We've Been Pre-Approved:
Why Those Five Words Make Me Nervous in Costa Rica
- Dennis J. Easters
- Dennis@pldatenasrealty.com
- +506-8854-7721
“We’ve been pre-approved. Now it’s just a matter of finding the house.”
I could hear the excitement in Bill’s voice as he climbed into our car, ready for our first day of showings.
My stomach sank.
If we’d been in the United States or Canada, his statement would have been perfectly ordinary. But this is Costa Rica, and Costa Rica has never worked quite the same way.
It’s a country where relationships often matter more than systems, and certainty is worth more than promises.
Today, two companies have entered the Costa Rican market offering U.S.-style financing to foreign buyers. On paper, everything feels familiar—pre-approvals, loan officers, application portals, standard forms. It looks just like home.
Except it isn’t.
Estimated closing costs provided to a prospective buyer during the financing process. Personal information has been removed for privacy.
The Conversation I Didn't Want to Have
I warned Bill that in nearly twenty years of selling real estate in Atenas, we’d never successfully completed a transaction that depended on conventional mortgage financing.
We’d tried.
More than once.
I explained something many foreign buyers don’t realize.
In Atenas, sellers rarely accept financing contingencies. After title review, survey work, inspections, and due diligence are complete, the buyer’s 10% escrow deposit becomes non-refundable.
If the lender walks away at the last minute…
… you’re the one holding the bag.
On a $600,000 purchase, that’s a painful lesson.
Bill wasn’t worried.
His loan officer wasn’t worried either.
In fact, Bill introduced us.
“See,” Bill smiled, “it’s going to work this time.”
I wanted him to be right.
I wanted the lender to be right.
Quite honestly, financing options would be good for our business.
So I challenged the loan officer.
He assured me this was a slam dunk.
He even asked if we could meet afterward to discuss sending him future business.
I smiled.
“I’ll tell you what,” I said.
“Close this transaction, prove to me conventional financing works in Atenas, and then we’ll have that conversation.”
The Part That Worried Me Most
Two months later…
After document requests.
After delays.
After slow communication.
Three days before closing…
The loan was denied.
The reason?
Zoning.
Fortunately, Bill had the cash available and completed the purchase anyway.
The loan officer called to apologize..
Bill apologized.
Like my mother always taught me, I resisted the temptation to say, “I told you so.”
But one fact remained.
In twenty years—and well over one hundred and twenty successful closings—we had yet to see a conventional mortgage carry a transaction all the way to the closing table.
It wasn’t the denial that concerned me.
It was when it happened.
Three days before closing.
Costa Rica Isn't North America
Costa Rica has roughly five million people.
The United States has more than 340 million.
Everything here is smaller.
The banking system is smaller.
Competition is smaller.
National banks dominate lending.
The rules are different.
Interest rates are generally higher.
Adjustable-rate loans are common.
Banks typically rely on their own appraisers.
Most importantly, property ownership, zoning regulations, agricultural classifications and legal easements often don’t fit neatly into underwriting models developed in the United States.
It’s simply a different game.
The Promise of Easy Financing
Today there are companies actively marketing U.S.-style mortgages to foreign buyers.
Their advertising is compelling.
“Finally, mortgages in Costa Rica have arrived.”
“The loan you know and trust in a country you didn’t expect.”
Frankly…
I wish it worked exactly that way.
I’m not suggesting these companies never close loans.
My observations are based entirely on our experience representing buyers in the Atenas market over the past twenty years. Other regions—particularly San José and condominium-heavy beach communities—may experience different results.
Our challenge has almost always centered around agricultural zoning, easements and property characteristics unique to rural Costa Rica.
Even today, no one has been able to give us a consistent explanation for why some properties qualify while others don’t.
The Hidden Costs Buyers Don't See
The fee schedule from Bill’s transaction tells an interesting story.
There is a $1,495 application fee.
A 4.5% loan origination fee.
Escrow fees.
Guarantee fees.
Insurance.
Property taxes.
Foreign exchange fees.
Then comes one line that deserves a closer look:
“Transfer Tax Deferral.”
The wording sounds straightforward.
Unfortunately, no one has ever been able to clearly explain to me exactly how those transfer taxes are being deferred—or when they’re ultimately paid.
Transfer taxes in Costa Rica total approximately 2.5% of the purchase price.
On a $650,000 purchase…
That’s another $16,250.
Not included are mortgage registration costs, which generally add another 1% to 1.5% of the loan amount, depending upon the attorney handling the transaction.
By the time every fee is accounted for, the true cost of financing is often dramatically higher than buyers initially expect.
The point isn’t that financing is impossible.
The point is that buyers should understand exactly what they’re committing to before they commit themselves emotionally to a property.
Why Sellers Still Prefer Cash
There’s another reality buyers often overlook.
Sellers have long memories.
After years of financing falling apart, many simply won’t accept offers dependent upon lender approval.
Even knowing they’ll keep the buyer’s escrow deposit often isn’t enough.
They aren’t chasing penalties.
They’re chasing certainty.
Many of our sellers are retirees.
They’re moving because life has changed.
Health.
Family.
A move closer to children.
They don’t want uncertainty.
They want a clean closing.
Twenty years ago cash was king.
Today…
Nothing has changed.
A Year Later...The Same Story
Bill’s transaction happened in 2025.
Almost exactly one year later, history repeated itself.
An agent from San José brought qualified buyers to one of our premier listings.
They loved the property.
They wrote an offer.
Then financing entered the conversation.
Again, I explained our sellers wouldn’t accept a financing contingency.
As we discussed the lender’s fee schedule, questions surfaced about deferred transfer taxes, mortgage registration fees and other costs that weren’t immediately obvious.
The answers weren’t clear.
The buyers grew uncomfortable.
In the end, they withdrew their financing application.
Then they purchased the property with cash.
That decision ultimately gave everyone exactly what they wanted.
A successful closing.
What I Tell Every Client
If you need financing to buy property in Costa Rica, I won’t tell you it’s impossible.
I will tell you to approach every lender with healthy skepticism.
Read every document.
Ask difficult questions.
Understand every fee.
Don’t assume the process will mirror what you’re accustomed to back home.
Often there are better alternatives.
Refinancing your primary residence.
A securities-backed line of credit.
A 401(k) loan.
Developer financing.
Owner financing.
Even hard-money lending can sometimes prove less expensive overall once the fees are compared.
After twenty years in this market, I’ve reached one conclusion.
The only financing that’s guaranteed to close…
…is the money already sitting in your bank account.
In Closing
Costa Rica has never promised to be easy.
It has always promised to be worth it.
Those are two very different things.
Costa Rica rewards patience far more than urgency.
The people who thrive here aren’t the ones who rushed to make a deal work.
They’re the ones who first learned how the country works.
Sometimes the smartest real estate decision you’ll ever make isn’t buying sooner.
It’s waiting until you can buy wisely.
If that means waiting another year so you can purchase with cash, I believe that’s often the better decision.
Cash gives you negotiating power. It simplifies the transaction. It removes uncertainty. Most importantly, it allows you to begin enjoying Costa Rica instead of wondering whether your financing will survive until closing.
In more than twenty years, I’ve never had a client regret buying with cash. I have, however, had clients regret assuming Costa Rica would work like home.
Costa Rica is different. That’s precisely why so many of us love it. The sooner you understand its rules, the sooner you can begin enjoying everything else it has to offer.
Explore our luxury property listings to find your dream home in the world’s best climate and start living the lifestyle you’ve worked so hard to achieve.
Dennis Easters
Real Estate Broker
+506-8854-7721
Dennis@pldatenasrealty.com
