Loan-to-Value in Costa Rica, With Simple Examples

Loan-to-value is the number that shapes almost every property-backed loan. It decides how much a borrower can receive and how much protection a lender has. This guide explains loan-to-value in Costa Rica with simple examples, including what happens when a property already has a mortgage.

What loan-to-value means

Loan-to-value, or LTV, is the loan amount divided by the value of the property, shown as a percentage. A US$100,000 loan on a property valued at US$400,000 has an LTV of 25%.

At GAP, around 30% or less is preferred. Forty percent is generally more favorable than fifty, and 50% is the maximum for standard loans, not the target. Lower leverage can support better pricing, but the property, its location and the whole transaction matter too, so there is no fixed rate for each LTV.

Who decides the value

The value used for LTV is not the owner’s asking price or the borrower’s estimate. GAP determines the valuation used for the loan, with the lender’s input and acceptance. Calculations like the ones below are illustrations; the real numbers come from the review.

Example 1: the same property at different LTVs

Take a house valued at US$300,000:

• at 30%, the loan would be about US$90,000;
• at 40%, about US$120,000;
• at 50%, the maximum, US$150,000.

The 30% loan leaves US$210,000 of value behind it; the 50% loan leaves US$150,000. That difference is the cushion that protects the lender if prices fall or the property takes time to sell.

Example 2: how big a property a minimum loan needs

Standard loans start at US$50,000. At the 50% maximum, that needs a property valued at US$100,000 or more; at the preferred 30%, a property valued at around US$167,000 or more.

Example 3: a property with an existing mortgage

A lender must hold first position, so an existing mortgage is paid off at or before closing, often from the new loan. Suppose a property is valued at US$400,000, carries a US$60,000 mortgage, and the owner borrows US$120,000 (30% LTV). The US$60,000 mortgage is paid off at closing, and the loan fees are deducted, so the cash the borrower receives is well below US$120,000.

How far below depends on the fees for that loan. As an example only, a US$100,000 loan with US$10,000 in fees leaves US$90,000 before any other payoffs; fees are not a fixed 10%.

Land and other special cases

A lot without a house is reviewed on stricter terms, usually at a lower LTV, because land often takes longer to sell. Loans above US$1 million involve additional documentation and due diligence.

Why loan-to-value in Costa Rica matters to both sides

• For borrowers, it sets the maximum you can borrow and affects the terms you are offered.
• For lenders, it measures how much value stands behind the money. A first-lien loan at a low LTV leaves room for price changes, legal costs and time.

More on eligibility in who can borrow against property in Costa Rica, and on the lender side in how a first-lien mortgage protects a private lender.

Frequently Asked Questions

What is the maximum loan-to-value in Costa Rica with GAP?

50% for standard loans. Around 30% or less is preferred.

Is my asking price the value used for the loan?

No. GAP determines the value used, with the lender’s input and acceptance.

Does a lower LTV mean a lower rate?

Lower leverage can support better pricing, but the property, location and the whole transaction also matter. There is no fixed rate for each LTV.

Can I borrow if my property already has a mortgage?

Often yes. The existing mortgage is paid off at or before closing so the new lender is in first position.

This article is general information only and is not legal, financial or tax advice. All figures are illustrations, not offers. Every loan depends on property review, documentation and lender approval.

Start a loan request with GAP Equity Loans → · WhatsApp us at +506 4001 6413 to get started, call or email info@gap.cr