a lower household income. Banking authorities, real estate agents, and government representatives concur that conditions are critical for those Costa Ricans whose monthly income oscillates between five and seven “minimum salaries”between c510.000 (US$1,103) and c714.000 (US$1,545) monthly.

According to the State of the Nation, 17.5% of Costa Rican households have a monthly income above c458.000 (US$991) but below c938.000 (US$2,030).

This group is unprotected, pressed into a sandwich, because it does not qualify for a housing bonus, but neither qualifies for a loan , said Ms. Ofelia Blanco, director of the Loan and Mortgage department of the Instituto Nacional de Vivienda y Urbanismo (INVU) Nacional Institute for Housing and Housing Developments.

Ms. Blanco added that this sector represents “an excellent market , because everyone wants to buy their own home. However, a feasible financial offer is inaccessible due to the high incomes demanded by the banks, in order to keep risks low.

Another limiting factor is the lack of housing projects that fit the income bracket of this percentage of the population.

The sub-director, Ms. Mayela Rojas, of Mutual Alajuela, a loan and mortgage association states that nowadays it is much more difficult to find a new house within a price span of c8 million and c15 million. (US$17,316 – US$32,467)

Looking at the ads in the newspapers, most of the new houses for sale are priced higher than c17.5 million. (US$37,878)

In order to be able to afford one of these homes, the monthly family income must be around c900,000 (US$1,948) and monthly payments are c192,000 (US$415)

Real estate agents, like Gustavo Diaz, state that projects, where the houses are from c10 to c15 million, are more difficult to sell. “The banks do not like to finance these properties due to the loan risks, and that the family later on can not come up with the payments.

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Who can save?

With this outlook, an alternative is to save for a while and then start building your own home. This is only feasible if rent, children studying, or a car loan does not compromise the family income.

For those who ventured into building their own home, the story is full of years of sacrifice and dire times.

The minister of housing, Mr. Helio Fallas, assured that he is in contact with the Banco Centroamericano de Integracion Economica (BCIE) & Central American Bank for Economic Integration in order to open an account with lower interest rates.

Preliminary negotiations point out an interest rate of 18%, with a running time of 15 years. This could finance houses from c5 to c30 million, said Mr. Fallas.

Research and Compare.

These are some of the offers to finance a home:

With Mutual Cartago if you need a mortgage of c15 million, you’ll have to come up with c252.431 monthly (without insurance). This forces you to earn c841.438 monthly.

If you switch to dollars, the monthly rate is c200,361 and a salary of c572,880. With a mortgage contract in dollars, your amortization is less, due to the devaluation of the colon.

At Interfin Bank the same c15 million will force you to monthly payments of c252,000 and an income of c840,000. The same loan, but in dollars, is translated into payments of c120,582 and a monthly income of c485,100. The loan runs for 20 years.

Banco Nacional offers a loan program called BN Real Housing: It is based on “development units”(colones linked to the progress of the inflation) with the purpose of minimize the “dollarization”of mortgage loans.

For a loan of c15 million, your monthly income has to be c371,477 and payments are c148,698. The loan is paid off in 14 years, with an interest rate of 8%.

In Mutual Alajuela there is also a “Real Payment”program, which allows a higher loan amount together with a lower income. The c15 million are due in monthly installments of c186,300 with a household income of c612,000. With this program, the loan increases during the first 7 years, and from the 8th to the 15th year you begin to amortize.

You also have the alternative to save at the Instituto Nacional de Vivienda y Urbanismo (INVU) Nacional Institute for Housing and Housing Developments. You save your money for 2 to 10 years, and then you are eligible for a fixed-interest loan at 9% annually.

* It is important to note that these mortgages will apply to Costa Rican citizens and legal residents only.

Current rate of exchange on date of this article is 462 colones = US$1
1 sq m = 10.7639104 square feet
1 metre = 3.2808399 feet

Our thanks to Vanessa Loaiza N. and our friends at La Nacion – Costa Rica’s largest Spanish circulation newspaper for their permission to use this article…

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