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Check My Options →Panama is one of the few countries in Latin America where foreigners can actually get a mortgage. That is the good news.
The less-good news is that the process looks nothing like what you are used to back home. The rates are higher, the paperwork is heavier, the timelines are longer, and two of the three most expat-friendly banks just changed ownership in late 2025.
This guide breaks down what is actually available right now - the interest rates as of February 2026, every mortgage type you can access, the bank options, and the alternatives - so you can make an informed decision before you commit.
Panama Interest Rates: Where They Stand on February 3, 2026
The Superintendency of Banks of Panama (SBP) sets a reference mortgage rate each quarter. For Q4 2025, the SBP increased this rate from 6.25% to 6.50% per annum, where it has remained into Q1 2026. This reference rate serves as the baseline that all mortgage products are built on.
What This Means in Practice
For Panamanian residents the typical mortgage rate remains in the 5.70% to 5.90% range. Residents with preferential-rate loans (subsidized new homes under $180,000) are now paying rates as low as 2.50% after the reference adjustment - up from 2.25% earlier in 2025. The average non-preferential mortgage rate for residents sits at approximately 6.24%.
For foreign borrowers expect rates in the 7% to 9% range depending on the bank, your residency status, and the property type. On top of the base interest rate, non-primary-residence properties incur a 1% FECI tax (Fondo Especial de Compensacion de Intereses), bringing the effective rate to 8% to 9% for most foreign buyers.
For Context: U.S. Mortgage Rates on the Same Date
As of February 3, 2026, the average 30-year fixed mortgage rate in the United States is 5.99% and the 15-year rate is 5.37%. So Panama's local rates are comparable to U.S. rates, but the foreign borrower premium of 1% to 3% on top pushes the effective cost noticeably higher.
Rate Outlook
The Superintendent of Banks, Milton Ayon, indicated in December 2025 that Panama could see a meaningful reduction in interest rates toward the end of 2026 as banks renegotiate fixed-term deposits locked in at higher rates over the past 14-16 months. This is not a guarantee, but the direction is cautiously positive.
| Rate / Term | Panamanian Residents | Foreign Borrowers |
|---|---|---|
| Reference Rate (SBP) | 6.50% per annum | 6.50% per annum |
| Typical Mortgage Rate | 5.70% - 5.90% | 7% - 9% |
| Non-Preferential Rate | ~6.24% | ~7% - 8% + 1% FECI tax |
| Effective Rate (w/ tax) | 5.70% - 5.90% | 8% - 9% (investment) |
| Preferential Rate (new homes) | 2.50% - 4.50% (subsidized) | Not available |
| Casco Viejo Discount | 2.75% (primary res.) | 3.75% (investment) |
| Down Payment | 10% - 20% | 30% - 50% |
| Loan Term | Up to 30 years | 10 - 20 years (typical 15) |
| LTV Ratio | Up to 90% | 50% - 70% |
| Min. Loan Amount | Varies by bank | $60,000 - $100,000+ |
| Approval Timeline | 2 - 4 weeks | 60 - 90 days |
Types of Mortgages Available in Panama
Panama offers several distinct mortgage products. Not all of them are equally accessible to foreigners, so understanding which ones you actually qualify for - and which are off-limits - is critical before you start shopping.
| Mortgage Type | Available to Foreigners? | Typical Rate | Down Payment | Term |
|---|---|---|---|---|
| Conventional (Residential) | Yes | 7% - 9% | 30% - 50% | 10 - 20 yrs |
| Commercial Property | Yes (limited) | 8% - 10% | 40% - 50% | 10 - 15 yrs |
| Construction Loan | Yes (with residency) | 7% - 9% | 25% - 40% | Up to 18 mo (interim) |
| Land Acquisition | Yes (limited) | 8% - 10% | 40% - 50% | 5 - 15 yrs |
| Preferential Interest | Residents only | 2.50% - 4.50% | 10% - 20% | Up to 30 yrs |
| Cash-Out Refinance | Perm. residents only | 7% - 9% | N/A (equity) | 10 - 20 yrs |
| Developer Financing | Yes | 7% - 8% | 30% | 3 - 5 yrs |
| Seller Financing | Yes | Negotiable | Negotiable | Negotiable |
1. Conventional Residential Mortgage
This is the standard bank mortgage for buying a house, condo, or apartment. Private banks like Banco General, Davivienda, Banistmo, and Bi Bank all offer residential mortgages to qualified foreigners.
This is the most common path for expats buying a primary or secondary residence. Residency status (especially Friendly Nations Visa or Pensionado) significantly improves your terms.
2. Commercial Property Mortgage
For buying office space, retail units, warehouses, or mixed-use properties. These are less common for individual foreign buyers but available through major banks for those with a business presence in Panama.
Commercial mortgage rates are influenced by property type - a retail space in a high-traffic area of Panama City will get different terms than a warehouse in David. The interest rate is partly driven by the bank's assessment of the property's income potential.
3. Construction Loan
Available for building a new structure on titled land. This is a two-phase product: an interim construction loan (typically up to 18 months) followed by conversion to a long-term mortgage once construction is complete.
Construction loans require detailed project plans, approved blueprints, contractor agreements, and a property appraisal that includes the projected completed value. Banks disburse funds in stages tied to construction milestones, not as a lump sum. Residency makes this significantly easier to obtain.
4. Land Acquisition Loan
For purchasing undeveloped titled land. This is one of the harder mortgage products for foreigners to access because banks view raw land as higher risk - there is no structure generating income or serving as collateral beyond the land itself.
If you are buying land with plans to build, some banks will structure a combined land acquisition + construction loan, which can improve your overall terms. Without a construction plan, expect higher rates and shorter terms.
5. Preferential Interest Mortgage (Government-Subsidized)
Panama's Preferential Interest Rate Law subsidizes mortgage rates on new homes valued up to $180,000. The National Assembly confirmed in late 2025 that the 4% subsidized rate would be maintained, with the law taking effect in January 2026.
The subsidy tiers:
Can Foreigners Access Preferential Interest? Technically, permanent residents can apply if buying a new-construction primary home in the eligible price range. However, in practice this program is designed for and primarily used by Panamanian citizens. Requirements include 2 years of continuous employment in Panama (private sector) or 5 years (government). If you hold permanent residency and work locally, it is worth asking your bank about eligibility - but do not build your financial plan around it.
6. Cash-Out Refinance
If you already own a property in Panama free and clear (or with significant equity), some banks will allow you to borrow against that equity. This is typically only available to permanent residents with an established banking relationship.
This product is emerging through newer non-bank lending programs that connect buyers with lender networks across Latin America and the Caribbean. These programs are offering cash-out refinance options that traditional Panama banks have been reluctant to provide.
7. Developer Financing
Available on new construction projects directly from the developer. This is extremely common in Panama, especially for pre-construction purchases. It avoids the bank paperwork entirely.
Developer financing is a bridge solution, not a permanent one. It gives you time to sell assets elsewhere, establish residency, or qualify for a traditional bank loan. Major developers offering this include Bern, Grupo Corcione, and The Group. If the developer has a banking relationship, conversion to a permanent mortgage can happen in days rather than months.
8. Seller Financing
The property owner acts as the lender. Terms - rate, down payment, duration - are entirely negotiated between buyer and seller. This is common in Panama, particularly for properties outside of Panama City and for deals where the seller is motivated.
Always have a qualified real estate attorney draft and review the agreement. Without proper legal structure, seller-financed deals can create title issues or leave you exposed if the seller has existing liens on the property.
Which Banks Lend to Foreigners?
Not all banks in Panama are willing to work with foreign borrowers, and among those that do, the experience varies widely. Here is what the landscape looks like heading into 2026.
| Bank | Expat-Friendly? | Key Strength | Watch Out |
|---|---|---|---|
| Banco General | Moderate | Largest, most stable | Strict underwriting |
| Davivienda (ex-Scotiabank) | TBD (transition) | Inherited expat portfolio | Ownership change Dec 2025 |
| Banistmo | Yes (historically) | Flexible with foreigners | Being sold to Cuscatlan |
| Bi Bank | Targeting expats | Courting N. Americans | 50% down if income outside Panama |
| Global Bank | Some programs | Multi-currency accounts | Policies vary |
| Multibank | Moderate | Construction loans | Conservative with foreigners |
| BAC Credomatic | Limited | Regional network | Not mortgage-focused for expats |
| Banco Nacional | Selective | State-owned stability | Requires strong profile |
| La Hipotecaria | Specialist | Mortgage-only lender | Niche - verify current terms |
Important: The Scotiabank-to-Davivienda Transition. On December 1, 2025, Scotiabank finalized the transfer of its Panama operations to Davivienda (a Colombian bank). Scotiabank was historically the most expat-friendly mortgage lender in Panama, especially for North Americans. Davivienda now operates the former Scotiabank branches under the Davivienda brand. Existing contracts and products are being honored, but whether Davivienda will maintain the same expat mortgage programs remains unclear. At the same time, Banistmo (the #2 expat lender) is being sold by Bancolombia to Inversiones Cuscatlan. Two ownership changes at once creates uncertainty - but also potential opportunity as these banks compete for market share.
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What You Need to Qualify
Legal Status
You need valid legal status in Panama - a visa, residency permit, or work permit. Without immigration status, banks will classify your property as an investment and apply stricter terms. Holding a Friendly Nations Visa or Pensionado Visa significantly improves your mortgage terms. Pensionado holders may qualify for additional interest rate reductions at some banks.
Documentation
Panama banks require substantial paperwork. Expect to provide all of the following, and expect them to ask for more:
If You Are Self-Employed
Self-employed applicants face additional requirements:
KYC and Financial Profile
Banks in Panama require compliance with two separate review processes. Know Your Client (KYC) involves detailed personal information including CVs, business plans, social media accounts, and work experience. The Financial Profile (FP) requires bank statements, tax returns, and credit scores. These reviews happen regardless of loan size.
Pro Tip: Apostille Everything Before You Leave Home. All foreign documents must be apostilled - a government-certified authentication recognized internationally. Some banks also require Spanish translations. Getting these done in your home country before traveling to Panama saves weeks of delays. FBI background checks (required for U.S. citizens applying for residency visas) are only valid for 90 days. Plan the timing carefully.
The Fine Print: What Most Guides Leave Out
Insurance Requirements
Every Panama mortgage requires a local life insurance policy naming the bank as beneficiary for the full loan amount. This policy is based on your age and life expectancy, so it is more expensive for older borrowers. If you are under 65, the premium can often be folded into your mortgage payment. Over 65, a medical exam may be required. You will also need fire insurance with extended coverage for at least 80% of the appraised value of structures.
Late Payments
There are no grace periods in Panama. A late payment can trigger a 2% interest rate increase on your loan. Some contracts require payments at a specific branch and may not allow auto-debiting or internet banking. Read the fine print in Spanish - have it translated if needed - before signing.
Prepayment Restrictions
Some loan contracts restrict prepayments or principal reductions during the first five years. If you plan to pay down your mortgage early, negotiate this clause before signing. After five years, most banks allow prepayment without penalty. Banks that restrict prepayment may charge 2% to 3% of the outstanding balance as a penalty.
Transfer Penalties
If you want to transfer your mortgage to another bank - say, to take advantage of better rates - the current bank typically charges a 2% commission on the outstanding balance. Factor this in before assuming you can refinance easily.
Fixed Payments, Front-Loaded Interest
All Panama mortgages use fixed monthly payments with no variable or adjustable rates. The catch: each payment is typically 85% to 90% interest in the early years, with only 10% to 15% going toward principal. Over a standard 15-year mortgage, you may pay close to four times the original loan amount in total. This makes a strong case for larger down payments or shorter loan terms.
Age Limits
Most banks cap loan maturity at age 75. If you are 65, the longest term available is 10 years. If you are 55, you could qualify for up to 20 years. This is a hard limit.
Debt-to-Income Ratio
Your total debt payments should not exceed 35% of your income - some banks stretch to 45%. Important: Panama considers open lines of credit (even unused ones) as real debt. If you have an open credit line with a $50,000 limit back home, the bank may count 2-3% of that limit as a monthly obligation.
One Advantage Worth Noting. Panama mortgages are not reported to your home country. The debt will not appear on your credit report in the U.S., Canada, or elsewhere. This means it will not affect your borrowing capacity back home.
Alternative Financing Options
Given the complexity of bank mortgages, many foreigners in Panama choose other paths. These are legitimate and widely used.
Self-Directed IRA (U.S. Citizens)
Americans can use a self-directed IRA or 401(k) to invest in foreign real estate, including Panama property. This keeps the investment within a tax-advantaged structure. The rules are specific - work with a custodian experienced in foreign property.
Home Equity from Your Home Country
Borrowing against existing property back home often gets you a lower rate than any Panama bank will offer. With U.S. 30-year rates at 5.99% and 15-year rates at 5.37% as of today, this can be significantly cheaper than a 7-9% Panama mortgage.
Private Lending
Higher interest (10-15%), faster approvals, fewer documents. Not a long-term solution, but useful for time-sensitive purchases. Always use a lawyer.
Emerging Non-Bank Mortgage Programs
New mortgage solutions are appearing that connect buyers with lender networks across Latin America and the Caribbean. These programs offer purchase, construction, land acquisition, and even cash-out refinance options for salaried, self-employed, and retired foreign buyers. Loan amounts range from $60,000 to $1,000,000+. The entire process can be managed in English. This is a developing space worth watching.
Special Case: Casco Viejo
If you are considering property in Panama City's historic Casco Viejo district, there is a significant financial incentive. Panama law reduces the mortgage interest rate by a full 3% for the duration of the loan on Casco Viejo properties. With the current residential rate at approximately 5.75%, that brings your effective rate down to 2.75% for a primary residence, or 3.75% for an investment property. That is a remarkable deal by any standard.
How Residency Affects Your Mortgage
Your immigration status directly impacts your mortgage terms. Here is the hierarchy:
For clients buying property at or above $300,000, the Panama Qualified Investor Visa (Golden Visa) offers a fast-track to permanent residency - typically processed in about 30 days. The current minimum investment threshold is $300,000 and is expected to hold until at least October 2026, after which it may increase to $500,000. Combining a property purchase with residency can improve your banking access for future refinancing or additional purchases.
Practical Tips for Getting Approved
The Bottom Line
Getting a mortgage in Panama as a foreigner is entirely possible, but it requires patience, preparation, and realistic expectations. The reference rate sits at 6.50%, local rates average 5.70-5.90%, and foreign borrowers pay 7-9% effective. The banking landscape is shifting with the Scotiabank-to-Davivienda transition and the Banistmo sale, but the fundamentals remain intact.
The strongest position to be in: have your residency sorted, your documents apostilled, a local bank account with some history, and a clear picture of whether a conventional mortgage, construction loan, developer financing, or an alternative approach makes the most sense for your situation.
If you are exploring Panama residency as part of a broader relocation or second-residency strategy, we can help you think through how property purchase and residency fit together.
Want to discuss how property purchase and residency fit together? We will help you evaluate your financing options and connect the dots between residency, banking, and real estate. Book Your Free Consultation
*Information in this guide reflects conditions as of February 3, 2026. Interest rates sourced from the Superintendency of Banks of Panama (SBP) Q4 2025/Q1 2026 reference rate, CEIC economic data, and La Prensa Panama reporting. U.S. mortgage rates sourced from Zillow via CBS News. Banking regulations, interest rates, and residency requirements change frequently - sometimes without notice. Always verify current terms directly with financial institutions before making decisions. This guide is for informational purposes only and does not constitute financial, legal, or tax advice. Consult qualified professionals for your specific situation.*
